Q1 2024 Galaxy Digital Holdings Ltd Earnings Call

Operator: Good morning, and welcome to Galaxy's first quarter 2024 earnings call. Today's call is being recorded. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. At this time, I would like to turn the conference over to Jonathan Goldowsky, Head of Investor Relations. Please go ahead.

Good morning, and welcome to Galaxy's first quarter 'twenty 'twenty four earnings call.

Today's call is being recorded after today's presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two at this time I would like to turn the conference over to Johnson Goldovsky.

Jonathan Goldowsky: <unk> of Investor Relations. Please go ahead.

Jonathan Goldowsky: Good morning, and welcome to Galaxy's first quarter 'twenty 'twenty four earnings call before we begin. Please note that our remarks today may include forward looking statements.

Jonathan Goldowsky: Good morning, and welcome to Galaxy's first quarter 2024 earnings call. Before we begin, please note that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory Authority on CDAR Plus and available on our website or in future filings we make with other securities regulators. Forward-looking statements speak only as of today and will not be updated.

Jonathan Goldowsky: Actual results may differ materially from those indicated or implied by our forward looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory authority on SEDAR, plus and available on our web site or in future filings, we make with other securities regulators.

Speaker Change: Forward looking statements speak only as of today and will not be updated.

Jonathan Goldowsky: In addition, none of the information on this call constitutes a recommendation, solicitation, or offer by Galaxy or its affiliates to buy or sell any securities, including Galaxy Securities. With that, I'll turn it over to Chris Ferraro, President and CIO of Galaxy.

Speaker Change: In addition, none of the information on this call constitutes a recommendation solicitation or offer by galaxy or its affiliates to buy or sell any securities, including Galaxy securities with that I'll turn it over to Chris Ferrara, President and CIO of Galaxy.

Christopher C. Ferraro: Thanks, Jonathan.

Christopher C. Ferraro: Well, we're changing things up a little this morning, so I'll start by wishing everyone a good morning from sunny New York. Before I jump into our business results and performance, I want to spend a few minutes discussing the recent equity capital raise we completed last month. Over the past several months, we have seen a confluence of sizable growth opportunities across our business amidst a backdrop of accelerating digital asset adoption globally. And in mid-April, we executed a strategic equity capital raise of $125 million to help us capitalize on these trends.

Christopher C. Ferraro: Or change it up a little this morning, so I'll start by wishing everyone. A good morning from Sunny New York.

Christopher C. Ferraro: Before I jump into our business results and performance I want to spend a few minutes discussing the recent equity capital raise we completed last month.

Christopher C. Ferraro: Over the past several months, we've seen a confluence of sizable growth opportunities across our business amidst the backdrop of accelerating digital asset adoption globally and in mid April we executed a strategic equity capital raise of $125 million U S to help us capitalize on these trends.

Christopher C. Ferraro: In our global markets business, the opportunity set has expanded dramatically. Client Spot and Derivative Flow Volumes, Position Financing, Asset Sales Syndications, and On-Chain Liquidity Pool Provisioning, just to name a few, have all begun to show strong recurring demand growth. In addition, and consistent with our platform objectives, we recently crossed $8 billion in trailing 12-month notional of over-the-counter derivatives traded, requiring us to register as a swap dealer in the U.S. and comply with a new set of regulatory requirements.

Speaker Change: In our global markets business the opportunity set has expanded dramatically.

Speaker Change: Client spot and derivative slow volumes position financing asset sale syndications, and unchain liquidity pool provisioning just to name a few have all begun to show strong recurring demand growth.

Speaker Change: In addition, and consistent with our platform objectives, we recently crossed $8 billion in trailing 12 month notional over the counter derivatives traded requiring us to register as a swap dealer in the U S and comply with a new set of regulatory requirements.

Christopher C. Ferraro: These obligations will drive additional operating expenses and capital requirements, but importantly, will enable us to provide increasingly larger institutional clients an opportunity to engage with us in an established and regulated trading business, a format that many of the world's largest asset managers, hedge funds, and allocators already operate within and, in fact, require at scale. And you don't have to just take our word for it.

Speaker Change: These obligations will drive additional operating expenses and capital requirements, but importantly will enable us to provide increasingly larger institutional clients an opportunity to engage with us in established and regulated trading business a format that many of the world's largest asset managers hedge funds and allocators already operate within and in fact require at scale.

Speaker Change: And you don't have to just take our word for it in the preceding months the trading desk carefully manage its derivatives business opportunities, allowing the necessary time to implement its swap dealer framework prior to exit are exceeding the de minimis threshold.

Christopher C. Ferraro: In the preceding months, the trading desk carefully managed its derivatives business opportunities, allowing it the necessary time to implement its swap dealer framework prior to exceeding the de minimis threshold. Post-exceeding the $8 billion threshold, we have seen a significant uptick in client activity, leading to an approximate 25% increase in notional derivative volumes relative to the 12-month period prior to crossing. Outside of the U.S., we are pursuing various sets of licenses to operate client businesses in Europe and Asia to bolster our product and service offerings in two regions that are experiencing meaningful growth and adoption of digital assets.

Speaker Change: Post exceeding the $8 billion threshold, we have seen a significant uptick in client activity, leading to an approximate 25% increase in notional derivatives volumes relative to the 12 month period prior to crossing.

unknown: Outside of the U S. We are pursuing various sets of licenses to operate client businesses in Europe, and Asia to bolster our product and service offerings in two regions that are experiencing meaningful growth and adoption of digital assets.

Christopher C. Ferraro: In addition to expanding our business operations in the U.S. and internationally, we are also investing a portion of the capital we raised in the next phase of the expansion of the Helios Mining Facility's infrastructure, which I'll provide more detail on in a few minutes. We are expecting returns on these investments to be well above our cost of capital, which we believe will drive significant shareholder value over the long term. Finally, Galaxy has a six-plus-year track record of being good stewards of our balance.

Speaker Change: And in addition to expanding our business operations in the U S and internationally. We are also investing a portion of the capital we raised in the next phase of expansion of the Helios mining facilities infrastructure, which I'll provide more detail on in a few minutes.

unknown: We are expecting returns on these investments to be well above our cost of capital, which we believe will drive significant shareholder value over the long term.

unknown: Finally galaxy has a six plus year track record of being good stewards of our balance sheet.

Christopher C. Ferraro: Over the past two years, while some of our peers have raised billions of dollars through at-the-market offerings to scale their businesses, Galaxy has repurchased approximately 12 million shares of our stock at an average price of $6.44 Canadian and leveraged the gains on our investments, digital assets, and operating businesses to fund our growth. The roughly 12 million shares we repurchased over the past two years and just reissued to the market through this most recent equity raise represent a return on investment of over 100%. Now, while we absolutely do not intend to prioritize trading our stock with investors for profits, we do recognize more than anyone the cost of not myopically and maniacally focusing on building an industry-leading franchise.

unknown: Over the past two years, while some of our peers have raised billions of dollars through at the market offerings to scale their businesses Galaxy had repurchased approximate 12 million shares of our stock at an average price of $6 44, Canadian and leverage the gains on our investments digital assets and operating businesses to fund our growth.

Galaxy: The roughly 12 million shares we repurchased over the past few years and just reissue to the market through this most recent equity raise represents a return on investment of over 100%.

unknown: Now, while we absolutely do not intend to prioritize trading our stock with investors for profits, we do recognize more than anyone the cost of not myopically in maniacally focusing on building an industry leading franchise, we have employed capital markets activities when either the returns of our stock were unavoidably attractive or when the opportunity set to grow our business with.

Christopher C. Ferraro: We have employed capital market activities when either the returns of our stock were unavoidably attractive or when the opportunity set to grow our business was unavoidably rich, as it is now. Moving on to our first quarter results, let's start with global markets. Our trading desk strategically positioned itself to be a beneficiary of the positive momentum in market conditions and digital asset prices throughout the first quarter, generating $66 million in counterparty trading revenue in Q1.

unknown: Rich as it is now.

Christopher C. Ferraro: This 79% increase quarter over quarter was primarily driven by continued growth in our derivatives book, where we earned more revenue in one Q24 than we did in all of 2023. In line with this increase in revenue, we also saw counterparty trading volumes increase 78% quarter over quarter. Our desks continue to onboard new counterparties, bringing our total count to over 1,160 at the end of March.

Speaker Change: Moving on to our first quarter results, let's start with global markets.

Speaker Change: Our trading desk strategically positioned itself to be a beneficiary of the positive momentum in market conditions and digital asset prices throughout the first quarter generating $66 million in counterparty trading revenue in Q1.

Speaker Change: This 79% increase quarter over quarter was primarily driven by continued growth in our derivatives book, where we earn more revenue and <unk> 24 than we did in all of 2023.

Speaker Change: In line with this increase in revenue. We also saw a counterparty trading volumes increased 78% quarter over quarter.

Speaker Change: Our desk continued to onboard new counterparties, bringing our total count to over 1160 at the end of March.

Christopher C. Ferraro: This continued growth in client trading volumes and engagements with our desk is confirmation that Galaxy is earning more wallet share amongst our existing clients and that we're becoming the trusted partner to new institutional asset managers and hedge funds as they begin to enter the space. Our lending business has also been a beneficiary of increased institutional activity, with our average loan book size growing to $664 million, up 5% quarter over quarter. And we continue to make meaningful progress on the build of Galaxy One, our institutional client platform, and ended Q1 with approximately 75 clients with over $1 billion of fair market value assets being serviced by the platform.

Speaker Change: This continued growth in client trading volumes engagements with our desk as confirmation that galaxies, earning more wallet share amongst our existing clients and that we're becoming the trusted partner to new institutional asset managers and hedge funds as they begin to enter the space.

Speaker Change: Our lending business has also been a beneficiary of increased institutional activity with our average loan book size growing to $664 million up 5% quarter over quarter.

Galaxy representative: And we continue to make meaningful progress on the build of Galaxy, one our institutional client platform and ended Q1 with approximately 75 clients with over $1 billion of fair market value assets being serviced by the platform.

