Adam Torres and Russell Starr discuss ETF and Defi protocols.
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Show Notes:
Defi Technologies provides access to institutional grade exposure to digital assets through ETPs, strategic ventures, and Web3 infrastructure. In this episode, Adam Torres and Russell Starr, Former CEO & Current Head of Capital Markets at Defi Technologies, explore Defi Technologies and its recent acquisition of Reflexivity from Anthony Pompliano.
About Russell Starr
Former Bay Street Executive and associate Hedge Fund manager. Forward-thinking CEO, Entrepeneur and Financier with deep capital markets expertise and a track record of orchestrating transformative deals for business expansion. Believer in a world where the renewable energy transition and melting fiat system create demand for scarce assets. Strong advocate for Canada as a globally under-valued natural resource powerhouse and well positioned for a natural resource renaissance.
About Defi Technologies
DeFi Technologies is a public company traded on CBOE Canada (DEFI). Founded in 2020 out of the need for a better and more secure access to decentralized finance. DEFI provides regulated diversified exposure to a new wave of blockchain based assets, services and applications.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to missionmatters. com and click on be our guest to apply. All right. So today I have Russell Starr on the line and he’s former CEO and current head of capital markets over at DeFi Technologies.
Russell, welcome to the show. Thank you very much, Adam. Glad to be here. All right, Russell. So a lot to talk about today. So we’re going to get to ETF and defy protocols. We’re going to talk about defy technologies. And I know you were sent over to us by Mark, who’s been on the show in the past low press.
And so we’re going to have some fun there too. And at the end of this thing, of course, I’m going to let people know how ask you and you’re going to let people know how they can follow up if they want to learn more. .
But that being said, Russell, will get this episode started the way that we start them all with what we like to call our Mission Matters Minute. So Russell, we at Mission Matters, we amplify stories for entrepreneurs, executives, and experts. That’s our mission. Russell, what mission matters to you? look, our mission is, is very simple and, yet I think critical in today’s market, and that is trying to give everyone the opportunity to get exposure to this incredible new ecosystem that many refer to as crypto or Web 3.
0 in a traditional capital markets way. that’s our mission, that’s our mission statement, and that’s what we’re trying to do. That’s awesome. Love bringing on mission based entrepreneurs and executives to share why they do what they do and, really how they what we can all learn from that.
So we all grow together. So great having you on. And I guess just to get us kicked off, like, when did you first get interested in, in kind of technology and like going down this route? Where, where’d all that begin for you?
To be perfectly blunt I was a gold bug and I started watching and witnessing a really intriguing trend in the market. And that was a movement away, necessarily from gold as a really good investment vehicle to, to deal with basically the, relentless printing of money in the U S and I saw capital crypto versus versus gold. And so I started looking at, you know, the miners, I started looking at this particular company and, and honestly, I loved what this company was doing so much that I, bought myself into the company. So to speak, I started buying equity in it became the CEO stepped aside and let one of the co founders take over once he’d finished Bit of a sabbatical and, and you know, I, I’ve, I’ve never looked back and it’s been a, it’s been a really volatile last few years, but I think finally you can see a world where, you know, my thesis is actually coming true and that is, you know, 1 to 2 percent of that gold trade moving into Bitcoin and crypto.
But there’s the other dynamic, which is, is really dramatic. And that is, this is an ecosystem that’s growing two times faster than the internet group. So you have, you have this, wow, you can get, you can get a hedge against what governments are doing. That being printing money in an, in a, in a relentless fashion.
And you can, you can also get long an ecosystem that’s growing faster than anything we’ve ever seen in the capital markets. Hmm. I want, I want to stick in kind of the earlier days of you, you know of DeFi technologies coming on, on your radar. Like what attracted you to this company? Yeah. Well, if you look at the business and the way this ecosystem has evolved there was no Bitcoin ETF in the US and, and how you would get exposure to Bitcoin or Ethereum was by buying the miners.
So you’d buy Hive, or you’d buy Hut, or you’d buy MicroStrategy, or Marathon, or, you know, the list goes on and on, Riot and that, that was how people were getting exposure to Bitcoin. Now today you see the ETF and so, so there’s obvious flow that is occurring theoretically away from the miners and into the ETF because you don’t really need a proxy anymore and ultimately you’re, you’re likely going to see an Ethereum ETF being launched in the US, but it’s, it’s no surprise.
I mean, everybody can, can watch the Can watch the court case, the grayscale SEC case when it went to the Supreme Court. And, you know, you, you were basically witnessing the SEC basically saying, look, you know, Bitcoin is bad for the U S dollar. We don’t want to let this ETF, you know, emerge in the U S well, that’s not really a good justification for not letting an ETF exist, especially when you’ve already allowed the futures ETF.
