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The Starting Block is The Block's new flagship daily live show — the breaking news, the context behind it, and the people shaping where crypto goes next. Each episode is a 45-minute live broadcast hosted by award-winning journalist and broadcaster Gareth Jenkinson and powered by The Block's newsroom and research desk.
Welcome back to the starting block.
Happy Wednesday to you wherever
you're joining us around the world
today.
Happy hump day.
You've made it halfway through the
week, so it's downhill from here
to the weekend.
It's been an interesting few days in
the industry.
Obviously, the biggest talking point
has been the cold card exploit,
which happened late last week,
impacting Bitcoin only
hardware wallet cold card
and seeing more than
one and a half thousand Bitcoin and
being stolen from devices that.
Had that issue.
If you missed our conversation on
Monday, right here on the starting
block, we dived into this in
depth on the show with
a couple of big name Bitcoiners,
namely, Casa, co-founder
and CTO, Jamison Lopp,
as well as Zach Herbert from
Foundation.
If you wanna go and watch that
interview, you can find it on the
block's YouTube channel.
We posted that up today,
so you can hear from them what it
means for Bitcoin self custody going
forward.
Bitcoin hardware wallet
manufacturers and a number of other
considerations a really great
conversation That I recommend you go
and listen to you can find that
once again on the blocks YouTube
channel while you're there And you
don't already please subscribe We're
putting out a load of great content
every day And we would love for
you to see it and interact with it
if you don't t already as well
Please follow us right here on X if
you're joining us on Twitter
for the live stream today, and if
you Don't know who I am my name is
Gareth Jenkinson I'm the host of the
show head of multimedia here at
the block It's been a fantastic
six weeks so far, hosting
the Starting Block since we launched
with our starting interview with
CZ. And again, if you missed that
conversation, I implore
you to go onto our YouTube channel
and check that out. Our full
conversation with C Z, 17 minutes
unfiltered, uncut, I asked him some
questions that no one else in the
industry has asked him yet.
So you definitely wanna go and check
it out. We've got a jam pack show
coming up today.
We're gonna have Luke Deans from
Bitwise Europe.
To give us a rundown of the markets
and the market pulse.
And then we've got Yoshi Yokokawa,
who is of course the co-founder and
CEO of Alpaca to talk about
their recent $435 million
raise and the big
tokenization push on
Wall Street to bring securities
on chain. So that's all we got
coming up in the show, but first
things first, we're gonna be giving
you the top stories you need to know
in the last 24 hours with the block
briefing.
And on that note, let's jump into
our first headline of the day.
Washington is turning up the heat on
the president's crypto play.
Senators Elizabeth Warren and
Richard Blumenthal are urging the
SEC to investigate Donald Trump's
meme coin pointing to reports that
nearly 1 million wallets
have lost money since the token
launched in January last year,
combined losses of around $3.8
billion.
The senators can go so
far as to call it a rug pull.
It all lands as the industry's
market structure bill enters
what would be its most pivotal
week yet on Capitol
Hill. So we'll have to see what
comes out of that.
Our next headline, Cloudflare, is
wading into agentic commerce.
The internet infrastructure giant
has begun rolling out programmable
wallets built to let AI agents
pay for APIs, data,
and online content using
stablecoins.
Step one, revealed on Tuesday.
Lets users claim a unique Cloudflare
wallet handle tied to their account,
funding it and authorizing agents to
spend is coming quite
soon.
There are two flavors here, an
account wallet for individuals and
organizations to add money and
control spending, and a virtual
wallet that runs through API keys so
agents can make purchases on
their own. So we're seeing agentic
commerce come to fruition in real
time.
Amazing times to be alive, really.
Our next headline BlackRock is
tidying up its Ethereum ETF.
According to an SEC filing,
the asset manager will run a one
for three reverse share split on its
Ethereum trust.
The ticker is ETHA
on the 6th of October.
Every three shares become one,
lifting the funds per share net
asset value, though the value of
your holdings doesn't change.
Bloomberg's Eric Balkunas says the
move should cut trading costs from
around seven basis points to roughly
two. As he puts it, ETF issuers
now treat a seven-bip spread
as a problem worth fixing.
Then a big plumbing change in the
wrapped Bitcoin world.
BitGo is moving wrapped Bitcoin,
an asset with a $7.4 billion
market cap onto Chainlink's
CCIP cross-chain standard.
It joins a broader exodus away from
layer zero, following this year's
$292 million Kelpdowel
Bridge exploit.
