How Tokenization and ETFs Are Driving Crypto's Comeback

SPEAKER_1 (0:00)

And joining me right now is Mirza Uddin, COO Injective. Want to hear why you are continually bullish on crypto, and what parts of crypto specifically?

Mirza Uddin (0:12)

Yeah, thanks for having me on.

I would say what I'm most bullish on is the regulatory clarity we're getting now in the space. After the failure of the Clarity Act, I think a lot of people became quite bearish on crypto, but then we immediately saw the SEC coming out, the CFTC coming out, offering innovation exemptions into crypto. So now what you've had is people using crypto as a flight to safety almost, where even in a more positive interest rate environment, you're seeing Bitcoin and other assets, even in the altcoin sector, benefit greatly. There's a few reasons for it. One is the regulatory clarity and one is just the adoption that crypto is experiencing now, because we have way more ETFs, way more points of accessibility. So, yeah.

SPEAKER_1 (1:01)

Okay. Well, that makes sense. I mean, we think about tokenization too and the popularity of that. Also, adoption, right? Those are two other things that people are really talking about.

Mirza Uddin (1:15)

Absolutely. I think tokenization has been probably the largest economic catalyst for crypto.

We today have billions of dollars in tokenized stocks, tokenized bonds, tokenized real estate on chain. And on top of that, what's really interesting to see is the innovation exemption that Csmpc just issued. So for the next five years, people are less worried. People like myself or builders in the space are less worried that the government will come after you if you pursue tokenization. And that applies to tokenized equities, tokenized bonds, tokenized assets in real estate. And that adoption, I believe, is what's fueling the growth in crypto and the prices that you see in the secondary markets.

SPEAKER_1 (1:59)

So when you talk about this exemption for five years, has that gone through or is it sort of the proposal part of the story? And where do the midterms come into this? Because right now you have an administration about getting political is more friendly. And I've heard people from both sides of the aisle say that.

Is this the kind of thing that you feel protected now going forward for the few years ahead?

Mirza Uddin (2:23)

Yeah, that's an excellent question. So I think what happened with the Clarity Act on the Hill is it became quite a partisan issue, even though it was supposed to be bipartisan.

You had Democrats and Republicans on different sides of the aisle, arguing about whether or not we need the Clarity Act. And it eventually led to the failure of the Clarity Act. But I think that failure ended up being the biggest boon for crypto, because then what you had are bipartisan agencies like the CFTC and the ICC coming out and offering these proposed exemptions. And so a lot of builders now see that as clear rules of the road for crypto ahead and don't see this as being as partisan as before. So even what you mentioned, the midterms, yes, it will likely be acrimonious and quite partisan in nature, like all elections are. But in general, I believe a lot of people are now optimistic that regardless of the outcomes of the midterms, the rules for crypto will remain untouched and remain a mistake for the future, for innovation here in the United States.

SPEAKER_1 (3:24)

I think about Bitcoin, one year down 30 percent, six months up 23 percent. And when we look at Ethereum, we get some of the same, right? I think Ethereum may be doing a little better lately than even Bitcoin.

When you think about how this all spans out, how people, you're referring to yourself as a builder, how do people invest in this? How much of a portfolio should go in this? I mean, are you in this camp that this group takes off? Do we see Bitcoin 100,000 and Ethereum take off too?

Mirza Uddin (4:01)

Yeah. Well, look, I wish everyone had a crystal ball that allows them to predict price as well. But here are a couple of caveats that I think will help explain what we're seeing now and why it's so positive for the future.

Usually what you get in these macroeconomic conditions with rising interest rates and pending war is a huge blow. It's like Bitcoin. But what you're seeing is Bitcoin has outperformed even other asset classes, even as interest rates have started to go up and there's a lot of fears in the bond market. So I think that bodes well for crypto and the other major issue or the other major catalyst that people are often overlooking is the rise of ETFs. So you mentioned Ethereum and it outperformed Bitcoin sometimes. And yeah, that's largely led by the growth in Ethereum ETFs. And you'll start to see that with other crypto companies like ourselves who are having an ETF launch soon this year.