We as a company, defy. That’s all we do. We’re an ETF company. and I was like, hang on a second here. I can get, I can get exposure to not just Bitcoin by DeFi, but I can get exposure to Solana. you know, we had a basically the SEC through a court case um, business model.
And, and before that, thought I saw value in the ecosystem and in DeFi because we’re focused primarily in Europe and Europe is much more crypto friendly. Okay. Web 3. 0 friendly as is really most of the rest of the world and really all we’re trying to do, and you heard it with my mission statement.
All we’re trying to do is allow people to get exposure to Solana without having to go through, you know an unregulated trading platform. That, you know, might not be completely secure. What better way to do it than to actually have a suite of ETFs in Europe, in our case, ETPs, where people can get access to any and all of these other protocols.
And you saw recently we bought Anthony Pompliano’s research business, Reflexivity. And, and, you know, I don’t think Pomp would mind me saying this at all. He was very happy to take stock because while the rest of the market is really fixated on, hey, let’s get long Bitcoin, wow, this is an amazing product.
The reality is there’s a much greater trade that’s occurring today. And that is with these other protocols like Solana, Polkadot, Cardano, Uniswap. Adam engine, you know, the list goes on and that’s what DeFi does. So I think, you know, it’s only a matter of time and us doing conversations such as we’re having with you that, that it catches on.
And the next thing, you know you know, we become a household name, just like this gray scale products, just like, you know, BlackRock. It’s just, everything’s happened so quickly that almost the, the ecosystems run out in front of the investors. So I think, you Why do you think this is such an important move for investors, like in terms of accessibility, or I don’t want to put words in your mouth or otherwise, like just, you know, why do you think that’s so important for investors?
Well if you think about it in an example that I use when I, when I talk to other clients you know, we, we have an example of an ecosystem that grew very, very quickly and that’s the internet. And, you know, I remember my days doing my masters and all of a sudden this browser came out called Netscape and, you know, you had all of these other, you know, email type platforms to a large extent people ignored it and thought it was a flash in the pan.
often jokingly say about Amazon. Well, you know, there was a period where, where this was a guy sending packages out of his dad’s garage and it’s worth trillions of dollars, billions and billions of dollars. Now that’s, in my opinion, what this ecosystem represents, the challenges right now. Just like the internet, first of all, it’s, uptake.
And second of all there’s an added complication in the U. S. right now. And that is, you’ve got this, this big brother or big sister called the SEC, who, who is desperately trying to prohibit what I would call An opportunity for the U. S. To be a leader on DSO. Consequently, you have to pursue this in other jurisdictions That’s what we’re doing. I do think that ultimately, the SEC will will relent because they’re losing. I mean, they truly are losing the battle. They’re making it very difficult. But you also have an election coming up where you could have a new government that could be very, very pro crypto. But the reality is this is an ecosystem that I and I’ll keep on going back to this.
This is going to revolutionize how finance is done and you have a choice. You can be a part of it, or you can be grudgingly, you know, take the same stance that most people are. And that is all bitcoins a flash in the pan. This is never, ever, ever going to happen. And yet here we are, you know, 5, 10 years later.
Yeah, how many black swan events that should have destroyed this as a potential investment vehicle and yet it survived and to me It’s almost like if you take enough punches and you survive you can you just almost become Invincible against that sort of type of attack and and it and despite repeated punches that bitcoin and the ecosystem has taken It’s still here It’s it’s still moving.
It’s still revolutionizing. And that is the opportunity. And that’s why I’m so passionate about it. And that’s why I think you know, this company and quite frankly, the ecosystem in general is going to become a greater and more important part of everybody’s day to day living. how much in terms of investment have these ETPs, how much have they attracted so far?
So that’s a really good question. When we launched the company in 2021, we went from nowhere to almost 450 million U. S. in AUM and our stock was trading at 3 U. S. We actually were approved for a NASDAQ listing. We had DTC and then the SEC, and this is when that grayscale case was, you know, the SEC intervened and against standard legal procedure stopped us from uplisting.
We did what’s called an MJDS, which I don’t really want to get into, but it’s where you rely on the Canadian regulator. And despite meeting all of the conditions, the SEC said, Nope, you’re crypto. And they asked a bunch of ridiculous questions over and over and over. And, and look, the writing was on the wall.
They, they don’t want anything crypto related listed in the U. S. But people made a lot of money and the stock was doing well. Bitcoin then fell out of bed. We dropped down to, I think near our low of maybe 150, 200 million in a UM. And here we are today, we’re, we’re cruising on 700 million in a in the us.