CEO Mike Belshi says security comes
first. And that CCIP offers
a proven institutionally adopted
interoperability standard.
And BitGo also confirmed it'll use
CCIP exclusively for all
future BitGo issued assets,
which is a notable vote of
confidence in Chainlink's
infrastructure. On that note, we did
have Mike Belshy from BitGo on
the show a couple of weeks ago.
Again, you can find that on
our YouTube channel or right
here on X.
Our next story, the fallout from the
cold card exploit.
Is reshaping where people keep
their crypto.
OKX says the breach, which is one of
the largest thefts ever tied to a
Bitcoin hardware wallet floor, is
driving what its chief compliance
officer calls record inflows
to centralized exchanges.
Jonathan Brockmeyer told the block,
it's the flip side of FTX.
Back then, everyone fled to
self-custody and now the money
is coming back.
OKX rather says it's leaning on
artificial intelligence to flag
risks, arguing self-custody.
Puts an awful lot on the
individual user.
Our next story, Trading Slump, is
exposing a real gap between
Robinhood and Coinbase, both
pulled in less crypto revenue last
quarter, but Robinhood had
other engines to lean on.
Its crypto transaction revenue fell
to $100 million in the second
quarter, down more than 37%
year over year, and crypto now
makes up just 13% of the company's
transaction revenue.
Volumes dropped another 23%,
quarter over quarter, the lowest
since late 2023.
Options, equities and prediction
markets picked up the slack and
Coinbase had no such
cushion.
So diversifying here, definitely
helping Robinhood out in
2026.
Tokenized stocks just took a step
forward to being mainstream.
Denari says it's the first company
to let eligible US investors
trade more than 700 tokenized stocks
using USDC straight from
self custody wallets.
Through a partnership with Circle,
individuals and businesses can buy
and sell every name in the
S&P 500 on chain.
The tokens called the D-Shares
are each backed by the underlying
security held in qualified custody.
CEO Gabriel Otter says
the launch finally brings digital
assets and traditional equities into
a single system, while keeping the
protections of regulated
markets.
A final story in the block briefing.
Ethereum's researchers are floating
a big change to staking economics.
A group, including Justin Drake,
has published a draft proposal for
a tapered issuance burn,
permanently destroying a growing
slice of validators' rewards
as more ETH gets staked.
The design sets a saturation point
around 60.25
million ETH, roughly half of the
supply, where the burn hits 100%
in net issuances for staking falls
to zero.
The goal here is to discourage
overstaking and keep participation
near 50%.
It's early and only a draft.
But it targets a long running debate
over Ethereum's
issuance.
That is it for the block briefing
today. We're gonna move straight
into the market pulse this afternoon
and it's a great pleasure to welcome
back Luke Deans from
Bitwise Europe to
the show.
Wealth of information.
Luke, first things first, how are
you? It's been a couple of weeks
since we last saw you.
By yourself.
I'm very, very good.
Yeah, I think first things first,
just wanted to get your general
sentiments on the markets before we
jump into a couple of other talking
points.
Obviously been a very interesting
few days following the cold
card exploit,
but I think a lot of people might
have expected Bitcoin to react
more negatively to such an event,
but it doesn't really seem like it's
had any overarching influence in
the price of Bitcoin right now.
What are you seeing?
In the majors?
Yeah, that's a really interesting
question. And when we look around
from our last conversation,
the price of Bitcoin hasn't really
moved at all.
And what we're seeing is kind of
complacency in volatility
expectations.
We see that the price is actually
becoming less reactive to
geopolitical shocks,
internal shocks, the
tightening of liquidity in the
macroeconomic environment, and
also the fragility
in the AI complex itself.
And we've seen how that's been
whipsawing recently too.
And we actually ran a study on this.
What we've seen is that downside
beta from Bitcoin price to sentiment
indexes is showing that Bitcoin is
actually becoming more and more
resistant to these changes.
And part of the reason we believe
this is the case is because that
Bitcoin being the canary in the
coalmine and reacting to liquidity
conditions and has actually reacted
in advance to the deterioration
in liquidity conditions has already
repriced 50% lower in
anticipation of this.
So to put it, Bluntly,
Bitcoin has already been beaten up
so much that a lot of the
tourists and the speculators who
were in the asset have already left
and we're left with a cohort
of investors who believe in the long
term valuation and they're much more
price insensitive.
So simply the moves are not having
as much interest because the
investor base has changed.
But when we look fundamentally under
the surface, what we see is through
multiple measures, that volatility
expectations are very complacent.