Christopher C. Ferraro: Moving on to our other segment of the Global Markets Business, Investment Banking, our team successfully closed one deal in the quarter, having served as an advisor to CryptoSlam, the leading aggregator of NFT data across blockchain ecosystems, which received a strategic investment from Spirit Blockchain Capital. In Q1, rising crypto market optimism spurred M&A interest, with even traditional non-crypto firms looking at M&A opportunities to enter the space at scale. On the capital markets front, we are seeing a tail of two markets.

Speaker Change: Moving onto our other segment of the global markets business, our investment banking business.

Speaker Change: Our team successfully closed one deal in the quarter, having served as an advisor to crypto slam the leading aggregator of N F. T data across blockchain ecosystems, who received a strategic investment for spirit blockchain capital.

Speaker Change: In Q1, rising crypto market optimism spurred M&A interest with even traditional non crypto firms looking at M&A opportunities to enter the space at scale.

Speaker Change: The capital markets front, we are seeing a tale of two markets strong valuations for tokens in early stage races reminiscent of 2021 while generalist investors have not yet returned to growth stage companies.

Christopher C. Ferraro: Strong valuations for tokens in early stage raises are reminiscent of 2021, while generalist investors have not yet returned to the growth stage. Our expectation is that capital deployment and acquisition appetite will increase with a prolonged positive market sentiment, which we anticipate will drive pipeline monetization for the business and growth in the second half of the year and into 2025. Turning to our asset management business, we ended the first quarter with $7.8 billion of assets under management, a 50% increase quarter over quarter.

Speaker Change: Our expectation is that capital deployment and acquisition appetite will increase with a prolonged positive market sentiment, which we anticipate will drive pipeline monetization for the business and growth in the second half of the year and into 2025.

Speaker Change: Yeah.

Christopher C. Ferraro: This increase in AUM was primarily driven by GAM being awarded an additional mandate in the FTX bankruptcy process, net inflows into our global range of ETFs, and market appreciation. As I mentioned on our last call, over the past few months, Galaxy's asset management's mandate to monetize FTX Estates' digital asset holdings for creditors has increased in both scope and complexity. In addition to managing certain assets within FTX's liquid portfolio, as well as various trust assets, in January, we were awarded a third mandate to wind down the estate's sizable locked token position. In the first quarter, we kicked off the first of many dispositions of those locked assets.

Speaker Change: Turning to our asset management business we.

Speaker Change: We ended the first quarter with $7.8 billion of assets under management, a 50% increase quarter over quarter.

Gam: This increase in AUM was primarily driven by Gam being awarded an additional mandate in the F. T X bankruptcy process net inflows into our global range of Etfs and market appreciation.

Speaker Change: As I mentioned on our last call over the past few months galaxy's asset management's mandate to monetize F. T X the state's digital asset holdings for creditors has increased in both scope and complexity.

Speaker Change: In addition to managing certain assets within F T X as liquid portfolio as well as various trust assets in January we were awarded a third mandate to wind down these states sizable locked token positions.

Speaker Change: The first quarter, we kicked off the first of many dispositions of those locked assets and although this brought our AUM down from a record $10 1 billion in February the decrease in assets is a reflection of the team's successful execution in aiding creditors in reclaiming their funds.

Christopher C. Ferraro: And although this brought our AUM down from our record $10.1 billion in February, the decrease in assets is a reflection of the team's successful execution in aiding creditors in reclaiming their funds. Additionally, the associated fees were meaningful revenue drivers for the business, as evidenced by a 113% increase in GAMS management fees quarter over quarter. As of quarter end, the value of assets tied to the various FTX mandates we are managing was $3.4 billion.

Speaker Change: Additionally, the associated fees were meaningful revenue drivers for the business as evidenced by a 113% increase in games management fees quarter over quarter.

The team: As of quarter end the value of assets tied to the various F. T X mandates, we are managing was $3 $4 billion.

Christopher C. Ferraro: Although the assets under management and fees tied to the FTX mandates will decrease over time as we continue to monetize the portfolio, we are the only firm with a proven track record of executing a multi-billion dollar complex bankruptcy mandate in the crypto space, which we believe has bolstered our franchise value significantly. Building on GAM's existing partnership footprint in Canada, the U.S., and Brazil, on April 4th, GAM announced the European launch of Bitcoin and Ethereum ETPs with DWS Group's X-Tracker French.

Speaker Change: Although the assets under management and fees tied to the F. T X mandates will decrease over time as we continue to monetize the portfolio. We are the only firm with a proven track record of executing a multibillion dollar complex bankruptcy mandate in the crypto space, which we believe has bolstered our franchise value significantly.

Gamut: Building on games existing partnership footprint in Canada, The U S and Brazil on April 4th Gamut announced the European launch of Bitcoin and a theory M E T PS with dws groups ex tracker franchise.

Christopher C. Ferraro: X-Trackers is a leader in ETFs globally with $200 billion in AUM, and we couldn't be more excited to scale and grow these products. Finally, on the venture side of our business, we are currently raising external capital for our inaugural crypto venture fund. As you recall, in 2023, our proprietary crypto venture franchise moved into the asset manager with the intention of opening that investing program to external LPs. We are currently raising capital for this inaugural vehicle, which will complement our existing interactive and crypto fund-to-fund franchise.

Speaker Change: X trackers as a leading is a leader in Etfs globally with $200 billion in AUM and we couldnt be more excited to scale and grow these products together.

Gamut: Finally on the venture side of our business. We are currently raising external capital for our inaugural crypto venture funds.

Gamut: As you recall in 2023, our proprietary crypto venture franchise moved into the asset manager with the intention of opening that investing program to external L. PS.

Speaker Change: We are currently raising capital for this inaugural vehicle, which will complement our existing interactive and crypto fund of fund franchises.

Speaker Change: We think the market opportunity for the fun is $150 million to $200 million and institutional interests from the allocator community early on has been stronger than expected. We are on schedule for a quick first close in Q2.

Christopher C. Ferraro: We think the market opportunity for the fund is $150 to $200 million, and institutional interest from the allocator community early on has been stronger than expected. We are on schedule for a quick first close in Q2.

Christopher C. Ferraro: Galaxy Asset Management is well positioned to leverage its strong track record to capture new institutional demand in this next wave of growth. With over $2.7 billion in passive AUM, $3.6 billion in active AUM, and $1.5 billion in venture, Galaxy is one of the largest and fastest growing digital asset managers globally. And finally, turning to our Digital Infrastructure Solutions business, our mining team continues to demonstrate success in operating and managing the Helios facility and, in the first quarter, reported record revenue of $31.5 million.

Adventure Galaxy: Yeah, I'll see asset management is well positioned to leverage its strong track record to capture new institutional demand in this next wave of growth with over $2 7 billion and passive AUM $3 6 billion and activate U M. At 1.5 billion adventure Galaxy is one of the largest and fastest growing digital asset managers globally.

Adventure Galaxy: And finally, turning to our digital infrastructure solutions business. Our mining team continues to demonstrate success in operating in scaling the Helios facility in the first quarter reported record revenue of $31 $5 million. This represents a 69% increase quarter over quarter and an over 200% increase when compared to the same.

Christopher C. Ferraro: This represents a 69% increase quarter over quarter and an over 200% increase when compared to the same quarter last year. For the first quarter, our power purchase costs and external hosting expenses, net of curtailment credits, were approximately $15 million, resulting in a 52% direct mining profit. Our strong mining margin quarter-over-quarter continues to position us as a leading Bitcoin miner globally. We maintain a low-average marginal cost to mine of less than $19,500 per Bitcoin, with the quarter-over-quarter increase driven primarily by all-time high network difficulties.

Adventure Galaxy: Quarter prior year.

Mining Team: For the first quarter, our power purchase cost and external hosting expenses net of curtailment credits were approximately $15 million, resulting in a 52% direct mining profit margin.

Mining Team: Our strong money margin quarter over quarter continues to position us as a leading bitcoin minor globally.

Mining Team: We maintain a low average marginal cost of mine of less than $19500 per bitcoin with the quarter over quarter increase driven primarily by all time high network difficulty.

Christopher C. Ferraro: As everyone already likely knows, the Bitcoin halving occurred on April 19th, resulting in the Bitcoin block subsidy dropping from 6.25 to 3.125 Bitcoin roughly every 10 minutes when a new block is mined. All else being equal, this means that, predictably, the first posthalving block reduces the block subsidy portion of the block reward by 50%.

Mining Team: As everyone already likely knows the bitcoin having occurred on April 19th resulting in the bitcoin block subsidy dropping from 6.25 to $3 125, Bitcoin roughly every 10 minutes when a new block is found.

Mining Team: All else being equal this means that predictably the first post having block reduces the block subsidy portion of the block reward by 50%.

Christopher C. Ferraro: From there, there are several factors that impact the collective industry's go-forward profitability, including transaction fees, Bitcoin price, network difficulty, machine efficiency, and energy prices. So, what does this mean for Galaxy? Well, to give everyone a tangible sense, our preliminary mining gross profit for April, which included 19 days pre-halving and 11 days post-halving, was still largely in line with our March profitability. While we do acknowledge that heavy on-chain fee activity did help to offset much of the halving impact and are generally less predictable today, as we've discussed, Galaxy's mining assets also benefit from an attractive power market and our proprietary Active Power Management software, And also helpful, the first post-happiness Bitcoin network difficulty adjustment occurred on May 9th and resulted in a 6% downward adjustment in line with our previous expectations.

Galaxy Money: From there there are several factors that impact the collective industries go forward profitability, including transaction fees Bitcoin price network difficulty machine efficiency and energy prices. So what does this mean for galaxy money.

Galaxy Money: Well to give everyone a tangible sense our preliminary gross.

Mining Team: Mining gross profit for April which included 19 days pre having an 11 days post having was still largely in line with our March profitability.

Mining Team: While we do acknowledge that heavy on chain fee activity did help to offset much of the having impact and are generally less predictable today as we've discussed galaxy's mining assets also benefit from an attractive power market and our proprietary active power management software, which allows us to adjust our operations based on real time profitability in either mine bitcoin or curtail.

Mining Team: And also helpful. The first post having bitcoin network difficulty adjustment occurred on may 9th and resulted in a 6% downward adjustment in line with our previous expectations.

