Welcome, everyone. My name is Rayna Kumar, and I lead payments, processors, and IT services research at UBS. I am joined by Damien Vanderwilt, Co-President and Head of Global Markets for Galaxy Digital. Okay, I think you guys lost me for a second, but I am back. So before we get started, I'm just going to read a disclaimer. Galaxy Digital publicly filed a registration statement with the SEC on January 28, 2022. Given Galaxy Digital is in the midst of a regulatory review process, Damien will be unable to comment on that filing or the process of the proposed U.S. listing. Damien's comments regarding Galaxy Digital will be limited to their disclosures from the Q3 earnings at this time. So Damien, thanks for joining us today. Thanks, Rayna. Thanks for having me here. It's great to be with you. Perfect. So if you could start out, could you just please give us a little bit, tell us a few details about your background and the scope of your role at Galaxy Digital? Yeah, for sure. So I'm relatively new into the digital asset space. I spent just over two decades in traditional financial services at Goldman Sachs. I was always in our markets division there. I did lots of different jobs, both in our equities and FICC divisions in Sydney, Hong Kong, Tokyo, London, and New York. And in my last role at Goldman, running our systematic market making and FICC execution services group, we did experiment back in 2017 with setting up a crypto trading business that ultimately was able to trade NDFs, but did very little of that business as the crypto winter ensued in 2018 and 2019. But that was really my first venture into the world of digital assets. I'd known Mike Novogratz, who was also a Goldman partner way back when for a long time. He somehow, post-COVID, and the first fiscal response to COVID from the U.S. government convinced me to come and join him and help him build out Galaxy. Great. So how do you believe Galaxy Digital differentiates itself in the crypto space? Yeah, it's a great question. I think it's an important one to level set for us in every company in the digital asset space that people are being introduced to and learning about and trying to imagine where we all sit on the chessboard. It's often helpful for me to explain what we're not and then move into what we do do. We don't do retail, which most of our main competitors in the sector are focused on. And they have sort of largely been retail first, institution second. So we're institution first. And we don't own and operate our own exchange, which is really important if you're serving the institutional community. People that are used to trading on venues in traditional financial services are well aware of the conflict that could exist if you're seeking liquidity for clients on a venue that you own completely. And so we believe our role is to understand where the best liquidity exists across the sector and the ecosystem, on which exchanges, where to go for which types of liquidity, and help our customers do that. So they're the two things we don't do. What we do do is a range of institutional operating services that all fit as platforms around our investing expertise. So the history way back when Mike Novogratz dreamt up Galaxy and started to do a lot of investing himself in the sector, it really was a company that focused on venture investing at the seed, pre-seed, and A stage all the way through to large balance sheet positions in some of the bigger liquid coins. And then around that, what we've done over the last four years is build other operating businesses to help traditional pools of capital make their way safely into the digital asset sector. And so we have a big sales trading and derivatives business. We're one of the bigger providers of liquidity to institutions across those products. That business does derivatives, Delta One, a lot of lending and structured products. We have an investment banking advisory group that covers companies in our sector on all the things that you would expect: M&A advice, buy-side advisory, financing, and corporate governance advice. We have a big research unit that is publishing wonderful research to help people really understand, in plain English, what we believe is going on in the sector and where to focus. We have a quickly growing asset management business where we have 13 different products stood up, ranging from passive single asset funds to index funds all the way through to our venture third-party capital funds. We have a mining business. We're a significant proprietary miner. We also have a customer business around that mining expertise where we offer other miners access to financing, hedging to reduce their cost of capital. We help people procure ASIC chips when it's difficult to do so, and a range of things around that business. And then we're in the middle of acquiring a really exciting company, BitGo, who will provide the digital custody and staking services that you really need to be a fully integrated prime broker in the digital asset sector. So they're the platforms that sit around a core investing expertise. The investing we do on balance sheet is super important because now we have over 80 positions in companies throughout the sector. We speak to those founders all the time. That provides us with a tremendous amount of information about what's going on in the sector, where developers