If we look at price and let's say we
take the high and the low of
price over the last 30 days on a
kind of percentage basis, or whether
that be 60 days, 90 days,
all the way up to a year, what we
see is price is extremely tight
and it's trading within this narrow
corridor.
And it's just Bitcoin has been
devoid of this price action.
It's just apathy and exhaustion and
boredom. And it doesn't really
matter what catalyst has been
probing it.
It's been unresponsive and inert.
But there's a contrarian view here.
When price.
Rarely moves, it's
expected to move down the line.
We move from periods of
consolidation into trending.
And right now we're in that
consolidation period.
And with such low percentiles on
this price tightness,
it is telling us that the market is
expecting some form of move.
And this isn't just isolated to the
price. We can see this across
options markets.
If we look at the IV term structure,
whether that's the one week or the
six months tanners, what we see
if we look at the three year
distribution.
We see that this is also in their
bottom 5% of percentiles across
all the tenants.
It's telling us that the options
markets view on forward
volatility expectations
is extremely subdued.
They expect the market to be
continuing to behave in a stable
manner. But we know that this not
the case. These are very contrarian
signals. And this trade is getting
extremely crowded in terms of
the short vol positioning.
In terms of market volumes,
we're seeing the same thing.
We're seeing spot market volumes.
Futures volumes options volumes
on chain has seen a bit of a tick-up
following the cold card exploit And
we are seeing the movement of funds
to new wallets and addresses So
we've seen an uptick there but
ETFs and that's as well completely
devoid of any form of
volume of Speculation of
animal spirits and it really
just complements this apathy that
we're seeing so when we
see this lack of volume
It tells us about these illiquid
market conditions and that small
changes in supply and demand can
have outsized effects.
And finally, within on-chain
markets, what we're seeing is
capital flows have become extremely
balanced.
So profit-taking and loss-taking
are almost in tandem with each
other. And what does that tell us?
It tells about a form of
market equilibrium.
There's no discernible trend of
whether there's capital inflows or
capital outflows.
The market is, by all intents and
purposes, at some form of turning
point. And this is where the trend
will confirm itself, whether we move
back into a regime of capital
outflows and remain in a risk on
environment, a risk off environment,
sorry, or that we turn to a regime
of capital inflows where capital
continues to enter the asset and
supports higher prices.
That's where we're at. We're kind of
at this turning point and all of
these are suggesting the same thing.
They're suggesting that volatility
expectations are way too complacent.
And that we do need some form
of regime shift to essentially
unlock some of this latent supply
and liquidity in the market, because
right now we're extremely starved
at that across all market sectors.
And it's actually this confluence
that gives us more confidence in
what we're seeing. We're seeing it
across every single sector telling
us the same story of the market.
All individual lenses, but looking
at the whole picture.
So looking at them in tandem tells
us that.
Volatility expectations are very
low, and we should probably expect
an uptick of volatility in the near
future.
Now, one thing to keep in mind with
that is that volatility is
direction agnostic.
So it's not saying that price is
going up or price is down,
just that simply price is going to
move. And it's an extremely hard
market to read.
So what we need to do is let price
guide us.
And to do that, we need look at key
pricing levels. And on the show.
I think three weeks ago now, we
spoke about some of these pricing
levels, one being short-term holder
cost basis, telling us about new
demand in the market, where are they
positioned, what is their average
acquisition price.
Because they're new price-sensitive
investors, they kind of tell us
about local market conditions,
how much profit they're in, how much
loss they're in, what their pain
point. And right now, their
breakeven is about $68,000.
We can also look at the true market
mean, which actually looks at a
broader spectrum of these investors.
It tells us about all investors who
are active on the network,
excluding Satoshi's coins and early
miners, where are they positioned?
And the same concept applies.
They're at $76,000.
And we can't expect them to turn
into a risk-on environment until
these investors are actually in
profit. Because what is risk-one?
It is when you are in euphoria, it
is when there is profit, it is when
capital is entering the market.
So we are really looking at decisive
reclaims of these levels to tell us
about the local condition, the
short-term holder.
Or the macro condition, the true
market mean.
So those are kind of the levels
we're looking above.
And if we get this upsided
volatility, these are the levels
that we want to be monitoring and to
see if there's actually some
durability in that rally.
On the downside, we see the
200-week move in average.
And that's around 62k right now.
And what's interesting from both an
on-chain and technical perspective,
we seen that there's large clusters
of volume at this level.
It's been a level that's been traded
quite aggressively.