Christopher C. Ferraro: In the first quarter, we continued to add both proprietary and hosted hashrate, bringing total hashrate under management to 5.7 exahash per second, representing nearly 1% of the entire Bitcoin network. Helios currently has 180 megawatts of energized mining capacity, and we have started construction on the next phase of our substation to bring on an additional 300 megawatts of high voltage capacity in the third quarter of next year. We believe this project in itself will add significant incremental value to our asset base and will set the foundation for our growth opportunities at Helios, while we monitor the Bitcoin mining and capital market conditions closely to determine how best to prudently expand our operating data center capacity in the future.

Mining Team: In the first quarter, we continued to add both proprietary and hosted hash rate, bringing total hatchery under management to 5.7 exit has per second representing nearly 1% of the entire bitcoin network.

Mining Team: Helios currently has 180 megawatts of energized mining capacity and we have started construction on the next phase of our substation to bring on an additional 300 megawatts of high voltage capacity in the third quarter of next year.

Mining Team: We believe this project itself will add significant incremental value to our asset base and will set the foundation for our growth opportunities at Helios, while we monitor the bitcoin mining and capital market conditions closely to determine how best to prudently expand our operating data center capacity in the future.

Christopher C. Ferraro: Development of that substation capacity is well underway. We have already purchased and taken delivery of some of the long-lead time electrical infrastructure, including four main power transformers, which are fully paid for and already installed at the Helios substation. We're also excited to share that in Q1, we purchased an additional 160 acres of land adjacent to Helios. This gives us the optionity to further scale our mining operations but also to opportunistically pursue other high-power computing business models that rely on access to quality infrastructure and inexpensive power.

Mining Team: Development of that substation capacity is well underway, we have already purchased and taken delivery of some of the long lead time electrical infrastructure, including four main power Transformers, which are fully paid for and already installed at the Helio substation.

Speaker Change: We're also excited to share that in Q1, we purchased an additional 160 acres of land adjacent to Helios.

Speaker Change: This gives us the optionality to further scale, our mining operations, but also to opportunistically pursue other high power computing business models that rely on access to quality infrastructure and inexpensive power.

Christopher C. Ferraro: Our blockchain infrastructure business beyond Bitcoin mining also had a strong quarter and continues to position Galaxy as one of the most trusted nodes in the decentralized ecosystem. Our assets under stake doubled relative to the prior quarter to reach $486 million. And as I previewed on the last earnings call, we had line of sight to scale this number further, and I'm now pleased to share that as of April 30th, our assets under stake have grown to $1.5 billion, with Galaxy growing to become the number two validator globally on the Solana network.

Galaxy: Our blockchain infrastructure business beyond Bitcoin mining also had a strong quarter and continues to position Galaxy is one of the most trusted nodes in the decentralized ecosystem.

Speaker Change: Our assets understate doubled relative to the prior quarter to reach $486 million and as I previewed on the last earnings call. We had line of sight to scale. This number further and I'm now pleased to share that as of April 30th our assets under stake has grown to $1 $5 billion with galaxy growing to become the number two validate or globally on the Salon and network.

Christopher C. Ferraro: The performance of each of our operating businesses this quarter highlights how our diversified business model is uniquely positioned to benefit from the institutional capital we are seeing begin to flow into the economy. My conviction in what we have built at Galaxy and our ability to execute has never been higher. I'll now turn the call over to Alex to discuss the financial results, and then he'll turn it over to Mike to close.

Speaker Change: The performance of each of our operating businesses. This quarter highlights how our diversified business model is uniquely positioned to benefit from the institutional capital. We are seeing begin to flow into the ecosystem.

Speaker Change: Conviction in what we have built at Galaxy and our ability to execute has never been higher I'll now turn the call over to Alex to cover financial results and then he'll turn it over to Mike to close Us Alex Yeah. Thank you Chris Good morning.

Alex: Thank you, Chris. Good morning. We had a great quarter. We reported net income of $422 million, up $120 million quarter over quarter and an increase of $287 million compared to the same quarter last year. This was primarily driven by market appreciation and growth in our operating business. Chris covered most of this, but I want to highlight a few key trends.

Alex: We had a great quarter, we reported net income of $422 million up $120 million quarter over quarter, and an increase of $287 million compared to the same quarter last year.

Alex: This was primarily driven by market appreciation and growth in our operating businesses.

Michael Edward Novogratz: Chris covered most of it.

Alex: To highlight a few key trends.

Alex: First, in this past quarter, we had the launch of the Spot Bitcoin ETF in the U.S., which facilitated adoption of the largest crypto asset by mainstream investors. However, we believe full-scale adoption of the Bitcoin ETF will take time to propagate. And it is the beginning of a multi-year cycle with institutional allocators and wealth platforms. We expect there to be market retrenchments along the way, but we believe that the demand for this product will continue to increase.

Michael Edward Novogratz: In this past quarter, we had the launch of the spot Bitcoin E T F in the U S.

Michael Edward Novogratz: Which facilitated adoption of the largest crypto asset by mainstream investors. We believe full scale adoption of the Bitcoin E. T F will take time to propagate.

We: And it is a beginning of a multiyear cycle with institutional allocators and wealth platforms.

We: We expect there to be market retrenchments, along the way, but we believe that the demand for this product will continue to increase.

Speaker Change: Second.

Alex: Our trading, asset management, mining, and staking operating businesses made significant gains in the past quarter. Our equity capital was $2.2 billion as of March 31, up $400 million quarter over quarter. And after the quarter ended, as Chris noted, we raised $125 million of additional equity capital. Total liquid assets were $1.5 billion at the end of this quarter, up from $910 million at the end of 2023, and consisted of $163 million in cash, cash equivalents, and stablecoins. 821 million of net digital assets, excluding stablecoin, and 515 million of spot Bitcoin ETFs that started trading this quarter.

Speaker Change: Our trading.

Speaker Change: Asset management mining and staking operating businesses made significant gains in the past quarter.

Speaker Change: Our equity capital was 2.2.

Speaker Change: $1 billion as of March 31, up 400 million quarter over quarter.

Chris: And after the quarter ended as Chris noted, we raised hundreds and 25 million of additional equity capital.

Chris: Total liquid assets were $1 5 billion at the end of this quarter up from $910 million at the end of 'twenty 23.

Chris: And consisting of $163 million in cash cash equivalents and stable coins.

Speaker Change: 821 million of net digital assets, excluding stable coins and five hundreds and $15 million of spot Bitcoin Etfs that started trading this quarter.

Alex: We continue to make progress on our U.S. list. We have thought about and received preclearance from the SEC on a number of accounting issues. In April, we received significantly fewer comments from the SEC on our latest round of comments compared to the prior round. This was the sixth round of comments from the SEC. We can't be sure that the number of comments will continue to decrease, but we are encouraged by the progress we have made.

Speaker Change: We continue to make progress on our U S listing we have thought and received pre clearance from the SEC on a number of accounting issues.

Speaker Change: In April we received significantly fewer comments from the FCC on.

Speaker Change: Our latest round of comments compared to the prior round.

Speaker Change: This was the sixth round of comments from the SEC.

Speaker Change: We can't be sure that the comments, we will continue to decrease but we are encouraged by the progress we have made yes.

Alex: Yesterday, we filed our responses to the latest round of SEC comments, along with a registration statement updated for the full year 2023 and for the latest accounting guidance. Of note, starting in 2023, for the U.S. GAAP financials included in the latest S-IV, we early adopted fair value accounting for digital assets, covered by a new accounting standard published by FASB at the end of last year. Now to Mike. Thank you.

SEC: Yesterday, we filed our responses to the latest round of FCC comments, along with our registration statement updated for the full year 2023 and for the latest accounting guidance.

unknown: Of note starting in 2020 three for the U S. GAAP financials included in the latest desk for we early adopted fair value accounting for digital assets.

unknown: By a new accounting standard published by FASB.

SEC: At the end of last year.

SEC: Now to Mike Thank you.

Michael Edward Novogratz: Yeah, good morning everybody, um, listen, we changed the order up a little bit today because I wanted Chris to lead off with what a strong quarter we had. You know, I wanted to talk about how I see the business right now and how I see Galaxy and how I see us going forward. You know, crypto is a very interesting industry in that the main asset, Bitcoin, in the crypto space really drives a lot of things. It drives activity in all your different businesses, it drives enthusiasm for the space, and it drives adoption. And so, when markets are going up, businesses always feel great.

SEC: Hey, good morning, everybody.

Speaker Change: Let's see we changed the.

Michael Edward Novogratz: The order up a little bit today, because I wanted a crystal lead off with Oh, what a strong quarter, we had and you.

Michael Edward Novogratz: I wanted to talk and put that in context of how I see the business right now and how you see galaxy and IC is going forward.

Speaker Change: You know crypto as a very interesting industry and that the main asset bitcoin and in and in the crypto space really drives a lot of things it drives activity in all your different businesses.

Michael Edward Novogratz: Drives enthusiasm for the space it drives adoption and so what markets are going up businesses always feel great.

Speaker Change:

Michael Edward Novogratz: Markets don't always go up. And so what's important to note, and I think this is really important, is that sometime in the last, I'd say three to three to nine months, our company and the whole industry crossed a Rubicon where, while we are still going to have quarterly results that are somewhat correlated to the price of crypto because activity goes up and down with crypto prices. My confidence that institutions are coming for long-term stays has increased immensely. We've seeded our own business. People willing to lend us, you know, crypto for long periods of time, unsecured.

Speaker Change: Americans don't always go up and so what's important to note and I think this is really important is sometime in the last I'd.

Michael Saylor: I'd say three to three to nine months, our company and the whole industry crossed the Rubicon, where while we're still gonna have quarterly.

unknown: Quarterly results that are somewhat correlated to the price of crypto because activity goes up and down with with crypto prices my confidence that institutions are coming for a long term stays has increased immensely we seeded our own business are people willing to lend.

Speaker Change: Does you know.

Speaker Change: Don for long periods of time unsecured that didnt happened six months ago, and it's happening now counterparty is growing engagement around the space just at a different level than it was before and so it makes it easier for us to invest long term.

Michael Edward Novogratz: That didn't happen six months ago, and it's happening now. Counterparty is growing. Engagement around the space is just a different level than it was before. And so it makes it easier for us to invest long term. It makes it easier for us to really have a strategy that we can think, hey, in two years, we have a good sense of where things are going, much harder two years ago.