are moving to which protocols, what's working, and then really importantly, what's not working. Great. Okay. Could you discuss how you think the regulatory environment in the U.S. is going to play out? What do you think are the headwinds and tailwinds to your business? And particularly given the Biden news this week, I think this question is very relevant. So I'd love to hear your thoughts on that. Yeah, for sure. We're super focused on the regulatory landscape, as you would expect. We recently announced that we've hired Neal Katyal, who's a really significant attorney in the U.S. with a great history in constitutional law, who's also very passionate about crypto and digital assets. He's the chair of our advisory board, and we just commenced the buildout of our Washington, D.C. presence, and really, the approach we're taking is to be front foot with education, and I think there have been examples in the last three months. And if you think back to the infrastructure bill on the floor of the Senate, which was the first time really that digital assets had been discussed in any great detail in the Senate, it was pretty clear that there was a lot of education that needed to take place in Washington with a lot of the Senate and Congress and the staff supporting them to help policy evolve in a really thoughtful way. So we're trying to be front and center with that mission. I think there's a lot of misinformation in the market about how regulation will evolve and this sort of ongoing public debate that happens a lot on Twitter between the SEC and the CFTC. My own view is I think you're going to see the CFTC continue to take a bigger role in really regulating more and more parts of the digital assets sector. And there are certainly ways and precedent for existing rules to allow for that. And I know there's a lot of work happening right now in Washington to help everybody think through that. And so I'm optimistic that some of the questions that people and us and our clients are seeking answers to, particularly around this Howey Test interpretation of what is a security and what is not, that will start to look in better shape, I think, towards the back end of this year when the CFTC has a greater role in regulating some parts of the sector. I think you're going to see regulation through enforcement continue from the SEC as they continue to try and explore which practices they don't feel are occurring suitably in the sector. They've obviously been very focused on lending products into retail. And that's been very public. And I think it's quite fair for them to go and explore exactly what those products are and how similar or not they look to banking products that are required, of course, to be regulated. But I think the focus now is the most exciting thing for us. The best thing in the world for Galaxy would be that we do get regulation, even if it's not perfect regulation that we would have written. Because right now, where we sit with so many of our institutional clients is in a state of education. The level of sophistication at most of the large asset managers around the world in crypto today is substantially higher than you would expect if you just looked at their level of activity. Largely, the activity so far has been dominated by allocating into the venture capital sector, which, of course, every large pool of capital is able to do, particularly if the trustees and boards get comfortable with the sector. But the product itself is familiar. And there hasn't really been yet large-scale allocation into the ecosystem directly into protocols and coins. And the reason for that is that right now, the regulatory landscape for those institutional managers of capital is unclear. As soon as that is clarified, there is going to be a huge wave of activity from so many managers that we're currently preparing for that event with. And that's going to be a really, really great day and future for Galaxy when that happens. Got it. Okay. Which cryptocurrencies do you believe will be the winners and the losers in the space going forward? Yeah, I think it's too early to tell. The race, Bitcoin, I think, has cemented its position certainly as a store of value, and the digital gold theme is one that I'm sure everyone on this call has heard, and so I sort of won't go through that thesis, but certainly, Bitcoin is now permeating in a way that adoption is so broad. It's obviously in the U.S. recently become a really big political issue given the number of people who own Bitcoin in their portfolios, and so we believe that Bitcoin will continue to play a role that is store of value-oriented digital gold-like, but with optimism around just the huge amount of development that's taking place to improve parts of the Bitcoin blockchain that aren't perfectly suited for transactions and other things, so Taproot and Lightning and other innovations around the Bitcoin ecosystem, they're going to continue. People aren't going to just sit down and leave the Bitcoin blockchain doing just what it's doing today. There'll continue to be innovation. And there are many, many developers thinking and working on that. The layer ones, I think it's too early to tell. As I mentioned, we follow really closely the pace of development, adoption, and utility. And I think we've been public about some of the exciting coins and protocols that we have