And we saw that price actually found
some degree of support on that
recently before we've trended just a
slight uptick higher, but it's
clear that this is the delineation
level. We believe it to be the kind
of upper threshold of where we would
expect the market to bottom, and
we've already entered into this
range multiple times already,
so that's going to be the first
level that we look at.
And the second is the realized price
at around 53k now, which looks
at the whole spectrum of the supply,
including Satoshi's coins, and tells
us what the average price of
purchases there.
So that 53 to 62k level is
kind of what we're looking for the
downside.
The 68 to 76k is telling us
about our local and macro upside.
And as a tell risk, 48k,
which is our mature investor cost
basis.
And we don't expect this as a base
case to be something that is
reached, but it is a tell-risk event
that we should keep in mind.
And it also aligns with the 61.8%
Fibonacci retracement from the
all-time high.
That's what's pretty funny about
on-chain markets, options markets,
spot markets, technical pricing.
They're all partial views at
the same picture.
And when we see this confluence and
overlap, it's just different facets
of the market agreeing on what we're
seeing. So really, we can
see that volatility is expected to
come in the near future.
We don't know what direction it's
going to be in.
Nobody can tell you where price is
going to go.
We can only monitor where.
Price reacts to these levels
and how they react.
And that's going to give us critical
information on whether the trend is
durable, with moving into risk on,
or that we remain into risk off.
Beautiful, Luke.
Thank you so much for that very
in-depth breakdown and key
levels to watch both to the upside
and downside.
Very quickly, because we do have
Yoshi on the line waiting
to join us.
I wanted to talk to you very briefly
just about the AI trading
capital rotations here.
Can you give us a TLDR and your
thoughts on this one?
Yeah, I'll keep it really brief.
What we've seen over 2026
is the boom of the AI trade.
We've seen it started with initially
with the models, but now we're
seeing it propagate to components
such as semiconductors, memory
stocks, even down to the
construction of data centers, and
we've even seen copper catch a bid
in this environment.
So we're in this financial
environment where capital is
constrained, yet all marginal
liquidity is really revolving around
the AI complex and the Expending
is really keeping that up.
So we're just seeing liquidity and
momentum just completely and
kind of circularly revolve around
this environment.
But what we know is that all trends
don't last forever.
Markets just can't simply go
upwards. And we're seeing the first
cracks of this trade in
the volatility.
We saw 20% moves in the
SOX index with semiconductors
recently. And then we saw the move
back upwards. We've seen that
rebound in the rally.
But ultimately, what that's showing
is the whip-soaring in price action
is telling us volatility
is here and that there is some
fragility and instability
within this trend.
And that's because it's built on an
unstable macroeconomic platform,
which is still rife with tightening
of liquidity and geopolitical
risks.
So when this trade breaks down,
where will capital actually rotate
to? And that is a really hard
question to answer.
We can only kind of
just look out into the future and
extrapolate. But what we actually do
see if we.
Look at 2024, that was the
digital asset rally.
It was the onset of the US ETFs.
And Bitcoin enjoyed a very
impressive year, as well as the
digital assets complex.
2025, everyone forgot about the
gains. And it was gold and silver.
And that's all that everyone cared
about. And we saw a parabolic
run in assets with
a base of trillions of dollars that
went multiples higher.
And it's the bull markets that offer
the bear. So we saw that parabolic
one is now being digested by gold
and Silver in the bear market.
We've seen Bitcoin and the digital
asset complex had a much more
structured bull market, which is all
for the shallower bear.
So 2024, Bitcoin and digital assets,
2025, precious metals,
2026, AI, which is still in the
euphoric phase.
So if you look at that conceptually,
it looks like digital assets is
further along within that bottoming
process.
And market investors, everything's
a relative basis.
Markets are relative machines.
It's a relatively world.
And we need to look at relative
valuation. So if we look at price
in the 200-day moving average, which
tells us more about midterm
valuations from a technical
perspective, or the 200 week moving
average which looks at a more of
a longer-term trend of that same
valuation, we see that the
AI complex or leading equities,
they're at all-time highs across
both measures.
Gold and silver, they actually
quite undervalued on the midterm
measure. But with the 200 weeks
moving average measure, they're
extremely overvalued that they still
digest this parabolic move.
But Bitcoin and the digital asset
complex is the only one that across
both the mid measure and
the long term measure is undervalued
through this lens, through this
technical lens, this deviation
between the 200 day and
the 200 week.
So what does that tell us?
It tells us that not that
capital will rotate there.