Mm-Hmm. . Almost closing in on a billion in Canada where we had five products, six products before, we’re now up to 16 product, no 13 products, sorry, 14 products. our stock has barely moved. And, and it’s just one of those weird dynamics where look, you’re small, you’re in Canada, you know, you’re on an OTC listing, but, you know, you don’t have to look too far to see the likes of galaxy, galaxy.
Trading in Canada, and this again has to do more with regulatory impediments than it actually does has to do with the viability of the company because truly all we are really truly all we are is an ETF company. Yeah, seems like political risk is rearing its head here. I feel like that stuff.
Yeah. Oh, yeah, yeah, yeah. Yeah, it’s interesting. And when I think about the obviously, this isn’t a perfect analogy. I don’t know if we have, we would have a perfect analogy, considering that these that digital assets and just in general, like Web3, it’s all new. But when I just think about specifically how things are packaged.
and product tie specifically financial instruments. So if you think about you know, way back when obviously stock, that’s pretty straightforward, then the drip plans, then at some point, you know, Bogle and his guys and the mutual fund then, then ETFs, and then in all these had their cycles and, you know, a large amount of time for them to be.
Adopted. So, you know, if your thesis is right, then this should it theory or could in theory be one of those next. Packages, if you will, obviously the underlying assets are different than what I’m describing previously, but the packaging concept, like now we think of mutual fund and, oh, that, you know, it’s been there forever, right?
Like, no, it hasn’t been there forever. And for many years, decades, people didn’t trust them because they didn’t, quite get them. Same thing with UTS. Like, what is this? It trades daily. Like, is there more, is there more risk there? This, that again, decades for people to catch on. So now with this, Might be decades for people to catch on, but if you’re right, then it’s, it’s super interesting, right?
and just so everyone’s aware, you know, management owns probably close to 45, 50 percent of this company. So, so we’re aligned with the investing public, but yes, totally agree with your, your thesis. But the other upside is, is to a certain extent, there’s transformational wealth opportunities here.
Because Even though this, this ecosystem is growing as quickly as we’ve mentioned, most people have yet to embrace it or adopt it. And, and as, as soon as you get more and more and more people looking at it embracing it, becoming involved in it, you get sort of that tidal wave effect that sort of floats all boats.
And honestly, the Bitcoin ETF approval in the U S. It’s a perfect example I was reading, I think it was just, you know, Thursday or Friday that Bank of America allowed their clients access to the Bitcoin ETF. A lot of, a lot of institutions in the U. S., even though it’s been approved, are still not allowing clients to buy the ETF under the guise of protecting their clients.
When in reality, all they’re doing is forwarding or, or promoting what I would consider to be a really good investment. You know, naive and unimpressive stance that the SEC is taking purely because it’s really political. You mentioned it. It’s, it’s truly political. This is, this is the government trying to.
You know, moderate all of the million of attacks that the U. S. Dollar is suffering instead of actually understanding that they should stop printing money. I mean, the other article I read, I think it was last week was the interest was double the daily revenue on that day. For their debt, you cannot run a sustainable business that way you can’t.
And, and that’s why gold and Bitcoin to my mind should have a major position in everyone’s portfolio. Yeah. I mean, for the large companies, the bank of America thing was a big deal because they’re probably the, I don’t know, the most conservative or the largest in terms of once they’re able to, that almost gives permission for others.
Because for the vanguards or the Schwab’s of the world, like even if they Added to the platform. There’s nothing for them to gain. Like what do they gain? They just have another thing on their platform and now they’re in the news and it makes every news because they’re allowing it and now It’s kind of like their their mark of approval if you will so that they literally have nothing to gain like there’s no additional fee or anything like they don’t care about that That’s such it’s small stuff in terms of that.
So they definitely don’t want to lead the pack I feel and at some point they’ll be if everybody starts doing it, you know how it is. It’s the monkey, see monkey, do that guy’s role. And then there’s no, they don’t want to be first. So think of America being first is interesting.
So it’ll be interesting. Like as they start to fall down, you know, one at a time. And we see this over and over with, with all of them. It just depends on who’s going to stick out their neck first on what particular new thing. So it’s interesting to follow. Yep. Yep. Totally agree. And it’s look. Really, just from my perspective, you’re just seeing.
You’re seeing more and more acknowledgement and support for this opportunity and ecosystem daily and, and there will be a time where this is a, you know, a household owned product or ecosystem. It’s just, you know, you’re, you’re, you’re dealing with so much negative news from, from the government, whereas the rest of the world is embracing this, I guess, is the best way to put it.
