FULL TRANSCRIPT

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Slava Rubin (00:00)

In this episode of Smart Humans, we talk with Reeve Collins, who's the founder of Tether and one of the experts in all things crypto. We talk about where is the future of the US economy and global economy headed? How can we use stable coins and what's happening next in the world of crypto? Should you be buying the dip now? Should you be thinking about how to invest in all kinds of altcoins or should you be focused on things like BTC, Solana, ETH and more? We talk about all that and more.

in this episode.

Slava Rubin (01:02)

Hello and welcome to the latest episode of Smart Humans. Today we are live for a special episode here on the grounds of iConnections at Global Alts. We're going to be doing one of our shorter episodes with an incredible founder. We have with us Reeve Collins, who's co-founder of Tether. Reeve, thank you so much for coming.

Reeve Collins (01:20)

So thank you for having me, it's great to be here, that's for sure.

Slava Rubin (01:22)

Absolutely. So let's just start where we always are, which is in the beginning. How did you even get into the world of alternative investments?

Reeve Collins (01:30)

Yeah, so it's a long story. But if we rewind about 12, 13 years to when the blockchain was just coming out, that's kind of when I did a really deep dive. As you shared, the co-founder of Tether. created the stable coin. Today, though, my main focus is still on the stable coins, but it's the evolution of stable coins with a handful of new businesses that I'm really focused on. STBL, We-Fi, ⁓ which are bringing about kind of what I believe to be the next evolution of where this technology is going.

But taking it back over a decade to how it started was the blockchain came out and Bitcoin. What was Bitcoin? A new type of foreign currency that people didn't understand, one based in code, not controlled by governments. However, it moved around the world globally instantly and for free. It connected anyone in the world with a cell phone device to financial services. So we formatted the dollar. The bright idea was, wouldn't it be cool if a dollar could do that? And so we formatted the dollar to work on that infrastructure.

Slava Rubin (02:29)

What year is that?

Reeve Collins (02:30)

2013 was the concept, it rolled out in 2014.

Slava Rubin (02:33)

So Bitcoin comes out in like 2008, 2009. So you're looking at Bitcoin. You're thinking, I wish the dollar could do this. What is that inception point of, let's create this? Tell me little bit more about that.

Reeve Collins (02:48)

Well, just some ideas were floating around and that one came up. It's like, well, let's format the dollar to work on a blockchain. Wouldn't that be amazing if you could move globally instantly and for free. Now, there was so much pushback. People didn't get it. People thought it would never work, mainly because you have to look at the regulatory environment. When we talk to attorneys, when we talk to other people, like, well, you just can't do that. But that's how the best ideas come about, right? With lots of opposition. And it still took a long time once we created the technology and put it out there.

for it to really grow and to take off. But once people understood that the dollar is now democratized, that everyone in the world has access to it, then there was a lot of demand for it. Once they understood that you didn't have to have a bank account, there was a lot of demand for it. But it started out mainly in the crypto space, and still today it's mainly in the crypto space. Meaning, it laid the foundation for people within cryptocurrency to have a stable trading pair, right? They can trade out of Bitcoin, they can risk off into dollars.

and stay in that ecosystem. That's a stable coin, yes. And what's amazing about it is that we've had a decade of kind of this sandbox for stable coins to work. So now everyone in the world, hopefully, ⁓ most people know what stable coins are, and they know that it's a new way to move money. But finally, the regulations are getting to a point and the governments are paying attention where they're laying the rules so the institutions can start to play.

Slava Rubin (03:48)

This is people call stablecoin.

Reeve Collins (04:14)

So we've had 10 years to perfect it and make sure that actually it can hold up. And there's been some bumps along the road, that's for sure. But stable coins in general are the future of how money's going to move because it moves on a blockchain and a blockchain is an upgrade to the current financial system, which is slow and inefficient to something that's much more efficient and global and instant. ⁓ And so money's going to flow onto blockchains via stable coins. So I believe

all this money that's floating around in the traditional financial systems are going to eventually run on blockchains via stablecoin.

Slava Rubin (04:51)

So some of our listeners are deep into crypto, others are afraid of it. Are they all going to be using stable coins?