Speaker Change: It makes it easier for us to really have a strategy that we can think hey in two years, we have a good sense of where things are going.

Don: Much harder two years ago, and so if there's one message to take is that while we will still have volatility and big claim price and hence volatility in earnings are the whole industry will.

Michael Edward Novogratz: And so there's one message to take is that while we will still have volatility in the Bitcoin price and hence volatility in earnings, the whole industry will. I feel really confident that it's heading in a pretty bright direction. Listen, we had a great quarter, right?

Don: <unk>.

Speaker Change: I feel really confident that it's heading in a in a in a pretty bright direction.

Speaker Change: Listen we had a great quarter right asset management fees at a record mining revenue at a record, we really jumped bootstrap and and and and got into the staking business in a big way.

Michael Edward Novogratz: Asset management fees at a record, mining revenue at a record. We really jumped bootstrapped and got into the staking business in a big way. Our derivative business is, uh..., is jumping to a new level, trading opportunities are abound, and it all feels pretty good. Where's Bitcoin right now? Right at 62,000 at the end of the quarter at 73,000. And where's it going? Listen.

Speaker Change: Our derivative business is.

Speaker Change: Jumping to a new level.

Speaker Change: You know trading opportunities are abound, and so all feels pretty good.

Speaker Change: Whereas bitcoin right now right 62000 and ended the quarter at 73000, and Where's it going listen.

Michael Edward Novogratz: We had a lot of tailwinds in Q4 and Q1. Adoption of the ETF was far the biggest right that was the Giant had a wake-up call that this is now an institutional asset. We also had the halving that we've now put in the rear view mirror. There was also a view that the Fed would bring rates down significantly this year. And that view has changed. It's changed in the market. It's changed here at Galaxy.

Speaker Change: We had a lot of tailwind in Q4 and Q1.

Speaker Change: The adoption of the ETF by far the biggest right that was the.

The giant: The giant had a wakeup call that this is now an institutional asset.

Michael Edward Novogratz: We also had the having that we've now put into the rearview mirror. There was also a view that the fed would bring rates down significantly this year and that view has changed it's changed in the market its changed here of Galaxy and so I think we.

Michael Edward Novogratz: And so I think we're at a consolidation phase in crypto; Bitcoin, Ethereum, and everything else, Solana, will consolidate. What does that mean? Probably somewhere between 55 and 75 until the next.

Michael Edward Novogratz: We're in a consolidation phase in crypto bitcoin theory of and everything else are Lana will consolidate what does that mean it means probably somewhere between 55 and 75 until the next set of circumstances, that's set of market events brings us higher and.

Michael Edward Novogratz: The next set of circumstances, the next set of market events brings us higher. When we're in those periods, there's still trading opportunity, but I figure on, I always use these words, it's a grind, and it's time to build. And we are frantically doing both of those things. When I say grinding, it's coming in every day, being in touch with clients, and trading the opportunity set you see. But more importantly, it's the build, it's the technology build, it's the relationship build, and corporate opportunities build.

Michael Edward Novogratz: So what.

Michael Edward Novogratz: When we're in those periods, they're still trading opportunity, but I figure on I always use. These words, it's a grind and it's time to build and we are frantically are doing both of those things, but I say grinding its coming in every day.

Lana: Being in touch with clients trading the opportunity set you see but more importantly, it's the bill it's the technology build its the relationship build Ah it's the.

Speaker Change: The corporate opportunities build and I think that's probably where we are.

Michael Edward Novogratz: And I think that's probably where we are, certainly for this quarter, maybe next quarter, until A, either the Fed starts cutting rates because the economy finally slows, or B, we get through the election. And I think the election will bring clarity one way or the other to the crypto regulatory landscape. And so... You know, I leave it there.

Speaker Change: Certainly for this quarter, maybe next quarter until a either the fed starts cutting rates because the economy finally slows.

Speaker Change: Or b, we get through the election, and I think the election will bring clarity one way or the other to the crypto a regulatory landscape and so.

Michael Edward Novogratz: We had a great quarter. The business feels good. I think, you know, there's no, there's no, nothing on the horizon that gets me panicked. Oh, my God, crypto could crash. I don't see it.

Speaker Change: You know I I leave it there are we had a great quarter the business feels good.

Alex: I think you know there's no there's no nothing on the horizon that gets me panicked Oh, My God Crypto could crash don't see it prices can go up and down with the macro forces. We continue to see adoption growing you know as Alex talked about the ETF got launched you know big players are.

Michael Edward Novogratz: Prices can go up and down with macro forces, but we continue to see adoption growing. You know, as Alex talked about, the ETF got launched, and big players are just now starting to put it through their systems. You've read about Morgan Stanley, who's just getting started. And so I feel pretty good both here in the US and, more importantly abroad that, you know, crypto has found a place in people's portfolios and will continue to grow. And with that, I'll turn it over to Q&A.

Alex: Just now starting to put it through their system.

Morgan Stanley: Read about Morgan Stanley.

Alexander M. Ioffe: It was just getting started and so that whole process of wealth managers selling it to their clients isn't an overnight process and so feel pretty good both here in the U S and more importantly abroad that you know crypto has found a lane in People's portfolios and will continue to grow with that.

Speaker Change: Ill turn it over to Q&A.

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Andrew Bond with Rosenblatt Securities. Please go ahead.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press star.

Speaker Change: And two at this time, we will pause momentarily to assemble our roster.

Morgan Stanley: Our first question comes from Andrew Bond with Rosenblatt Securities. Please go ahead.

Andrew Bond: Hey, thanks, and good morning, guys. Chris, I believe you mentioned that platform derivative volume, Q, is almost greater than all 23. Are you seeing a greater percentage of this volume and kind of your revenue being driven by more traditional, institutional market participants and market makers as counterparties post ETF approvals? And is this kind of where you're seeing growth or expect to see more growth with your additional regulatory approval?

Andrew Bond: Hey, Thanks, and good morning, guys, Chris I believe you mentioned that platform derivative volume Q1 was greater than all 23 are you seeing a greater percentage of this volume is kind of your revenue being driven by more traditional institutional market participants are market makers as Counterparties post ETF approvals ended.

Andrew Bond: Just kind of where you're seeing growth or expect to see more growth with your additional regulatory approvals.

Christopher C. Ferraro: Yeah, good morning. Thank you, Matt.

Matt: Yeah. Good morning, Thank you Matt.

Andrew Bond: Yeah, I'd say early on it's a bit of a mix, there's there's existing market participants who.

Matt: Who are more and more using a more capital efficient ways to get their positions on unhedged positions. We we are seeing institutions, who previously were not participating coming in and using more and more derivatives and and earth like basic exotics two to create their position.

Christopher C. Ferraro: Yeah, I'd say early on it's a bit of a mix. There are existing market participants who are more and more using more capital efficient ways to get their positions on and hedge their positions. We are seeing institutions who previously were not participating coming in and using more and more derivatives and, like basic exotics, to create their positions. But it's in the very early stages on that front. And so we were holding the dam back, truthfully, proactively on what we were doing in that business, specifically to get ourselves ready.

Speaker Change: But it's like very early stages on that front and so the we were holding the dam back truthfully proactively on.

Speaker Change: What we were doing that in that business, specifically to get ourselves ready.

Speaker Change: From a regulatory compliance and from a tech perspective for the swap dealer registration, we're gonna be actively registered starting June one and once once we let we let that damned down like we said sort of the business expanded 25% very quickly.

Speaker Change: And and and that whole apparatus is being set up to accept.

Christopher C. Ferraro: Traditional financial institutions coming into the space, and like I said, that's been very early stage. So a mix of both, but not anywhere near what we expect the market to do and what we expect the platform to be built on.

Matt: Traditional financial institutions coming into the space and like I said that that that's been very early stages. So.

Matt: Mix of both but but not not anywhere near what we expect.

Matt: The market to do and what we expect the platform to be built for.

Michael Edward Novogratz: Got it and just a follow up maybe for Mike I Kinda talk briefly on the political and regulatory environment, obviously a lot.

Michael Edward Novogratz: Got it. And just to follow up, maybe for Mike, you kind of talked briefly about the political and regulatory environment. Obviously, there is a lot going on heading into the election cycle. Just wanted to see if you could share your view on the, you know, your thoughts on what the best outcome would be for crypto markets and your businesses as we head into the cycle here. Yeah, let me talk a little bit about...

Michael Edward Novogratz: Going on heading into the election cycle I'm just wanted to see if you could share your view on the you know your thoughts on what the best outcome would be for crypto markets in your business as we head into the cycle here.

Michael Edward Novogratz: Yeah, let me talk a little bit about the politics in crypto over the last 10 days because I think something significant happened. And it's interesting. It's been kind of a buildup, right?

Mike: Yeah, Let me talk a little bit about like politics encrypt all over the last 10 days, because I think something significant happened and it's interesting it's been kind of a buildup right crypto should be a bipartisan an apolitical like theres, a libertarian streak right freedom and privacy, the bitcoin and there.

Michael Edward Novogratz: Crypto should be bipartisan and apolitical, right? There's a libertarian streak, right, freedom and privacy to Bitcoin. And there is a cut out the middleman, really progressive side to so many of these crypto ecosystems, right? If it's in music or in finance, and how do we cut out the middleman, right, which should be seen as progressive?

Speaker Change: There is a cut out the middleman really progressive side to so many of these crypto ecosystems right if it's in music or in.

Speaker Change: And in finance and how do we how do we cut out the middle man right, which can be seen as progressive and so.

Michael Edward Novogratz: And that it has been politicized is a damn, damn shame. I blame that almost squarely on Elizabeth Warren and Gary Gensler, to be honest, and I don't think the Dems realized it was a problem. And just last week, you know, there's a thing called SAB 121, it's an accounting rule that forces institutions to hold crypto as an asset and a liability on the balance sheet, even if it's in custody. And so that stopped banks from, like, Bank of New York, the biggest custodian in the world, from custodying crypto because, hey, you know, it's going to blow up their balance sheets and Republicans put forward a bill to overturn that accounting rule, and President Biden said he'd veto it.