been involved with in the past, Luna being one of them. And I think several of these different protocols, Avalanche and others, could end up taking huge market share in different parts of the ecosystem as utility grows. And so we're invested across a lot of them and particularly invested in places where we see utility. Great, and I'd love to hear your strategy on investing specifically in NFTs. Yeah, so for us, the NFT space is hugely important. It's one of the only parts of the ecosystem that we think is non-contentious because it's not like DeFi disrupting an existing incumbent high-margin set of services that the banks enjoy today, and it's a huge builder of community and an enabler for so many different types of people and corporates to build community and connect with each other. The great example people use often is just the art world where digital artists now and even traditional artists that want to tokenize their existing art are able to do so and retain economics not just when they first sell their art, but of course, when the person who buys it sells it again and they sell it again. And so the NFT space is going to continue, we think, to grow and become a hugely important part of our lives, ranging from the things we know today, which are sports cards, the NBA, and what we're doing with Topps. We've got partnerships with the sports franchises through our investment in Candy. Then there's the art world, the music world. And it will extend all the way through to medical records, parts of the property titling service for sure. And there's a lot of really interesting stuff taking place in the mortgage and credit space as well. So it's going to be huge. The way we participate at the moment is predominantly in two ways. One is investing in the companies in that ecosystem, so the picks and shovels, and also providing a lot of advice to companies who are trying to figure out how they should participate to connect with their end customers. And I think there have been some interesting examples of that. Nike bought a company called RTFKT that we were an investor in. They did really cool digital shoes. And Nike figured out quickly the number of eyeballs of their target and existing consumers that are already operating in that space. And they wanted to be quick and very relevant and seen there. Visa came out and bought NFTs because they understand what the digital asset frequency of transaction could mean for them in the long term. The number of times on average that somebody swipes their Visa or Mastercard per day today is just under one time, I think. If you talk to the digital asset units of Visa and Mastercard, they expect with the proliferation of digital assets, that swipe could be as high as 10% in five years from now. And so they're thinking about very interesting creative ways to enhance their existing business model with an eye on what's happening in digital. Great. That's really good detail. And since you mentioned the card networks, I'm curious to hear your opinion on this specifically because it's a question I get asked very often. Do you think crypto is going to disrupt the traditional payment players? And I guess, are you starting to see crypto evolving into a way consumers will pay for goods? Or do you view it as more of just an asset that investors will own and hold? It's already a substantial payment rail in many different parts of the world and in many businesses. And so absolutely, it will compete with fiat for payments. I think what you're seeing with the payment companies and the on-and-off ramp, they're really looking at this as an opportunity. And they're going to set up their existing legacy rails to be able to handle crypto. So they're definitely not sitting back and watching this revolution pass them by and sort of take part of their time. They're really working hard and building big teams to make sure that they can continue to have the market presence that they do, but not just to be settling in fiat when consumers and merchants are trying to do a transaction. And so crypto is just going to be a bigger part of their ecosystem. And in my own view, there's going to be a big part of the marketplace that will continue to enjoy the convenience, habitual or otherwise, of swiping their cards. I think the Gen Z world is less likely to embrace in the way that me and sort of my and older generations have done so and be much more comfortable with peer-to-peer payment and not being a part of that payment rail ecosystem. But for many people, it will continue to be the primary use of how they transact. I guess on that point, I mean, do you think over time crypto evolves so that the problem of efficiency of time of transaction, that shortens? And with credit cards, right, you get chargeback protection, fraud protection. Is there a mechanism in crypto that you think would develop so that it could be as competitive as using a credit card? Yeah, for sure, and we know several entrepreneurs who are focused on building that out and are already heavily engaged with all the right regulators, FDIC, the OCC, and Treasury to try and figure out how to bring those protections where possible into the digital asset sector. So they're in quite late stages, actually, and I think in the next 24 months, there'll be quite a bit of news out around that. So yeah, I mean, the key thing to watch