Reeve Collins (04:59)

Well, look, to the listeners, to people who are afraid of it, let me recategorize it for you or put a different lens on it. You hear about this narrative, RWA's real world assets, and you hear about the narrative stable coins. All those are different formats of your traditional assets. So RWA's is all sorts of investments being tokenized. So it's the same investment, it's just formatted to work on a different infrastructure. That's all. Same thing.

Stablecoins, dollars, euros, yen, stablecoins is currency formatted to work on different rails. And so now you have RWAs and stablecoins, which is investments in cash, which make up basically the financial ⁓ ecosystem. Now they're formatted to work on a new ecosystem. This new ecosystem is a massive improvement from the old one, as we've shared. It connects the world. You don't need bank accounts. It's instant. It's much more efficient.

Isn't it a great thing to format all of these traditional things and put them on and upgrade the financial infrastructure? That's all RWAs and stable coins are. When they're like, I'm afraid of crypto, that's different. Because crypto, what really gets the attention of the world is all the speculative assets and the speculative nature and the meme coins and people making bunch of money. That's a lot of fun for a lot of people. That's not a stable coin, that's not an RWA, that's just...

Slava Rubin (06:19)

stable coin.

Reeve Collins (06:23)

one feature that you can do with crypto. You can create all these tokens and people can speculate on them. And that gets the hype. The meat, the real value is the underlying technology. And those who are very serious in the space that really want to make a change, that's what they focus on.

Slava Rubin (06:38)

When do you think my 73 year old mother, who's happy to use a credit card, uses a smartphone, uses email, but is not on Instagram or aggressively using technology, when do you think she's gonna interact with a stable coin, whether she knows it or not?

Reeve Collins (06:51)

Well, whatever,

absolutely. Soon, depends on what financial services she use. I've been telling people for years when they say, don't understand Bitcoin or blockchain, like, you don't need to. But if you use Wells Fargo or Bank of America, eventually, under the hood, they're going to run on some sort of blockchain.

Slava Rubin (07:08)

Let's say she uses those services. So when do think she'll interact with stablecoin, whether she knows it or not?

Reeve Collins (07:14)

don't know when those top tier services are going to upgrade their infrastructure, but there'll be a lot of other services that offer the exact same type of services, checking accounts, et cetera, but utilizing blockchain so it's much more efficient for them to...

Slava Rubin (07:27)

Do it's this year or do you think it's 2030?

Reeve Collins (07:31)

Yeah, for the large financial institution, it'll take a couple years.

Slava Rubin (07:34)

Couple years, awesome. So ⁓ one last point about this, some people have been saying that this is gonna be the year of stable coin, partially because of the regulatory clearances that have happened over the last several months. Can you just give us a double click on what's that all about?

Reeve Collins (07:48)

Yeah, so finally the government is leaning in to put some guardrails up on how crypto and stablecoins are going to be issued. The Genius Act has passed. So in the US, if you want to be Genius Act compliant, you have to back it with treasuries, has to be audited, and you have to do it from a regulated financial institution.

Slava Rubin (08:04)

back at it being a stablecoin.

Reeve Collins (08:06)

Back to stable coin, yeah. And then there's another act called the Clarity Act, which is interesting, which the debate and the reason it hasn't passed is because they don't want to pass the yield to the consumer. So they want the stable coin to work, but you can't share the yield with the consumer. And it's a really interesting debate, mainly because...

Slava Rubin (08:25)

It's otherwise known as like the interest from the bank account. Right. But instead here it's the yield from the stable coin.

Reeve Collins (08:31)

Exactly.

Exactly. There's an interest in bank account yield on stablecoin. The yield on the stablecoin is a lot higher and easier to provide to the consumer than the amount of interest you're getting on your checking account. ⁓

Slava Rubin (08:41)

And traditional finance is not really wanting to share that interest. ⁓

Reeve Collins (08:46)

Well,

they don't want a new product to come in that offers much higher interest that's more beneficial for the consumer because then the deposits will flow out of bank accounts into stable coins. So they want to kind of control that so it doesn't destabilize the banks because if all the money comes out, then the banks will have issues. But that's a funny point. That proves the case that stable coins or crypto is more efficient and better for the consumer if they're trying to throttle the shift.