Speaker Change: And that it's been Politicised is a damn damn shame I blame that almost squarely on Elizabeth Warren and Gary Gensler are tend to be honest, then and I don't think the dams realized it was a problem and just last week.

SAB 121: There's a thing called the SAB 121, it's an accounting rule that forces.

unknown: Institutions to hold crypto as an asset and a liability on the balance sheet, even if it's in custody and so that stopped banks from bank Bank like Bank of New York The biggest custodian in the world from custody and crypto because I you know its gonna blow their their balance sheet up and it's gonna look really foolish Republicans put forth.

Speaker Change: Hey.

President: A bill to overturn that accounting rule and you know president by it and said he'd be till it and I'm thinking like the insanity of a president vetoing an accounting rule.

Michael Edward Novogratz: And I'm thinking, like, the insanity of a president vetoing an accounting rule. But it just reads to the crypto community as the Democrats saying no to crypto. And it's unfair; there are tons of Democrats that are pro-crypto, guys like Ro Khanna and Richie Torres, and there are lots of them. But the power has been held by Elizabeth Warren on the Senate Banking Committee, and Gensler and a few others.

President: But it just read to the crypto community as the Democrat, saying no to crypto and it's unfair there are tons of Democrats that our probe crypto guys like real kana and Richie Torres and there there are lots of them, but the power has been held by Elizabeth Warren.

Elizabeth Warren: The Senate banking Committee and.

Donald Trump: <unk> and and a few others and so I think you saw something the same day Trump came out with Ryan Celsius alongside of them. He gave a speech and set handler pro crypto President.

Michael Edward Novogratz: And so I think you saw something the same day Trump came out with Ryan Selkis alongside him and gave a speech that said, I'm a pro-crypto president. And there was just a shift, there was a shift in the Twittersphere, there was a shift in the people I spoke to saying, wow, Republicans good, Democrats bad. I think that's kind of dangerous thinking in that broadly, for our industry to thrive, you're going to need bipartisan support because you can't go from one, you know, from one regime to the next and not know where you stand. But it's definitely heightened. Uh...

Ryan Celsius: And there was just a shift there was a shift in the Twitter space or is it shifting people I spoke to.

Ryan Celsius: Saying Wow Republicans good Democrats bad I think that's kind of dangerous thinking and that broadly for our industry to thrive youre going to need bipartisan support because you can't go for one you know.

Ryan Celsius: From one regime to the next and not knowing where your where you stand.

Ryan Celsius: But it's definitely heightened.

Speaker Change: The power of crypto right, there's been over $150 million will be 250, I bet within two months of pack money Super Pac money raised.

Michael Edward Novogratz: The power of crypto, right, there's been over $150 million, will be $250 million, I bet within two months of PAC money, Super PAC money raised. You can credit Brian Armstrong and his effort, but there's other efforts as well, to be spent in this election. And so races like Jon Tester's and Sherrod Brown's, key Democratic states for the Dems, are seeing a ton of crypto money pouring in. And, you know, I was talking to a senatorial friend of mine yesterday.

Speaker Change: You know you can credit Brian Armstrong and his effort.

Speaker Change: But there's there's there's other efforts as well.

Speaker Change: To be to be spent in this election, and so races, like John testers and shared Browns.

Senator: Key Democratic States for the dams are are seeing a ton of crypto money pouring in and you know I I was talking to a senator a friend of mine yesterday. It's like this is the definition of stupidity, if you're a Democrat is literally like saying Hey, we're the party against dogs.

Michael Edward Novogratz: I was like, guys, this is the definition of stupidity if you're a Democrat. It is literally like saying, hey, we're the party against dogs, right? There are more crypto users in America than there are dog owners. Can you imagine a party coming out and saying, oh, we don't like dogs?

Senator: There are more crypto users in America than there are dog owners can you imagine a party coming out and saying we don't like dogs like it. It's just terrible politics, but that's where we're at and so I think you're going to see this this issue stay politicize unless the Democrats can do a real pivot I think they finally are we.

Michael Edward Novogratz: Like it's just terrible politics. But that's where we're at. And so I think you're going to see this issue stay politicized unless the Democrats can do a real pivot. I think they are finally waking up because this week they heard it. But we'll see. We'll see. Like on its face, Trump has now said he's going to be a pro-crypto president. And so you probably get a better and faster regime shift if Trump wins and if Biden wins.

Senator: Aching up cause this week they hurt it.

Trump: But we'll see we'll see like on its face Trump has now said he's gonna be a pro crypto president and so you probably get better and faster regime shift if trump wins, and a flight and wins right.

Michael Edward Novogratz: Right. Does it happen overnight? Nothing happens overnight. But you know, he's broadly endorsed it. And so I think if you're crypto and you're a one-issue voter, you know, the Republican ticket is looking better than the Democratic one.

Trump: As it happened overnight nothing happens overnight, but you know he's broadly why not endorsed it.

Trump: So I think if you're a trip down your old one issue voter.

Donald Trump: The Republican ticket is looking better than the Democratic taken at this point.

Donald Trump: Awesome. Thanks, guys.

Martin Toner: The next question comes from Martin Toner with ATB Capital Markets. Please go ahead.

Donald Trump: The next question comes from Martin Toner with a T V capital markets. Please go ahead.

Martin Toner: Good morning, folks, and congratulations on another strong quarter. I'd like to ask a couple of questions about cost. Can you talk a little about the cost of infrastructure, the $40 million? I mean, where is it going, and how much of it is unrelated to power, and then, you know, what are you doing with it?

Donald Trump: Good morning, folks and congrats on another strong quarter.

Martin Toner: I'd like to ask a couple of questions around costs.

Speaker Change #128: Can you talk a little too cough and.

Donald Trump: Infrastructure.

Martin Toner: The 40 million I mean, where is it going and how much of it is unrelated to to power and then and then you know what are you doing with it.

Martin Toner: Okay.

Martin Toner: Yeah.

Christopher C. Ferraro: So the increase in cost from the prior year is driven primarily by mining in three pieces. There are more electrical costs. There's greater depreciation because we have more machines online, and Last year, there was this funky thing where we had to reverse impairment on the mining machines that we wrote down in 2022 when the Bitcoin prices were down, and hence, the useful effectiveness of those machines was somewhat curtailed, right? But in 2023, when the prices increased, we were able to reverse those impairments back to the original cost basis.

Speaker Change: So the increase in costs.

Martin Toner: From prior year.

Martin Toner: Given primarily by mining in three pieces, there are more electrical costs theres greater depreciation.

Speaker Change: Because we have more machines online.

Speaker Change: And.

Speaker Change: Last year. There was this funky thing, where we had to reverse impairment on the mining machines that we wrote down in 2022 when the bitcoin prices were down and hence the useful.

Speaker Change: And this is those machines was somewhat curtailed right, but in 2023 when the prices increased we were able to reverse those impairments back to the.

Speaker Change: Original cost basis.

Christopher C. Ferraro: That's under Canadian rules. In the U.S., that's not allowed. Once you write something down, it stays down. But in Canada, and that was the other piece of the difference.

Speaker Change: That's under Canadian rules in the U S. That's not allowed once you write something down and stays down but in Canada and that was the other piece of the difference.

Martin Toner: Got it. Okay. Thanks so much.

Michael Edward Novogratz: Next question is on global markets. Given that the price of digital assets has kind of stabilized, lack of a better term here, volumes, institutional retail, have gone down. Just wondering what impact that's going to have on your business here in Q2.

Speaker Change: Got it okay. Thanks, so much.

Speaker Change: The next question is on a global.

Speaker Change: Mobile market.

Speaker Change: Given that the price of digital assets has a kind of stable.

Speaker Change #127: Stabilized lack of a better term here volume institutional retail has gone down just wondering what impact that's going to have on your business here in Q2.

Michael Edward Novogratz: Yeah, listen. I said that in my opening remarks that our business is still correlated with both price and volatility, and so when we go into consolidation periods, you see volumes of overall crypto trading go down, and our activity goes down. Now listen, we're still a young enough business, and we're bringing in new customers, so we're going to try to kind of offset the macro of less overall with the micro of bigger market share, and so as we are expanding, you know Leon Marshall is now our head of sales based in London. He's bringing in new clients every week. And so we're trying to balance that off. But overall, when you see the Bitcoin price go sideways or lower, you can expect... activity to come down.

Speaker Change #129: Yeah listen I said that in my opening remarks, our business is still correlated with both price and volatility and so when we go into consolidation periods, you see volumes of overall crypto trading goes down.

Speaker Change #129: Our activity goes down now listen we're still young enough business and we're bringing on new customers. So we're going to try to kind of offset the macro of less activity overall with the micro a bigger market share and so as we are expanding our Leon Marshall is now our head of sales base and in London He's been.

Speaker Change #129: And on new clients every week and so we're trying to to balance that off but overall when you see the big claim price goes sideways or lower you can expect.

Speaker Change #129: Activity to come down.

Christopher C. Ferraro: Yeah, Martin, the only thing I'd add to Mike's comments is your question focused mostly on global markets, but if you zoom out to the overall business, you know, we've made a concerted effort to build and add business lines that help balance and add ballast to sideways down markets generally. And so, you know, the asset management business, while, you know, exposed to some data, has had a significant ramp in AUM, Our mining business, you know, correlates to Bitcoin but has its own consistent profitability dynamics based on our cost structure and the way we've built that business.

Speaker Change #130: Yeah, Martin there the only thing I'll add to Mike's comments as you. Your question focused mostly on on global markets. What have you, but if you if you zoom out to the overall business, you know where where we've made a concerted effort to build and add business lines that helped balance and add ballast to sideways down.

Speaker Change #129: Markets generally and so you know the the the asset management business walks you now exposed to some data has had a significant ramp in our U M, which has just started flowing through from a from a P&L and profitability standpoint in the first quarter and so so that's a good ballast to the more volatile trading business.

Speaker Change #129: Our mining business, you know correlated to bitcoin, but has its own its own consistent profitability dynamics based on our cost structure and the way, we built that business or port our illiquid portfolio.