It tells that the structural
environment is more conducive
for a relative risk to reward
trade.
And we're talking about momentum
traders in a capital constrained
environment.
They don't want to step in front of
the train. They don't want to step
in from Bitcoin when it's still risk
off and geopolitical risks are
still abundant and tightening
financial conditions on
the precipice. We see bond markets
rising.
So they're going to wait for
essentially confirmed momentum, in
my opinion.
And those are kind of those upside
levels that we just spoke about.
They want to see that Bitcoin is
confirmed and that the rally is
durable. They don't want to take a
risk on an asset that could still go
lower.
So I think once we see the
collapse of the AI trade and it
is inevitable at some point, we
don't know when that will happen.
Markets can remain irrational for
longer than people expect, but when
it does inevitably happen, the
digital asset complex seems to be in
a good position to receive some
of that capital flow.
A lot of that capitol is going to be
destroyed on the revaluation lower.
A lot are going to go into the
defense stocks, into safe haven
assets. Some are going to go into
digital assets.
And because that complex is so much
bigger, it only needs a sliver of
that liquidity.
But they're going to really wait for
that momentum to turn to get that
confirmation.
And then that relative risk reward
becomes attractive, especially in
an environment like this.
Beautiful.
Luke, thank you so much for taking
the time to join us.
If you don't already, Luke
up online is one of the best
market analysts out there with
Bitwise Europe.
Thanks again, Luke, for joining us.
We're going to take a very short
break and we will be back
on air with Yoshi Yokokawa from
Alpaca. Don't go away, we're just
going to take a short break.
Welcome back to The Starting Block.
Thanks for staying with us.
We're moving on to the hot seat
segment of the show and it's a great
pleasure to be welcoming
Alpaca co-founder and CEO,
Yoshi Yokakawa to the show.
First things first, Yoshi, it's
great to see you again.
We've met very briefly at Consensus
a couple of months ago in Miami.
Welcome to the Show. How are you
doing?
Great. Thank you for having me
here.
It's a great pleasure.
As I always do on the show for
our audience, I often ask our
guests to give us a quick TLDR of
how they got to where they are
today. I mean, you've built Alpaca
to be, I would say literally
the backbone piece of infrastructure
for tokenized securities in the US
already, but not everyone knows
your backstory, how you
got here, your journey through Y
Combinator. Can you give us quick
rundown for anyone out there that
might not be too familiar with your
story?
Sure.
We started this business
called Alpaca.
It really came from my personal
experience.
I grew up between the US and Japan.
And then if you are in Japan, you
don't have accessibility to amazing
trading apps, investing applications
that you can get in the US,
such as Robinhood or all other
things.
And I think that thing has
been always kind of frustrating to
me, that how we can contribute
to fix that unfairness
just simply because of the location
that you are in,
you have a different accessibility
to financial services.
So that's really backbone of
problem solving that we
are working on Alpaca.
Alpacas is basically building the
infrastructure behind the scenes.
So that access a
bunch of the financial assets behind
the scene, such as a compliance
regulatory framework, a lot of
memberships and then licenses in
many different countries, so that we
consolidate all those things by
ourselves internally, so
that all the businesses that's built
on top of that infrastructure
don't have to be really worrying
about those back office, middle
office operations, compliance,
custody, clearing, settlement.
But focus on the best
experience that they can provide to
the end customers so that we
eventually contribute to solve the
problem of unfairness simply
because of the locations that you
live in to have different
accessibility to financial services.
Obviously, in our industry, Alpaca
is very well known now for being
that backbone of tokenized
securities as we start getting all
of these different Wall Street
products on chain.
When you came up with the concept
here, did you think that this would
be a key use case was
essentially building the
infrastructure that would allow
blockchain protocols to bring
TradFi on chain?
Was that where your mind went?
Was it already a few years ago?
Yeah, even before the FTX
crisis, we had been
offering crypto products
alongside with all the
TradFi assets, such as the stocks
and options ETFs.
So we always believed in that the
future has to be on chain.
So we didn't know exactly
how that would turn
out to be.
However, we knew that someone
has to bridge between the TradFy
infrastructure at the
same time on chain infrastructure.
And we happened to have
been able to build both of the rails
as a one company.
And I think that allowed us to be
the backbone of all
those players who came up with
amazing solutions of the
tokenization of the TroutFi assets.
You guys call this like the AWS
of finance.
Can you unpack that a little bit for
us and what this kind of looks like
under the hood and just how much
heavy lifting you do for all the
companies that plug into the
services that you're offering.