You know, I’ve, I’ve always viewed the U. S. as, as, you know, you know, the country for opportunity and, and entrepreneurial ism and change. And, you know, it’s, it’s like the gold rush to California or, or the advent of the railroad. You know, crypto is, is Railroad 3. 0 or Gold Rush 4. 0. You know, the U. S. Has an opportunity to embrace this ecosystem and yet is choosing not to for political reasons rather than for the betterment of the financial system in general.
I think it’s definitely, it’s complicated when you know, we’re not in what you described, we were, you know, a developing country at the gold rush, you know, so it’s a little bit different now that we’re core quote unquote developed, the play, the board has changed and there’s, there’s a lot on both sides and to like seeing, it’s, it’s gotta be.
Interesting to see it navigate, like the navigating this going forward. I mean, obviously we, we’re covering this as stories, but you’re, you’re in the, you’re in the trenches day to day. So I get to look from the outside, looking in, but it’s super interesting. One of the things that you did mention though, that I do want to go a little bit further into is why was that acquisition of relaxivity?
Why was that important? Like, tell us a little bit more about why the decision was made. Well you know, 1st and primarily pomp and will come answer to the most respected analyst in the space. And again, you know, you’re seeing new protocols being launched left, right and center. You’re seeing layer 2 layer 3.
This is this is a complicated, ecosystem because it truly is revolutionizing the capital markets. So, so, you know, having two of the most respected crypto native analysts is not a bad thing. But then you also layer in just how well respected Pomp and Will are in the U. S. capital markets. It’s staggering.
And quite frankly, in the global markets they are, they are, are very impressive and, very well reputed individuals. So that’s. That’s fantastic. And then, and then thirdly, You know, we will list in the US and, it is only a matter of time, in my opinion, before the US fully embraces this ecosystem.
What better way to have, have access to the US capital markets than with two of the most respected voices in that space. So it, so it’s really a threefold move. And like I said, you know, maybe we look upon it a little bit differently if, if, you know, Pomp didn’t want to take, take equity, but, but here you have.
Maybe one of the smartest guys in the space, well respected globally, basically saying to everyone, and this is not new, I’m kind of screaming it from the rooftops, he took equity because he believes and is watching what this company is doing. So, yeah, Bitcoin and Ethereum are really cool, but we’re the, the little.
You know, the Thomas, the tank engine, the training could here we are, you know, like I said, we’ve got our, it is it’s 16. It’s actually 17 products. Now, as I correct myself, and we’re launching another 15, probably this year, probably another 30 next year, and that’s, you know, there’s really no other company that gives you that diversified exposure to that, that defy or web 3.
0 ecosystem. You know, we have our Bitcoin and we have our theory and products, but but, you know, no one. a year ago would have thought that Solana would have done what it did. Other than maybe Pomp and some of the real, real smart guys or smart, smart people in the industry. Well, lo and behold, our, our Solana ETP is now like 350 million in AUM, and it’s now our biggest product out of the blue.
And, and, you know, we’re seeing XRP rip, we’re seeing Uniswap rip. Who knows what the next one’s going to be? Maybe it’s Oxygen, maybe it’s Engine, maybe it’s Atom, who knows, but we’ll probably give you exposure to it. Fantastic. Well, Russell first off, thank you for coming on the show today. This has been a lot of fun.
You get, you gave me my dose of what’s going on. And also also great to hear the story about DeFi technology. It’s of course, reflexivity and all the work you’re doing there. That being said, if somebody is listening to this and they want to or watching this and they want to learn more what’s, what’s the best way for them to connect?
I’m one of those guys and gals that really tries to be available. You can email me at rstar, that’s with two r’s, at valor. com. Our website is defi, D E F I, dot tech, T E C H. You know, fire me an email, go to our website. Chances are you’ll be surprised. I’ll respond to you. Amazing. for the audience, we’ll put, of course, put the website link and all that good stuff in the show notes so that you can just click on the link and head right on over.
And speaking of the audience, if this is your first time with us and you haven’t hit the subscribe button yet, hey, now is your chance. Hit that subscribe button. We have many more mission based individuals on the line and we’re going to continue following this story, of course. So we don’t want you to miss anything.
So again, hit that subscribe button. And if you’re a long term listener and you haven’t left a review yet, hey, get that review in there. We sure do appreciate it. And Russell, man, again, it’s been a lot of pleasure having you on the show today. Glad that Mark sent you over to us and connected. So thanks again for coming on.
Thank you very much. And I really appreciate your time and your audience’s time. Love to come back anytime and wishing you all the best Adam.