Christopher C. Ferraro: Our illiquid portfolio, I'll highlight, is one that generally lags the public markets, and so while we've had some appreciation in that portfolio, a lot of the marks and a lot of the exposures there, we don't expect to come through and show up relative to the public markets for one or two quarters later, and so on a go-forward basis, like, there is an expectation that that part of the business, too, is going to start flowing through and offset, you know, what is overall general market slowness, and so I think the overall platform, you should expect to be more balanced and more consistent in production these days than they have been in the past.

Speaker Change #129: I'll highlight is one that I'm generally lags the public markets and so while while we've we've had some appreciation in that portfolio a lot of the marks and a lot of the exposures. There we don't expect to come through and show up.

Speaker Change #129: Relative to the public markets for one or two quarters later and so so on a go forward basis like there was an expectation that that part of the business too.

Speaker Change #129: It's going to start flowing through and offset you know what what what is overall general market slowed us and so I think the overall platform you should you should expect to them to be more balanced and more consistent production. These days than it had been in the past.

Martin Toner: Fantastic. Thank you. Last one for me.

Speaker Change #133: Fantastic. Thank you and last one for me have you guys think about market.

Speaker Change: Market share in our institutional trading volumes.

Christopher C. Ferraro: How do you guys think about market share in institutional trading volumes?

Speaker Change #131: Yeah, Oh, I'll start with that one and maybe Mike can add the I think it is just very early there there's there's far far far more white space than there is then there is phil filled space and and it being a zero sum game from market participants and so.

Christopher C. Ferraro: Yeah, I'll start with that one, and maybe Mike could add something. I think it's just very early. There's far, far, far more white space than there is filled space, and it's a zero-sum game for market participants. And so it's a hard metric to measure when you're talking about a relatively small percentage of the total addressable market only being serviced today and talking about market share amongst that little zoomed-in piece. So our business, as you saw in the first quarter, grew pretty dramatically, close to 80% in revenues and volumes.

Speaker Change #131: It's a hard metric to measure when when you're talking about a relatively small percentage of total addressable market only being service today and talking about market share amongst that like little zoomed in piece. So you know our our business as you saw in the first quarter grew pretty dramatically close to 80% on revenues and volume.

Speaker Change #131: <unk>, but like I said, that's it we think about it in the context of.

Christopher C. Ferraro: But like I said, we think about it in the context of how much white space is crypto actually touching, and are we getting our piece of it? And so, you know, as long as we're focused on that, it's not just about trading zero sum gains with others.

Speaker Change #131: How is the how much white space is crypto actually touching and are we getting our piece of it and so you know as long as we're focused on that it's not just about trading zero zero sum games with other markets.

Christopher C. Ferraro: It's going to be very, I think it's going to take a couple of years until there's an established set of competitors, a decent way to try to understand who's getting what business. You know, the volatility of our space is so dramatic that even in the derivative business. The P&L is often determined by not just clipping a spread on the trades you do, but how you position them in that 24-hour period or 48-hour period. You know, over time, you'll be able to see some leaderboards of us versus the competitors, but we're still very early.

Speaker Change #131: It's gonna be very I think it's going to take a couple of years.

Speaker Change: Until there is a.

Speaker Change: <unk> established a set of competitors.

Speaker Change: And <unk>.

Speaker Change: A decent way to try to understand who's getting what business.

Speaker Change:

Speaker Change: You know the volatility of our space is so dramatic.

Speaker Change: That even derivative business.

Speaker Change: You know that.

Speaker Change: The P&L is often determined by.

Speaker Change: Not just clipping a spread on on the trade you do but how you've positioned it in that 24 hour period or 48 hour period. So.

Speaker Change:

Speaker Change: You know that that over time, you'll be able to see.

Speaker Change: Some leader board of us versus the competitors, but we're still very early.

Christopher C. Ferraro: Demonstrably, on the derivative side of the business. We are the largest market share participant, I think almost definitionally, given the swap dealer designation in crypto. And the spot side of the business is a lot more dispersed and globally, and is also a much, much, much lower margin business generally. And that's shared not just by ourselves, Coinbase, other big intermediaries globally, but also exchanges, retail platforms, and the like.

Speaker Change: Yeah.

Speaker Change: Demonstrably on the driver side of the business.

Martin Toner: Very helpful. Thanks very much.

Speaker Change: We are the largest market share participant I think I think almost definition the definition really given the swap dealer designation, I mean, crypto and and the spot side of the business, there's a lot more.

Speaker Change: A lot more dispersed and globally and it's also a much much much lower margin business generally and that and that that shared not just by ourselves coinbase other big other big intermediaries globally, but also exchanges.

Speaker Change: Our retail platforms and the like so yeah, that's how we talk about the landscape.

Speaker Change #132: Very helpful. Thanks, So much pass along.

Joseph Anthony Vafi: The next question comes from Joseph Vafi of Canaccord; please go ahead.

Joseph <unk>: The next question comes from Joseph <unk> with Canaccord. Please go ahead.

Joseph Anthony Vafi: Hey guys, good morning. It's nice to see all the progress in the business. Congratulations on that. Just wondering here, you know, three businesses all with growth drivers, lots of opportunity across all three, plus you've got a recent capital raise. Is there a way that you're thinking about where you are prioritizing investment across the three units, and I guess kind of how you prioritize which one of those three units may get more investment attention versus others? And then I'll have a follow-up. Thanks.

Speaker Change: Hey, guys. Good morning, nice to see all the progress in the business.

Speaker Change: That's on that just wondering here are three businesses all with growth drivers a lots of opportunity cost across all three plus you got a recent capital raise is there a way that.

Joseph <unk>: You're thinking about where you are prioritizing investment.

Speaker Change #134: It across the three of you and yet across the three units and I guess kind of how you prioritize which one of those three units may get more investment attention versus others and that all the follow up thanks.

Speaker Change: Okay.

Christopher C. Ferraro: Sure. Maury and Joseph, I appreciate you joining us.

Speaker Change: Sure.

Joseph Newton Flynn: Morning, Joseph I appreciate you joining yeah. So.

Speaker Change: Yeah.

Speaker Change #120: Where we've circled the capital to be to be allocated or in a couple places and again for us for US. This is this is somewhat dynamic and and we we live and breathe and watch the markets every day and.

Christopher C. Ferraro: Yeah, so where we've circled the capital to be allocated is in a couple places. And again, for us, this is somewhat dynamic, and we live and breathe and watch the markets every day, and sort of reassess our priors often, as we should, but the places that we've focused on are one on the trading side, the sales and trading side of the gold markets business. As we've said, we have seen a significant influx, an early influx, of demand from bigger trading counterparties and bigger clients who want access to trade services, want positions financed, etc.

Speaker Change #120: And sort of reassess our priors, often as we should but the places that we've focused on is one in the in the trading side sales and trading side of the Golar market's business. As we've said we have we have seen a significant influx of early influx of demand from.

Speaker Change #120: Bigger trading Counterparties and bigger clients who won.

Christopher C. Ferraro: Access to trade services, what positions financed et cetera. In addition to that the regulatory regimes, where we are we are eyes wide open proactively walking into to service. These clients both in the U S with swap dealer designation and internationally with different licenses.

Christopher C. Ferraro: In addition to that, the regulatory regimes where we are eyes wide open, proactively walking into to service these clients, both in the U.S. with swap dealer designation and internationally with different licenses, require an investment, an OPEX investment, as well as capital requirements.

Speaker Change: Require investment.

Speaker Change: And Opex investment as well as capital requirements and so that that area of the business is one where we had the capital base to support B E U.

Christopher C. Ferraro: And so that area of the business is one where we had the capital base to support BAU. We thought it was prudent to do a small capital raise to help supplement that based on the demand, the forward demand that we were seeing form at the end of last year and in the first quarter of this year in that business specifically to support the growth. And so that area of the business is one. Another area of the business, in our mining business, we actually even have, we have a number of opportunities.

Speaker Change: We we thought it was prudent to do a small capital raise to help supplement that based on the demand. The forward demand that we were seeing form.

Speaker Change: At the end of last year in the first quarter in that business, specifically to support the growth and so so that area of the business is is one another area of the business in our in our mining business. We we have actually even post having we have a number of of opportunities we have.

Speaker Change: We have an asset that we acquired that was deeply undervalued in our in our in our strong opinion.

Christopher C. Ferraro: We have an asset that we acquired that was deeply undervalued in our strong opinion and is still today not fully understood by market participants in the market in terms of its potential value. And so now the capital that goes into the mining business is a lot longer-lived permanent capital than capital that we move in and out of the markets business with demand. And so the decisions we make in the mining business are more permanent, and as such, we take a lot more scrutiny and have a much higher bar to make investment decisions.

Speaker Change: And it's still today not fully understood by market participants in the market in terms of its potential value and so now the capital that goes into the mining business is a lot longer lived permanent capital than capital that we move in and out of the markets business with demand and so the decisions we make on the mining business are.

Speaker Change: Are more permanent and as such we take we take take a lot more scrutiny and have a lot higher bar to make investment decisions. The opportunities. We see now for the mining business and in the Helios asset are very attractive and we think are our full cycle opportunities and so part.

Christopher C. Ferraro: The opportunities we see now for the mining business and the Helios asset are very attractive, and we think they are full-cycle opportunities. And so, part of the capital that we raised in the equity raise has been ring-fenced to make the next steps we need to help grow the footprint at that asset, in particular in the longer-lived, longer-duration but high-value electrical infrastructure side of the business. And so that means expanding the substation at Helios, which we've said now will give Helios the opportunity to expand its data center capacity by over 300 megawatts by Q3 of next year.

Speaker Change: The capital that we raised in the.

Speaker Change: And the and the equity raise we've ring fenced to make the next steps we need to help grow the footprint.

Speaker Change: At that at that asset in particular in the the the longer lived longer duration, but high value in electrical infrastructure side of the business and so that means expanding the substation at Helios, which we've said now we will give helios the opportunity to expand its data center capacity by over 300.

Speaker Change: Oh watch by Q3 of next year.

Speaker Change: We also did a small acquisition of land to expand the footprint and and all that looks towards both bitcoin mining now that hash price has settled post having which towards bitcoin mining as being a very still a very attractive investment and return on capital, but also speaks to a pretty early nascent opportunity that we're seeing.