Yes, I think when we talk
about the word of AWS,
there are multiple components.
I think one thing, first thing is a
very easy thing that people
think about AWS as the
infrastructure that
you don't have to worry about kind
of boring stuff, something that's
happening behind the scenes.
And then that actually
created the whole
numbers of the new
businesses, projects, and new
startups because of the startup
cost of the projects went
down significantly because AWS
consolidated all the boring stuff
of the storage and then
managing those things and then
security and then the
very importantly interface that
developers can build on top of, so
like an amazing API and API
documentation.
So I think that is the reason why we
want to call ourselves or like, you
know, we always look up to like what
the AWS did.
Consolidating all the infrastructure
in the financial services mean that
we need to get a lot of licenses
approved by regulators like
SCC FIMRA and then also like
DTCC and FICC, OCC,
and all other different countries
like in Japan, UK, Europe, India.
But at the same time,
we have to be really paying
attention to experience
for the developers.
So we really put a lot of resources
into how the API experience
is, and then API
documentation should be written.
So that's how we define as
we want to be something like AWS.
I mean, I was looking at some stats
online and there's a rough estimate
here that Alpaca is
clearing or custodying roughly
94% of tokenized US
equities.
And before we dive into that actual
stats and the implications
of that, can you talk a little bit
about how you built
this breadth and how you
actually managed to do all of this?
Because from the outside looking in,
I would think that you need
to have an amazing tech
book, you need to know all the right
policy makers.
You need to know all the right
people on Wall Street and TradFi.
Is this just years and years of
culmination of hard work, both
networking and building the
infrastructure in the background
from a software perspective?
Definitely, you are correct about
that.
We even don't make it
look like it because we want
to be something invisible as an
infrastructure.
However, since we launched
our first product in 2018,
we had to continue to learn about
how to run a custody
broker dealer, how we
understand the global basis
of the anti-money laundering.
And then how to make
it work for the
United States regulatory framework
because that is our anchor regulator
that we have to be extremely
compliant of.
So it's a continuous efforts
of speaking
with the regulators, speaking with
the policymakers, and then also
understanding where the interests of
the Wall Street players are going.
And I think combination of those
things allowed us to be where we
are. But it's really because we
use the word of the fintech
a lot.
But it's really a combination of the
financial services, which is a
very legacy framework
that we have to be compliant of.
We have to get regulated licenses
at the same time as we
have to own the technology,
making sure that we own the leisure
system, being able to connect with
all the other players'
legacy systems or new systems at the
same time.
So combining all those two things in
one company.
Has been something that we
have been building for close to
eight years now.
I mean, just looking at this number,
so, you know, the 94% sort of
clearing and custodying of tokenized
US equities, it's a huge number.
And last week, we saw cold card,
the exploit hit Bitcoin is
pretty hard.
It's not the same thing.
So I'm not insinuating that it is
the same. But when it comes to
custodying
securities
and these kind of products,
how does that work in the background
and would
some people be right in assuming
there is some sort of centralization
risk if Alpaca is
almost like 94%
of the tokenized US equities
are running on your infrastructure?
Do you have any thoughts on a
centralization risky or is that even
a thing?
I think you're hitting the very
right point.
And I think we're talking about
counterpredatory risk and
everything.
I started my career at Lehman
Brothers' securitization team
back in 2000s.
So I truly appreciate
systemic risk, how
important that is, and then
understanding the tail risk,
like what could carry out.
So like, you know, our focus has
been extremely cautious.
And that is the reason why, you went
so deep, gaining all
the licenses under the
SEC FEMRA, and then even getting the
membership of the DCC, which is
basically the deepest that
you can go to make sure that
you are approved to
do certain custodians things and
settlements, you know things,
activity by the government.
So I think like, that has been the
attitude that we have been always
playing.
And then I think like talking about
tokenization, tokenization
is actually becoming a very broad
definition.
There are many things happening, and
then many players are doing multiple
different ways of tokenization.
Currently, like, you know, that we
are heavily involved with the
tokenization of the Shopify
securities.
That has the one-to-one backing
of the Spotify securities.
So how we play the
role in the ecosystem is
that we're the custodian of the
underlying securities of
the tokenized assets.
So which means that we are ensuring
that there's a one-to-one backing of
the TrotFi assets that are traded
extremely heavily in
the NAIS or NASDAQ or other
exchanges that exist in the world to
make sure that that has been
custodied in the right way.
There's a thing called 15C33 account
on the SEC investor protection rule.