Slava Rubin (09:14)

Amazing. So one of the amazing things about this podcast is our guests are willing to share about their own personal investment approaches. So the traditional philosophy on a portfolio is 60 % public equities, 40 % bonds, 0 % alts. I'm going to guess that is not your mix. So starting at the highest level, what would be your percentage of your net worth across public equities, bonds, and just alternatives as one big massive bucket? What would be those three numbers?

Reeve Collins (09:43)

Well, look, I've been in crypto for over 10 years. It's more than zero. It's more the opposite, right? I'm probably on this end of the risk spectrum. And so I got involved in crypto and over time that grows. And so as a percentage, it just kind of takes over their portfolio. And so I've just heavily invested in the crypto space over the years. And I dabble in traditional investments and I do have some real estate, but

Slava Rubin (09:46)

It's probably more than zero.

Reeve Collins (10:13)

but really the focus is on crypto.

Slava Rubin (10:15)

So let's just, again, let's start with those three numbers. So public equities, what percentage of 100 % do you think is public equities?

Reeve Collins (10:21)

Let's just say it's dominated by crypto.

Slava Rubin (10:24)

And then bonds is a zero.

Reeve Collins (10:27)

It's not zero, but really I focus on where I spend all of my time. I focus my investments there. And most of my investments are also in the companies that I'm personally involved in. Because I like to start companies and really kind of bring them.

Slava Rubin (10:42)

Which is another alternative investment. So inside the alternative investment world, there's crypto, there's real estate, private credit, art, collectibles, all these different things. Can you just give me a view into the alternative basket that you have ignoring the public markets and the bonds? Is it 90 % crypto inside your alt basket or is it 99 %?

Reeve Collins (11:05)

It's a good mix, let me just leave it at that.

Slava Rubin (11:09)

Okay, we're not letting you get away with this. So real estate, that ⁓ how much are you getting into real estate beyond just your own residence?

Reeve Collins (11:18)

Yeah, some investment real estate, what I appreciate more is building some houses and different things and some, ⁓ yeah, some.

Slava Rubin (11:28)

And are you looking there for the yield and for the steady ⁓ returns there? How are you thinking about real estate?

Reeve Collins (11:33)

For me, it's just definitely a nice alternative to crypto, something a more stable.

Slava Rubin (11:37)

Yeah.

Got it. And then how about like art or collectibles, anything like that? Even though you were big with NFTs.

Reeve Collins (11:42)

Not so much for me now.

Yeah, so the digital collectible. But for me, what I was passionate about is the innovation of the technology and enabling people to represent something physical digitally. An NFT, this non-fungible token, a highly programmable digital good, something that can bring more value to that real world object. And NFTs kind of got a bad rap because they're like, oh, let's speculate on these images. And so it turned out to be a new way to gamble online.

which is buying NFTs and everyone piling and the prices go up and down. But the underlying technology has a ton of utility and a ton of use case, and you'll see more and more of them come out above and beyond just speculation.

Slava Rubin (12:25)

So yesterday I had two guests on, a little bit more TradFi. They ⁓ manage tens of billions of dollars. I asked them if they had crypto in their portfolio and they had a resounding no. So you are resounding yes. So I need to double click here a little more as to how you diversify inside the world of crypto.

Most people, they're just like, do you buy Bitcoin or not? I imagine you have much more diversification besides just the word Bitcoin. So how do you think about allocating your crypto investments? How do you think about, let's call it speculation, high growth versus more stable? This is not a conversation I could have with most people. So I would love to hear your thoughts on how you diversify inside the world of crypto.

Reeve Collins (13:05)

Yeah, they're great questions and for investors, you really have to go what suits your personality and your belief system and what makes you excited, but most importantly comfortable, right? So don't get out of your comfort zone. And that's what I always tell people when they ask me about crypto. I do say buy Bitcoin and I always have, but I have been consistently saying buy Bitcoin for over a decade. And that's as far as I go when it goes to giving any investment advice. And why is that? Because I believe, right? I'm a believer in crypto.