for, and we watch for it all the time, is how people start to refer to the value of assets and the denominator, right? So most of the time for most of us, when we're talking about the value of anything, we refer to it as what it costs in dollars, right? Even if you're in foreign countries, oftentimes people will refer to something being worth X US dollars. What you're starting to see now with NFTs for sure, and this is starting to catch on quite a bit, is people are referring to the value of their NFTs in ETH as the denominator. That's something to really keep an eye on for people because once people start really referencing items and stores of value, particularly digital, not measured in dollars, but in cryptocurrency denominators, that's going to be really important. Got it. Okay. I want to spend some time on BitGo. That's a very interesting acquisition. Can you talk a little bit about what BitGo brings to the table for Galaxy Digital? For sure. So again, our mission is institutions. And institutions won't go anywhere near any asset class or allocate capital to any asset class where they don't think that their assets are safe. And so when we were thinking about what we needed to add to our portfolio to really be a full-service provider of services, the first thing we needed before anything else really was the mechanism to safely secure assets for institutions. And so BitGo really came at the top of the list when you look at security of protocol and the multi-sig technology that underpins cold storage custody at BitGo. On top of Mike Belshe, the CEO and founder of BitGo, we think did a wonderful job of innovating around the insurance space and working with underwriters to figure out different ways of we have a substantial amount of insurance for the assets that we custody that is quite different to the total notional of custody, but given how we isolate assets per wallet, very effective in protecting against something nefarious happening or a hack. And so those are the questions that every institution asks first is, if I come and buy this, where does it go and is it safe? And so that was super important for us. BitGo is established. They've got very, very high security and very broad coin support, which is only going broader. That's sort of the key part of why this is important for us so that people can transact with us, store with us out of cold storage, move it into our hot wallets when needed to transact, and then perform all the downstream services that institutions want, staking and other things like that. It's very, very important, we think, to the future of our prime offering and the services that institutions are going to need over coming years. Great. All right. So we have record high inflation in the U.S. If you can talk a little bit about the puts and takes of inflation to your business, that would be helpful. It's a great question, and I get asked this constantly by people who hear folks in the sector refer to crypto and Bitcoin particularly as an inflation hedge or something that should be not correlated to risky assets because of the finite nature of the structure, right, the 21 million coins, etc. The thing that people have to, as they digest that, and that's a thesis that I fully believe in and explain to people I think is true and will work over time, is that can't be the only thing that people consider in trying to understand the price moves of Bitcoin. It's very important for people to also acknowledge the cap table of Bitcoin and what parts of the market currently own the most amount of the coin, and it's still predominantly retail, and a lot of that retail continues to be leveraged. It's not as leveraged as it has been historically, and this transition that is taking place from retail and speculators into asset allocators who want to hold it for that reason, it's happening every week, but it's happening slowly in a measured way, and it's going to take several years, in my opinion, before the tables turn. The majority of Bitcoin ownership is more linked to people wanting to hold it through a sovereignty type perspective relative to their own local currency or, in fact, inflation, and so on that journey, we're going to see periods where Bitcoin is going to correlate highly to risky assets when there are extreme moves like we saw at the beginning of this year when growth equity really had a hard time digesting the pivot from the Fed. And I don't need to tell anyone on this call how challenging that period has been for risky assets. But there were many days there where the same people who were risk managing their equity long-short portfolios and growth currency portfolios also had to risk manage their crypto exposures. And so that is going to continue to happen over time. But I think when you zoom out, you're going to start to see a correlation breakdown over longer periods that will correlate more in Bitcoin's case to the path for inflation. And so one of the interesting things around how Mike Novogratz ultimately convinced me to join Galaxy was this thesis that he had and was very right about when we saw the first fiscal response to COVID in April of 2020. And he explained to me that asset allocation choices just changed for a lot of capital for a long time. And the people who had been freely able to come in and buy bonds in the U.S. were going to be less able and willing