That's our job.
So, I think, yes,
there is a certain concentration
in a way, but that concentration
risk goes through
approved custodians like ourselves,
Alpaca. That is a membership of
DTCC, which is in a
semi-governmental format that
creates a lot of security and
confidence of the system right now.
Thank you very much for the for the
in-depth explaining there.
I think it answered a lot of
questions in my mind and I want to
shift the conversation slightly
towards sort of agentic
trading. We had that in a story
earlier today and it's something
we've been talking about a lot on
the show.
I think recently in an interview
you noted a four times growth in
your monthly active API users
and that was attributed to AI
agents.
How are AI agents plugging into
Alpaca's infrastructure.
And how are you dealing with this
explosion and speed
of innovation when it comes to
frontier LLM models
and what that might mean for the
infrastructure that you're building?
I think when we're talking about AI
and evolution of agents,
I think it always comes through how
humans as ourselves interact with
the systems and the backbone
infrastructure of any industries.
So when we think about us being
the, quoted AWS of
the financial services, we always
focus on building the backbone.
I think this MCP
or LLM or agents
is allowing regular
human beings who are not
developers to be able to access
that backbone system and
infrastructure directly without
looking at some kind of graphical
user interface.
And I think developers always have
had that kind of luxury because
they can code and that
accessibility happened with
the interface of API.
And that API has been the only
interface for the developers to be
able to use. But now, because of
the MCP, because of the agents,
because of the LLM, it doesn't have
to be API.
But because like we have been
building the API interface for
like, you know, more than close to
10 years, so like, you know that,
that we always focus on
how easy that human can
access to the backbone directly,
regardless of API.
Or the wrapper outside
of the MCP.
So that whole narrative is
actually continuation of
DIY people who can
connect to the real foundation
of what's happening in the industry
as directly as possible.
So that's the reason why we see
humongous growth when the LLM
and the AI expanded the
definition of the people who were
able to build by themselves.
I also read recently
on Bloomberg that
Alpaca was exploring becoming a
prime brokerage. Can you tell us any
more about these ambitions and
why you would want to go in that
direction when you've built the
backbone of your company on
infrastructure?
Definitely. So I think like, you
know, when we think about the world
of infrastructure in the financial
services,
I think like, offering some kind of
capital, offering some kind like
a settlement buffer, it's also part
of the infrastructure's role
in the financial services.
Unfortunately, I think
in the other industry, we may not
have to, but in the financial
services, we have to.
So we believe that that's one
of the natural evolutions that we
are getting asked by a lot
of businesses, a lot of
individual traders and funds who
need this kind of capability.
So we're continuing to build all
the features that we're getting
asked about by our partners and
users.
Yeah, for sure. I mean, if people
are asking you for new products
and services, you're not exactly
going to say no.
I mean just to tack on to that
vein, I think we've seen a
lot of people in the industry, I
mean mainly, you know, Brian
Armstrong and Coinbase talk about
being the everything app.
And my kind of long term thesis
on the industry is that all the
big main centralized
cryptocurrency exchanges will just
become these everything apps
where... They might have a banking
side of the business where
a retail person can actually have a
bank account and a credit card.
You can trade crypto, you can trade
stocks and shares in
being tokenized.
Do you subscribe to that view and
what's your timeline for something
like that happening?
Is five to 10 years too
short for this to happen?
I actually love this kind of
conversation because I love history.
And I try to learn like, you know,
what rhymes, right?
So I think about this,
like, phenomena, like how you
said that everything, everyone
becomes everything up.
It's actually like, we're talking
about a pendulum swinging
from unbundling to
the bundling.
And I think like we saw like, from
15 years ago to 10 years ago, that
was the worth of unbundling.
The existing financial services
including banking and then big
brokerage firms.
And that's the reason why Coinbase
started, like Robinhood started,
Wealthfront started, Chime started,
and now they're bundling.
So we're swinging the pendulum
back to the bundling phase.
However, what's also another
layer of the wave that we have to
think about is the evolution of
how humans interact with
any services including financial
services.
When we look back the history, it
used to be human-to-human in person.
You know financial services
transaction we had you shake hands
and we exchange the certificate of
the securities with cash And
then it became telephone and we
start saying it's done and done and
that confirms that you know trade
and it goes to the settlement and
clearing And now we're talking about
web browser, that's like, you know,
e-trade and like, all the online
banking started and then there's a
mobile first Robinhood won that
game. And then now we were talking
about agent first.