Slava Rubin (13:34)

None of this is investment advice. This is all for entertainment. Yes. information.

Reeve Collins (13:38)

Yeah,

well, and it's just stuff that I stay away from in typical dialogue because I obviously am a big proponent of crypto and I understand the underlying technology and to me it is going to upgrade the global financial infrastructure and we're on the precipice of that because of what you mentioned earlier, regulation. Regulation is finally coming that's going to allow the institutions to get involved. Institutions would like to

run their business more efficiently. They would like more distribution. They would like to be able to sell their products outside of their geographical borders. Blockchain offers all of that. The only reason they weren't doing it is because it was unproven, but really they would have gotten in trouble. The regulation wasn't there. So the money's sitting on the sidelines. It's ready to enter this system as soon as the guardrails are put in place. And when it comes to investment, again, it's so personal.

Personal, to me, we still don't know which blockchain is going to get the lion's share of all those, of those dollars or which RWA platform or which stable coin, but to the consumer, from a benefit perspective, it doesn't matter. What matters is that they're going to get better services. What matters is that financial services are now going to be accessible to more people around the world than ever before and high quality investments. Because the tokenization of all of these traditional investments,

enable those companies to offer them much more cheaply, therefore they don't need such high minimums, and it enables the rest of world to access them. Most importantly on that point, when we think about where we're going with AI and what's going to happen, what the future looks like with AI, the only way AI is going to be able to interact on your behalf and do transactions and do investments is via blockchains and stablecoins.

Slava Rubin (15:35)

mini micro payments.

Reeve Collins (15:37)

Well, micro payments or large payments. So you need blockchains, need stable coins, you need RWAs. Because if you want an AI to buy 10,000 different investments at a dollar a piece or $10,000 a piece, or even five different investments, and it all has to be on a blockchain. Got it. So that's why this underlying technology is so important. So when your friends are like, we don't hold crypto at all, it's a little short-sighted in my opinion.

Slava Rubin (15:51)

transaction cost has to be low.

Reeve Collins (16:04)

because I feel like they're just thinking of the headlines of meme coins and NFTs and scams and this and that, which is, like I said, the speculative nature and gets the publicity, but it's not the underlying technology, which is where all the money's gonna be flowing due to RWA's stable coins and AI.

Slava Rubin (16:24)

Awesome.

How about the layer ones? mentioned this, like the blockchains, Ethereum, Solana, others. ⁓ How do you think about allocating there across the portfolio?

Reeve Collins (16:33)

It depends on which community resonates with you more because each one does like confirms transactions a little more differently. And if you feel that that's the future, then then dive in there and they attract communities. And so that's the best way to do your investments, like do your research and see which one resonates with you.

Slava Rubin (16:51)

Awesome.

So what do you think of today's market, today's economy, today's Bitcoin? That's an open-ended question. Give me a few minutes on just what does Reeve think about where we're at today.

Reeve Collins (17:04)

It's really interesting. I was on CNBC the other day and they asked me kind of similar questions of, Bitcoin is so low, except for you guys, you guys. The industry has just gotten pretty much all the things it wanted, which is regulation and the government's paying attention. And it's true. And it's very interesting, this disconnect that we're seeing right now due to what I'm seeing in the industry from governments and institutions, which is more interest than ever. They really do want to utilize this technology for the reasons I shared before.

it allows them to do more business. ⁓ And so there's more interest from the biggest players on the planet, yet the price is down. And so the price is down due to just overall global economic kind of fear and risk and instability that's going on right now. And that's really impacting Bitcoin. But I do think it's just this, to me, a strange disconnect where the price is versus the promise of the underlying technology where it's at today.

Slava Rubin (18:02)

So Bitcoin narrative for a while has been about being a store of value. Gold has had a longer narrative as a store of value. Gold has really seen a huge uptick in 25 and even in 26. It seems to have split with Bitcoin kind of going down while gold goes up. What's your point of view on where that's at? Is that going to converge back together? Is it going to stay fractured? What's your point of view on that?