to do so when the Fed was in there manipulating the bond market. We had a non-independent Fed and still do today. And that forced people to go and do work on all the other asset classes, not just crypto, that they could be making asset allocation to during this period of manipulation by a central bank. And of course, crypto was just one of the several sectors that everyone did the work on. Unsurprisingly, the macro luminaries that we all know, Paul and Stan and Louis and Bill and other people, they got there a bit quicker than most others. That's what they're supposed to do. And in all of their letters from May through the end of the year, it was interesting to see that they'd all built out teams, done their work on the sector. Not every one of them bought it, but they mostly came back and said, "This is very real. We understand the technology." And of course, lots of people like Paul and Louis did, in fact, put it in their portfolio and did very well. So I do think this is a theme that is very real, but it's not going to happen without at different points of the cycle being correlated like all things can be to extreme moves. Got it. Okay. Great. What are the biggest areas of investment for Galaxy Digital in 2022? Listen, in 2022, we're really trying to, we feel like we've got our operating business units that we need to have to serve our clients on board now. So it's growing each of those business units. We're well capitalized. We were fortunate to raise a big chunk of capital in the Q4 through an exchangeable note. We risk managed the balance sheet well. So this environment for us is, while we'd all prefer asset prices to keep going higher, having them slow down just a little bit to give us the opportunity to build and not build quite as fast, but build right is something that we're really excited to have the opportunity to do because last year was like crazy in terms of speed. So we've got an amazing new senior executive team. We just went through business planning. In every business unit now, we've got a really solid two-year plan of things we want to accomplish. We've grown from 85 people. This is ex-BitGo, these numbers at the back end of 2020 to now being 310. We're growing in Europe and in Asia. Every business unit we're excited about. The asset management business this year is going to have substantially more products stood up. We're really excited about that. We've got some wonderful partners in that business. We do a lot of business with CI in Canada. We've got our ETFs listed up there, and we're going to continue to innovate with new ETFs in Canada. We've got a great partnership with Invesco in the U.S. where we're going to jointly issue ETFs here once they're allowed and the SEC approves them. We also help them with their equity, blockchain, and crypto-related ETF products. And you're going to see more of those types of things from Galaxy in Latin and in Asia and in Europe. We're growing our mining business pretty significantly here in the U.S. We've got a really big ESG focus around that. And one of our IR directors who's with us on this call, Elsa Ballard, really leads that for us and is doing a great job of making sure that we're taking into account everything we should be from an ESG front as we grow our mining business because that's obviously been very important to investors. And our sales trading and derivatives business, our onboarding of clients continues to happen at a really rapid rate. Something that some people don't know, and I always find it fun to share because I learned this literally when I started at Galaxy and didn't know it before. But there are roughly 850 hedge funds dedicated in the crypto sector, most of whom many people I hadn't heard of never before. So they're not the names that you would traditionally be covering, Rayna, in your work in the equity long-short macro and institutional space. Roughly half of them are venture, and the other half are kind of multi-strat, quant, and market neutral funds. And that really makes the basis for the institutional business as TradFi firms are starting to come on board. So we're already very busy as we're helping traditional asset management groups on board and get comfortable. Wonderful. Okay. Well, since we're almost at 10:30 A.M., I'll just ask you one final question. I'm curious to know what are you most excited about for Galaxy Digital's future? Listen, I think the thing we're most excited about is playing our role really as a shepherd for institutions coming into the digital asset space in a way that is non-conflicted. I mentioned the exchange point before. No one's ever gone to the New York Stock Exchange to open up a brokerage account. As this market matures, the way we're setting up our business today, there are lots of days where Mike and Chris and I would love to own an exchange or we'd love to be doing retail because they have been really prosperous areas to be in for the last five years. But that's what we're excited about building. We want to have a big voice in Washington. We want to shape the industry in the U.S. the best we can from a regulatory perspective so that we can continue to innovate and help people safely into the sector. Damien, it was wonderful having you today. Thank you so much for hosting with us. To everyone else, thanks for tuning in and have a wonderful weekend. Thanks, Rayna.