Christopher C. Ferraro: We also did a small acquisition of land to expand the footprint. And all that looks towards both Bitcoin mining, now that hash price has settled post-halving, looks towards Bitcoin mining as being still a very attractive investment in return on capital, but also speaks to a pretty early nascent opportunity that we're seeing and have not yet formulated yet of, you know, if you look more broader outside of crypto, that there is a somewhat insatiable demand that's already formed and is being executed on by the major hyperscalers, thinking about the need for power to power data and data science, in particular behind AI.

Speaker Change: And have not yet formulated yet of you know if you look more broader outside of crypto. There. There is a somewhat insatiable demand that's already formed and is being executed on by the major hyperscale or thinking about the need for power to power data and data science in particular behind AI.

Christopher C. Ferraro: We ourselves are not committed to that business model yet, but I will tell you the number of early-stage conversations and the level of interest in... The asset that we have, given that it is reliable electrical infrastructure at a low cost and ready-built and in the process of expanding, is interesting to everybody in that market. And so those are the two primary areas that we've allocated capital to today. Again, it's dynamic, but that's the most interesting return on capital for us right now.

Speaker Change: We ourselves are not committed to that business model, yet, but I will tell you the number of early stage conversations and interest level in.

Speaker Change: The asset that we have given that it is a reliable electrical infrastructure at low cost and ready built and in the process of expanding it is interesting to everybody in that market and so those are the two primary areas that we've we've allocated our.

Speaker Change: Capital to today and again, it's dynamic, but that's the most interesting return on capital for US right now.

Joseph Anthony Vafi: Sure, that's very helpful, Chris, and exciting to see those investments being put to work. And then, just secondly, I know it's a little early days with DWS and those ETPs you're launching in Europe, but any real-time update there would be appreciated. Thanks a lot, guys.

Chris: Sure that's very helpful Chris and.

Speaker Change: You see that those investments are being put to work and then just secondly, I know, it's a little early days with Gws and those two piece youre launching.

Speaker Change: In Europe, but any real time up there.

Speaker Change: There would be appreciated thanks, a lot guys.

Christopher C. Ferraro: Yeah, thanks. No real-time update there. The products are pretty early on in their launch. We just went out, rang the bell, and started a sort of preliminary official launch on the marketing side there with DWS in the region. And those are going to take time to build interest and get distribution to proliferate across the continent.

Speaker Change: Yeah. Thanks, Nick.

Speaker Change #100: No real no real time update there. The products are are are pretty early on in their launch. We just went out rang the bell and started sort of preliminary official launch.

Speaker Change #100: On the marketing side, there with dws and region and those are going to take time to build interest and get distribution to proliferate across the continent.

Joseph Anthony Vafi: Great. Thanks, Chris.

Chris: Great. Thanks, Chris.

Speaker Change: Yeah.

Owen Lau: The next question comes from Owen Lau with Oppenheimer. Please go ahead.

Speaker Change: The next question comes from Owen Lau with Oppenheimer. Please go ahead.

Owen Lau: Good morning, and thank you for taking my questions. Going back to regulations, could you please talk about your view on how likely the U.S. can pass a stable coin deal this year? And might you just talk about Democrats finally waking up this week? Do you think it will increase the chance that they will support the stablecoin bill or bundle it with another bill and tell the world that they are pro-crypto? And also, if you can also give an update on your all-unity partnership and when you expect to launch your dual stablecoin, that would be great. Thanks, from on the regular.

Speaker Change #105: Good morning, and thank you for taking my questions.

Speaker Change #105: Going back to regulations could you. Please talk about your view on how likely the U S can pass a stable point of view with each year and Mike can you just talk about Democrats are finally waking up this week.

Mike: Do you think it will increase the chance that they would support the staple quite bill or bundle with another bill and tell the world that they have appropriate tools and also you can also give us an update on your old unity partnership and when do you expect to launch with your old stable quite that would be great. Thanks, Ron on the regulations that listen there's a.

Michael Edward Novogratz: On the regulatory stuff, listen, there is a, uh... There's a vote this week on FAB 21, and I think that'll tell us a lot in the Senate where that comes out. You know, Chuck Schumer has told people to vote their conscience. And so we'll get a sense of both how many Dems, you know, support it, and you'll have all the Republicans, but how many Dems, if there are enough Dems, can it get through, and then we'll see if Biden vetoes it.

Speaker Change #107: There's a vote this week.

Speaker Change #107: On slide 21, and I think that'll tell us a lot in the Senate where that comes out.

Speaker Change: Apparently.

Speaker Change: Chuck Schumer has told people to vote your conscience.

Speaker Change: And so we'll get a sense of both how many demos.

Speaker Change: You know supported and you don't have all the Republicans, but how many downloads. It as if there are enough downturns can can it get through and then we'll see if if if bite and details that that'll be the first litmus test I think theres, a very very remote chance I'd put it at 15% that's a stable claim bill gets through this.

Michael Edward Novogratz: That'll be the first litmus test. I think there's a very, very remote chance, I put it at 15%, that the stablecoin bill gets through this year. You know, we're in an election year, and you're having a hard time getting Dems and Republicans to do much together. While for us, this is unbelievably important, and for a handful of senators and congressmen, it's important, broadly, it just doesn't rise to the level of important enough for the Mass of Congress to care enough about.

Speaker Change #135: This year and you know, even though the market structure bill even less.

Speaker Change #101: And in election here, you're having a hard time getting denizen Republicans to do much together and.

Speaker Change: <unk> for US this is unbelievably important Ah and for a handful of senators and congressmen. It's it's imported broadly it just doesn't rise to the level of important enough Uh huh.

Speaker Change: For the math for the mass of Congress to care enough about.

Owen Lau: Got it. So any update on your Unity?

Speaker Change #102: Got it so any update.

Speaker Change #102: All unity.

Christopher C. Ferraro: No worries, Owen. Yeah, I was going to hit that.

Speaker Change #102: Right.

Speaker Change #105: Nowhere zone, Yeah, I was going with that so so on the unity side. We are we are we are driving forward there in partnership with M. D. W Dws Deutsche Bank and flow traders.

Christopher C. Ferraro: So on the all-unity side, we are driving forward there in partnership with DWS, Deutsche Bank, and Floatraders to get the application together with Boffin to launch the business and launch the product under German regulation, which we think is the most robust and will be the most easily pass-portable throughout the entirety of the continent and is the right thing to do. The right entry point and the right place to really build the foundation for a private Euro-based stablecoin, regulated stablecoin.

Speaker Change #105: To get the application together with Boston.

Speaker Change #105: To launch the business and launch the product through German regulation, which which we think is the most robust.

Speaker Change: And will be the most easily pass portable throughout the entirety of the continent and its the right the right.

Speaker Change: Entry point in the right place to really build the foundation for a a.

Speaker Change: Private euro based stable coin regulated stable quaint, we have we've hired and brought on and he has been spearheading the effort and awesome CEO I'm, Alex Harp, nor are there and you know he's doing everything that that that in early stage founder needs to do now.

Christopher C. Ferraro: We have hired and brought on an awesome CEO, Alex Hopner, who has been spearheading the effort. And he's doing everything that an early stage founder needs to do now to get the business running. He's driving the application process on the regulatory side with Buffin. He's attracting talent to the team and hiring the people we need to really execute on the plan.

Speaker Change: Now to get the business running he is driving the application process on the regulatory side with Boston, He's attracting talent to the team and hiring the people we need to really execute on the plan.

Christopher C. Ferraro: And so between him, ourselves, and our partners, we're off and running there. In terms of timing, the choice we made as a group with AllUnity was to launch a Euro stablecoin with fully MICAR requirements. And so that process is pretty much untapped, and there aren't any comps to it. And so timing-wise, our expectation is that it's likely going to be a 2025 event. We would love for it to be 2024, but working with Buffin to create a Euro stablecoin that's going to proliferate throughout the entire continent is not something that I think anyone takes lightly, but it is something that we think has the right approach and has a shot of becoming financial infrastructure in Europe.

Speaker Change: And so between him ourselves and our partners, where we're often running there in terms of timing.

Speaker Change #103: The choice, we made as a group with all unity was to launch a euro stable coin with fully my car.

Speaker Change #103: Requirements and so that process is some is pretty much untapped and and there arent comps to it and so timing wise. Our expectation is is that is likely going to be a 2025, and then we would love for it to be 'twenty, 'twenty, four, but but working with Boston two crew.

Speaker Change #109: <unk> a euro stable coin that's gonna porphyry throughout the entire content is not something that I think anyone takes it takes lightly but it is something that we think has it has a is the right approach and it's a shot of becoming financial infrastructure in Europe and so.

Christopher C. Ferraro: And so, you know, all good things take the appropriate amount of time and investment. Let me chime in for one second because there was an alternative path, right? Which was to go the unregulated version, which you already see some out, and so on.

Speaker Change #112: You know are all good things take their program at a time and investment let me chime in for one second because there was there's there was an alternative path right, which was to go to the unregulated version, what you already see some out there and just.

Speaker Change #104: Talking and our partners talking to the Big corporates are.

Speaker Change #104: In Europe.

Michael Edward Novogratz: Uh, I think the adoption from a payments perspective, from a..., an Internet of Things perspective among big corporate players in Europe is not going to really accelerate until you've got a Deutsche Bank blessed, or touched, Micar compliant product. So we're taking the longer route that we think will lead to a much bigger pie, versus launching an unregulated version of that, which there are plenty out there.

Speaker Change #103: I think the adoption.

Speaker Change #103: From a payments perspective from a from a.

Speaker Change #103: And Internet of things perspective, amongst big corporate players in Europe is not going to really accelerate until you've got a Deutsche bank Blessed.

Speaker Change #108: Our touch you know, Mike our compliant Ah Ah product and so we're taking the longer route that we think will lead to a much bigger pie.

Speaker Change #103: Versus launching.

Speaker Change #103: And unregulated.

Speaker Change #103: Version of that which will start playing out there.

Owen Lau: Got it, that is super helpful. And then on the venture side of raising external capital, could you please talk about the LPs there? Have these LPs already invested in this space, or do you see new investors coming in? You also talked about the $150, $200 million market opportunity. Do you have any aspirational goal for how large the fund can be and when you can get there? Thanks a lot.