Reeve Collins (18:27)

Well, you bring up a great point with gold. know, the analogy a lot of times is Bitcoin's digital gold and there's physical gold and Bitcoin has all these other characteristics that make it better. What I believe is going to happen very soon is gold is going to take on those exact same characteristics. Because of this RWA narrative, meaning tokenization, gold will be tokenized. There are a couple of companies doing it now and a lot of entrance into that space, making it super efficient to represent gold on a blockchain.

and then back currencies, back a stablecoin with gold. So you'll have a gold-backed stablecoin. So for the individuals or countries that don't want to utilize dollar-backed stablecoins or their local currency-backed stablecoins, they can use a commodity such as gold to back the currency that they're transacting with. And the reason why that's so important is because it adds more utility to an asset. So when you add more utility to something, the price goes up. And so I believe gold is obviously going to continue to be strong.

But I think that the tokenization and the utilization of gold on blockchains and within the crypto ecosystem is going to continue to add value to that asset class.

Slava Rubin (19:35)

Wow, okay, that was all an awesome point. Quite bullish on gold there, especially as it becomes digitized. So if you only have to pick one, and I you're gonna say both have value, but I'm gonna put you on the spot. You can put $100 today into digitized gold or into Bitcoin for a 10-year hold. Which one are you putting in today?

Reeve Collins (19:54)

Well, for me, would be Bitcoin all the way. Why? Because I am more in the risk bucket. And so to me, the upsides just gets me more excited and interested. Right. Other people are more conservative. They might be like, well, gold's got more of a history. I really know it's always going to be there. so but that's so that's my personal.

Slava Rubin (19:56)

Why is that?

Awesome. We're going to do lightning round on a few questions about the market. So just your quick opinions. So a year from now, I have you back. You're nice enough to come back. Are we in a recession in the United States? Yes or no?

Reeve Collins (20:25)

I think AI, yes or no, no.

Slava Rubin (20:29)

No. Okay. ⁓ inflation, is it up, down or flat? And why is that?

Reeve Collins (20:38)

⁓ I just think that the way that ⁓ our current monetary policy is going, it'll just...

Slava Rubin (20:45)

Give me some directionality. How much up is it?

Reeve Collins (20:48)

Not much, here's what I believe. I would like to say it's down, but I just think that the continuation of printing money is just, it's not gonna stop.

Slava Rubin (20:57)

which goes to the next question, which is interest rates up, down, or flat 12 months from now.

Reeve Collins (21:02)

⁓ I'd say they're up as well. Look. Yeah. ⁓

Slava Rubin (21:04)

Interest rates are up. That's a hot take. Even

though Trump's getting a new Fed chair, interest rates are gonna be up.

Reeve Collins (21:13)

Well, in one year from now, the midterms will be over. Correct. And so we'll see what's going to happen after that.

Slava Rubin (21:20)

that's a hard take, so up by how much?

Reeve Collins (21:22)

I can't say, but just directionally.

Slava Rubin (21:24)

I love it. This is great. ⁓ How about unemployment? Up, down, or flat?

Reeve Collins (21:30)

Unemployment will be down. I'm sorry, unemployment, yes, will be up.

Slava Rubin (21:32)

down.

So unemployment will be up. Is this because of AI taking jobs? Yes. So any directionality about how much?

Reeve Collins (21:42)

Not really, but it's going to be a painful transition for AI to take over everything. So there will be unemployment because people just won't be hiring as much. And then eventually, the AI will take off and produce goods less and the economy will really benefit and the individuals will benefit. But I do think there's going to be a dip and people will feel the pain for a while, which is unfortunate. But it's a big transition that we're going to be facing.

Slava Rubin (22:05)

I appreciate the opinions, very clear. Stock market, up, down, or flat a year from now? Up. Any sense on amount? Are we talking 5%, 8%, 20 %? Alright. And then, Bitcoin.

Directionality are we talking it broke 70 or we are back into six digits?

Reeve Collins (22:26)

I would hope above 100. That's my prediction.

Slava Rubin (22:29)

Right,

nice. Well, thank you for being so clear. ⁓

What is it about ⁓ stable coin that the lay listener needs to know that you with your decade plus of experience already see and know that you just want to share with them that given that how much of an expert you are.