So like the interaction with the
financial services continued to
evolve as our lifestyle, the human
changes.
So like, and I think that trend and
then pendulum swing in between the
bonding and bundling continue to
correlate how that works.
So I think like we're going to
continue to see the bundling because
now it's a bundling phase and the
player that's going to win is this
like in first era to the
Asian first era how they're
going to continue to adapt those
things as quickly as possible while
bundling and I think they will be
the winner when they do that
successfully.
You've been working pretty hard at a
sort of global expansion effort.
I wanted to pick your brain a little
bit here and get a sense of
what's been the hardest jurisdiction
to break into.
What do you think represents the
most opportunity and where,
how you're kind of balancing your
time and energy?
Because I kind of, I think we could
draw some parallels between
you and someone like CZ from
Binance who's just really just
growing at an exponential rate and
how do you sort of figure out
where to put all your time and the
energy into a specific place?
Firstly, I love to see this book.
I read this book and I started
shortening up the meeting, not five
minutes yet, but like 15 minutes.
So a big huge good old to that.
I respect how he's been doing.
And then I think in terms of the
globalization of our business,
we work as the full remote
distributed company and we are now
around 450
people in
45 or 50 different countries.
So I think that has been allowing us
to work extremely different
time zones and different countries
very seamlessly.
So that has being easier
compared to other traditional
ways of the in-office
working culture.
So that's one thing.
And the second thing is that, of
course, each country has a different
challenges in terms of how
to get in, what kind of requirements
that we need to get, what kind
people that we needed to be business
develop, your business
doing the business development too.
So I think that had to
be extremely customized to
all the countries that we go into.
My final question after
that is just the regulatory
landscape in the US has been a
lot of talk about the
market structure bill, when that
might be passed.
Is that a big consideration and will
it have a significant influence
on Alpaca going forward?
What are your thoughts yet?
Definitely, we are very sensitive to
how the regulatory landscape
continues to evolve.
At the same time, we cannot bet
on certain outcomes for
all our business, how
it's going to go.
So we're continuing to have a lot of
hedges and a lot scenario analysis,
like what will happen, what will not
happen, and what we need to be
doing. This is all about risk
management, and the risk management
really comes from my personal nature
and paranoia, you know,
starting at the carrier at the
Lehman Brothers and going through a
bunch of the stuff that created who
I am.
So we're really thinking about that
multiple different lenses and to
make sure that our business continue
to grow and then continue to
achieve at least like 2x growth
year over year for a foreseeable
future.
Well,
since Gareth had some technical
issue, my name is Yoshi.
I'm the co-founder and CEO of a
company called Alpaca.
Oh, Gareth is back.
All right, do you want to take us
back live?
My apologies, everyone.
I had a quick camera issue there.
A big shout out to Yoshi for being
the guest and the host on the day.
Thank you.
I really appreciate it.
But Yoshi, thank you so much for
taking the time to chat to us.
It's often that big
infrastructure providers aren't
quite appreciated for what they're
actually doing in the industry.
And I think Alpaca is one of those
players that's like quietly building
an empire in the background
and people don't really realize it.
So we're very grateful that you took
so much time to talk to us,
If and when you've got any big new
announcements, including
a $435 million
raise, which you raised a couple of
months ago, please knock on our door
and give us the exclusive.
We'd be happy to have you back.
Definitely. I appreciate that.
And thank you for having me here.
It's been so much fun.
So thank you.
Awesome. Thank you so much, Yoshi.
And thank you to the audience out
there for joining us today on the
starting block. Sorry for the tech
issues right at the end there.
We will be back the rest of the
week, Thursday, Friday. I've got a
couple of big guests coming
on the show, but I'm gonna ask you
to keep your eyes peeled on the
block social media channels.
If you don't already, please go
ahead and follow us on X.
And if you've been watching us
today, on YouTube, go ahead,
and subscribe to the channel.
If you missed any of our big
interviews, you can find that on our
YouTube channel as well.
Please do go and check that out.
Yoshi, if you haven't watched that
interview with CZ, It's also.
There on YouTube.
Don't we watch it already?
Yes, definitely.
I enjoyed it, yes.
Awesome, thank you very much.
And yeah, that's it for today.
So, Sho, we'll be happy to have
you, the viewer out there, join
us again tomorrow.
We broadcast at 8.30 a.m.
Eastern Time, if you're in the U.S.
2.30 p.m., if you are in Europe,
set a reminder on your calendar,
come and join us tomorrow.
You'll have a great time.
Until then, bye-bye.