Speaker Change #111: Got it that that is super helpful. And then on the adventure Si raising external capital could you. Please talk about the Lp's. There have these L. P is already faster in this space or do you see new investors coming in you also talked about $150 million to $200 million market off with.

Speaker Change #111: Let's see do you have any aspirational goal on how large the fund can be and when should you get there. Thanks a lot.

Christopher C. Ferraro: Sure. I'll hit the last one first, and then I'll go to the LP demand.

Speaker Change #118: Sure I'll.

Speaker Change #114: I'll hit the last one first and then I'll go to the LP demand. So when we say $150 million to $200 million market opportunity like the the worst thing. We think you can do in investing particularly with with external capital is to raise too much and then feel compelled.

Speaker Change #113: Compelled to have to put money to work. That's that is that's what big asset Aggregators do that that's not what we think.

Christopher C. Ferraro: So when we say $150 to $200 million market opportunity, the worst thing we think you can do in investing, particularly with external capital, is to raise too much and then feel compelled to have to put money to work. That's what big asset aggregators do. That's not what we think Alpha Generator, Generative Asset Managers. $150 to 200 million is probably low relative to what the market opportunity will be over a three-year investment period, but the resurgence of... The Crypto Ecosystem, the beginnings of a plethora of new use cases for blockchain and decentralized crypto applications are real, but they're nascent, and they're just picking up steam.

Speaker Change #113: Alpha generator generative asset manager should do.

Speaker Change #103: One 150 to 200 million is probably low relative to what the market opportunity will be over a three year investment period, but the the resurges of.

Speaker Change #110: The crypto ecosystem, the beginnings of a plethora of new use cases for blockchain and decentralized crypto applications are are real, but they're nascent and and they're just picking up steam and so it's really hard to size the.

Christopher C. Ferraro: And so it's really hard to size the market the right way for two years forward, three years forward from an investment program perspective. And so we say 1.5 to 200 million because we know that's an opportunity size that if we take in LP money, we can put to work and make LPs a ton of money, given what we see today. But that may change as the year progresses.

Speaker Change #110: The market the right way for two years forward three years four from investment program perspective, and so we we say one and a half to $200 million because we know that that's that's an opportunity size that if we take an L. P. Money, we can put to work and make L. P is a ton of money given what we see today that that that may change as as.

Speaker Change #110: The year progresses. If it does then we will likely invest the capital a little bit faster than we than we than we thought integrate positions and then we'd resize and talk about sort of what the next the next leg for that opportunity set is but we very strongly feel like from it from a franchise perspective sizing the opportunity.

Christopher C. Ferraro: If it does, then we will likely invest the capital a little bit faster than we thought into great positions, and then we'd resize and talk about sort of what the next leg for that opportunity set is. But we very strongly feel that from a franchise perspective, sizing the opportunity on the small side and correctly is the right way to generate alpha for investors, and that's how you build the right asset manager long-term. So that's how we think about fund size for that. Sorry, I'm blanking on the other question about LPs.

Speaker Change #110: On the small side and correctly is the right way to generate alpha for investors and that's how you build the right asset manager liked so that that's how we think about about fund size for that.

Speaker Change #124: The the sorry, I'm I'm Blake on the other question L. P. As the the other question on who are we or are we talking to.

Christopher C. Ferraro: The other question about who we are talking to, the answer is a mix of both. And we benefit from the fact that we've been in the business generally with LPs and talking to institutional LPs and allocators for five, six years now. We have investors who have previously allocated to our own passive products, the Bitcoin fund, the Ethereum fund, and the index fund. We also have investors who have allocated to our interactive funds. We have investors who have invested and allocated funds to our funded funds.

Speaker Change #117: The answer is you know a mix of ball and we benefit from the fact that we've been in the business generally with Lps and talking to institutional Lps and allocators 456 years now we have investors who have previously allocated to our own.

Speaker Change #117: Passive products, becoming a final figure in PON Index fund, we have investors who are allocated to our interactive funds. We have investors who have invested are allocated to our fund to funds and so that that pool of investors is one that we now can more quickly go back to and because we've generated good returns for them and we've done right by them are more apt to very quick.

Christopher C. Ferraro: And so that pool of investors is one that we can now more quickly go back to. And because we've generated good returns for them, and we've done right by them, they are more apt to very quickly make new decisions to re-up. And so that's like, that's the initial base that we go to. That's hundreds of hundreds of high net worth individuals and institutional allocators. And then we've also used the opportunity to engage in prior conversations with investors who haven't yet invested, and new conversations.

Speaker Change #110: We make new decisions to re up and so that's like the that's the initial base that we go to that's hundreds of of of high net worth and institutional Allocators and then we've also used the opportunity to engage in prior conversations.

Speaker Change #110: From investors, who haven't yet invested and new conversations and so it's a it's a pretty healthy mix and venture exposure tends to be a place where our risk forward sort of thesis forward allocated as investors start to look and be interested in.

Christopher C. Ferraro: And so it's a pretty healthy mix. Venture exposure tends to be the place where risk forward, sort of thesis forward, start to look and be interested and write checks because they know that that's where the best returns happen in crypto. And so, yeah, hopefully that's some helpful text.

Speaker Change #110: Write checks because they know that that's where the best returns happen.

Speaker Change #110: In crypto and so hopefully that's some helpful texture.

Owen Lau: Got it. Thanks a lot.

Speaker Change #110: Got it thanks a lot.

Bill Papanastasiou: The next question comes from Bill Papanastasiou with CIFIL. Please go ahead. Yeah, good morning.

Speaker Change #115: The next question comes from Bill Popper Anastasia with Stifel. Please go ahead.

Bill Papanastasiou: Yeah, good morning, gentlemen, and congratulations on another strong quarter. I just have one question here.

Speaker Change #116: Yeah, Good morning, gentlemen, and congrats on another strong quarter I just have one question here I'm, hoping you can comment on what you think the adoption curve for Tokai <unk> will look like over the next few years I believe it was Larry Fink that says that the Etfs were enablers for adoption.

Michael Edward Novogratz: I'm hoping you can comment on what you think the adoption curve for tokenization will look like over the next few years. I believe it was Larry Fink that said that the ETFs were enablers for adoption. How is Galaxy positioning for this trend, and do you see an opportunity to have a larger on-chain presence over time as momentum increases? Thank you.

Speaker Change #119: How's the galaxy positioning for this trend and do you see an opportunity.

Speaker Change #119: To have a larger on chain presence over time.

Speaker Change #121: As our momentum propelled thank you.

Michael Edward Novogratz: Yeah, listen, I think tokenization is going to go slow until it goes fast. And I know that's a cheeky answer, but that's actually what I really believe. And you don't know where that inflection point is.

Speaker Change #126: Yeah listen I think <unk> is going to go slow until it goes fast and I know that's a cheeky answer.

Speaker Change #125: But that's actually what I really believe.

Speaker Change #121: And you don't know where that inflection point is I know we're closer to it now than we were last year I know lots of our competitors in the trade by space. This is what they really are freaking out about are staying up at night thinking about as well.

Michael Edward Novogratz: I know we're closer to it now than we were last year. I know lots of our competitors in the trade-by space are really freaking out about or staying up at night thinking about as the world moves to more tokenization. So what are we doing? Right.

Speaker Change #116: World World moves to more <unk>. So what are we doing right. We have an effort we are constantly looking at potential partnership.

Michael Edward Novogratz: We are making an effort. We are constantly looking at potential partnership. We are building our on-chain capabilities as fast as we can, both in [inaudible]. But I know we're closer, and I, like I said in my early remarks, when I said this business is a little bit easier to run, it's not easy to run, it's a little bit easier because it really does feel like we have crossed a Rubicon in the adoption of this whole idea of digital assets and crypto being part of I fully believe that, and tokenization is a big part of it.

Speaker Change #116: We are building our onshore capabilities as fast as we can both in and in trading and lending and everything else and so you know by the end of the year, you'll see a significant I think P&L impact.

Speaker Change #116: From stuff, we do on chain that we didn't have last year that all prepares you for the day that you really start seeing bigger token is Asian, you haven't seen it yet.

Speaker Change #116: The reality.

Speaker Change #116: You know this Blackrock fund is pretty fascinating and we'll see how that.

Speaker Change #116: That pans out.

Speaker Change #116: But I know, we're closer and I like I said in my earlier remarks, when I said this business is a little bit easier to run it's not easy to run it a little bit easier because it really does feel like we crossed the rubicon and adoption of of this whole idea of digital assets and crypto being part of the financial infrastructure of the world.

Speaker Change #116: I fully believe that until the visitation is a big part of that.

Speaker Change #122: Okay, that's good color Mike.

Bill Papanastasiou: I appreciate the color, Mike.

Speaker Change #116: Yeah.

Speaker Change #116: This concludes our question and answer session I would like to turn the conference back over to Mike Novogratz founder and CEO of Galaxy for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mike Novogratz, founder and CEO of Galaxy, for any closing remarks.

Michael Edward Novogratz: Yep guys, thanks for your time and your support. We are working really hard. We continue to think this will be an opportunistic year, a good year, but a year where we really need to build. And so I'm hoping this time next year we're looking at you guys with a much more robust firm because we've had 12 months to work our tails off. Be well. The conference has now concluded. Thank you for attending today's presentation.

Michael Edward Novogratz: Hey, guys. Thanks for your time your support.

Speaker Change #116: We are working really hard we continue to.

Speaker Change #116: I think this'll be it on an opportunistic year a good year.

Speaker Change #116: But a year, where we really need to build and so I'm, hoping this time next year. We're looking at you guys with a much more robust a firm because we'd have to have 12 months to to work our tails off.

Speaker Change #116: Be well.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change #123: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change #123: Okay.

Speaker Change #123: Yeah.

Speaker Change #123:

Speaker Change #123: Yes.

Operator: BF-WATCH TV 2021

Speaker Change #116: Yeah.

Speaker Change #116: Yes.

Speaker Change #116: [music].

Speaker Change #116: Yes.

Speaker Change #116: Yes.

Speaker Change #116: [music].

Speaker Change #116: Yes.

Speaker Change #116: Hum.

Speaker Change #116: [music].