Reeve Collins (22:54)

Don't be afraid of it. Don't be afraid of RWA's of stable coin and of crypto. As I shared, it's just a different formatting of traditional assets being utilized on a different new infrastructure. And so when I say all transactions will be done in stable coins, it still might look like dollars in your bank account, but it will just run on some sort of blockchain. And so right now that definition is that would be a stable coin because it runs on a blockchain. And so I believe most transactions and most

Currencies and flows will happen on some form of blockchain because it's an upgrade. It's more efficient It's better than the traditional system and when the regulations get in place in the large institutions are be are going to be able to use it Then it's just switching the plumbing So for the most part in the next year two three people won't talk so much about is it crypto is a blockchain They're gonna be focused on I want to do transactions their AI is going to do the transactions in the fastest cheapest more efficient way for them

And so it won't matter how it's done because it'll just be done in the safest manner.

Slava Rubin (23:57)

Perfect. And can you just give us a perspective on the size of tether in terms of volume or how much is transacted?

Reeve Collins (24:03)

So

today Tether, think it's market cap and its market cap is much more different than most market caps, but it has a hundred and I'd say 83 billion, I think is the latest number of cash. $183 billion of cash, cash equivalents in bank accounts around the world and investments that back it. Most other cryptocurrencies, their market cap is their token price. Right. Times the tokens in float, right? It doesn't equal dollars in a bank account. So Tether's market cap is much more powerful. Any stable coin companies market cap.

Slava Rubin (24:13)

83 billion.

Reeve Collins (24:33)

is the amount of money of reserves they have on hand, which is much different than just a token price times float.

Slava Rubin (24:39)

Yeah, I just want to make sure the listeners know that ⁓ you don't have a little bit of experience. You have $183 billion of usage of ⁓ experience. ⁓ Awesome. So the final question, ⁓ for three years out, we always like to put our guests on the spot for ⁓ an opinion as to what's a really interesting company in the public markets to invest into and what's an interesting opportunity in the non-public markets, i.e. the private markets. So can you give us one company for the public markets and why you like that one? Again, not financial advice.

This is just for information and entertainment.

Reeve Collins (25:10)

I like in the public markets, know, I'm going to keep it so basic and simple and just stick with like Amazon. Okay. Right. I just infrastructure for the world. It's in my point, logistics and delivery and like it's just that's going to get more and more important as we get more digital and as people probably travel less and need things delivered to them more.

Slava Rubin (25:32)

So you could have picked a lot of the Mag 7, you could have picked a lot of big companies, but you picked Amazon, so you obviously think it's a bit undervalued. Give us a little bit more why Amazon?

Reeve Collins (25:40)

Over time and look for me, focus my, ⁓ I don't do deep investment in a lot of categories. Like I'm more build the technology side and why do I like Amazon? Because it's something that has.

been so ubiquitous around the world and the level of service that it provides. I think it will continue to innovate and grow over time. And it will probably be able to apply AI better than other companies because these companies that have these large infrastructures when they apply technology the best because they already have the distribution will extract the most value. And so I think Amazon will continue to do amazing things.

Slava Rubin (26:16)

Awesome. And then in the non-public markets, anything across crypto, pre-IPO, real estate, you name it, you can pick any of the assets.

Reeve Collins (26:25)

Well, I do encourage everyone to lean into crypto, even if they're afraid of it. Just buy a dollar, a hundred dollars, whatever dollar amount of Bitcoin. Perfect. Because then they're involved. Again, I've been saying that forever because I just want people to at least understand what a wallet is, understand how digital currencies operate, because it's not going away. It's just growing and getting bigger and everything will start melding into one. Your bank account will have a cryptocurrency, will hold cryptocurrencies at some point.

And so it's nice to at least have familiarity with them.

Slava Rubin (26:57)

This was an amazing conversation. You were so honest, so direct, so much conviction. I appreciate you taking the time and it's incredible what you've accomplished with Tether and everything else that you've been working on. So thank you so much for being here.

Reeve Collins (27:09)

Thank you.

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