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You may not like this thing called
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crypto or digital assets. Uh but you
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it's a new asset class. Uh and you you
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have to have a point of view. I really
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thought that bitcoin would serve the
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role that stable coins are going to
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serve. Uh right now finally we have
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institutions
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studying this and studying it hard.
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Robin Hood launching uh its own layer 2,
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launching perpetual futures in in
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Europe, in the UK and you know rolling
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out staking. They have taken off the
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gloves now and it's going to be
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extremely exciting. I think it's going
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to accelerate
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uh it's the crypto movement uh in more
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of the traditional financial world.
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In today's video, Kathy Wood breaks down
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why crypto is no longer fringe. It's
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becoming the backbone of a new global
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financial system. From the Circle IPO to
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stable coins backed by US treasuries,
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she explains why institutions are
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suddenly paying attention. Cathy dives
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into the macro shift, how inflation,
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monetary policy, and regulatory change
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are opening the floodgates for crypto
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adoption. She also covers Robin Hood's
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bold crypto strategy, the rise of
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tokenized finance, and why AI and DeFi
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together could disrupt traditional banks
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faster than anyone's ready for. Like,
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subscribe, and join the Telegram. The
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next financial era is already unfolding.
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Let's get into it.
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Oh my goodness. Well, you know, we're
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very proud that we uh were the
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cornerstone investor in Circle and uh I
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heard Tom Lee uh describe the Circle
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Circle IPO as the chat GPT moment and I
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I understand it because now whereas
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before we were saying to institutional
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investors in particular, you know, you
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may not like this thing called crypto or
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digital assets. Uh but you it's a new
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asset class. Uh and you you have to have
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a point of view. If you don't like it,
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you need to have reasons why you were
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not including this new asset class in
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your asset allocation. And so we were
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kind of spitting in the wind to be
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honest. Not until the Bitcoin ETFs came
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out. We got a little more uh uh of an
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audience around that. But you still had
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the SEC kicking and screaming even
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around the ETFs. uh and then you do get
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a new administration a complete change
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from a regulatory point of view and uh
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yes circle going public and I think if
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you ask if when people ask me what's the
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biggest surprise I thought and you know
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from probably our last um podcast I
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really thought that Bitcoin would serve
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the role that stable coins are going to
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serve uh right now Um from the point of
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view of emerging markets in particular
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uh there Tether is more uh uh the stable
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coin uh backed in large part by uh
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treasuries. Uh so I think that's the
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biggest surprise to me. But I think
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because of that IPO, I don't know if it
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was the safety that you know being
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backed 100% by Treasury securities
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um conferred upon it, but finally
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finally we have institutions
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studying this and studying it hard
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because you cannot miss uh you know the
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equivalent of AI and AI and and crypto
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together as we go towards agentic.
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Uh, also with DeFi threatening all of
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them as well, they better get with the
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program. So, you're right, light switch.
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It's it's almost like a light switch has
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gone on here. And it's it's thrilling.
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And I think uh uh you know, Robin Hood
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launching its tokenized strategy. Yeah.
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launching uh its own layer 2 uh using
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the arbitron uh uh launching perpetual
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futures in in Europe in the UK and you
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know rolling out staking or re-rolling
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out staking um I mean it's going for it
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this is we think this could become one
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of the most important financial services
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institutions in the world uh and you
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know when we first put Robin Hood in our
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portfol were accused of investing in
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meme stocks and you'll notice we did not
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invest in any of those other meme stocks
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because with they weren't worthy they
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there's nothing about technologically
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enabled innovation about them but there
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was with Robin Hood and I will say what
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in our early days with Robin Hood we
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were a little impatient that they
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weren't going u hard into crypto uh I
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think what held them back was all of the
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regulatory trouble they got into and
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they were just they had to play it safe.
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But uh they have taken off the gloves
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now and it's going to be extremely
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exciting and I think it's going to
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accelerate
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uh it's the crypto movement uh in more
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of the traditional financial world much
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faster. Now I know uh all the banks are
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uh trying to figure out you know how to
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participate lower their costs whatever
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however or you know how to cannibalize
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themselves so they're not
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disintermediated so it's pretty exciting
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the one monkey wrench that could gum up
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the works with 7% GDP uh maybe there are
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several but one of them is certainly
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macro setup right so we've got we've got
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tariffs uh we've got you like the
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potential of a new Fed share there's
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just generally some uncertainty. It has
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felt like a a shaky year from a macro
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perspective. We've got like wars, lots
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going on here. What's your outlook for
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macro as we sit in uh you know July
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2025?
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Well, the the market has been climbing
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this wall of worry which should tell us
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something and I think uh and and this
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has been our assumption. Happy to see
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that it's starting to play out this way.
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Um,
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we believe that President Trump, uh, and
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believe me, I understand how chaotic and
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how crazy this environment has seemed to
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everyone. I've been just throughout
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Europe and and Asia and they're like,
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"What is going on?" I said, "Okay, yeah,
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we agree. It seems cha I think uh that
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the methodology here is that President
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Trump decided to take all the hard
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medicine and do the dirty work very
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early on in his administration.
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Um he will define himself as uh and
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remember he wants to be considered the
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greatest president who ever lived. Well,
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tariffs and wars and and a bad economy
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don't get you there. taken all the bad
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medicine. I actually think and from a
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timing point of view and given our point
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of view on innovation, what will happen
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here is we're going to move as we go
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through the second half of the year into
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next year into a massive
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productivitydriven
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uh recovery and then expansion which
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will uh be accompanied by much lower
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inflation than anyone expected. And it's
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not going to come just from all of these
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deflationary technologies, but home
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prices are starting to fall. There's a
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huge inventory glut that builders are
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facing and they got to clear that. So I
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think inflation will come down. We know
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oil prices probably going to come down
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as well. So if this sounds a little bit
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like Goldilocks, it is. But what why did
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he do the dirty work now? It's because
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of the midterms next year. And that
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campaign season is probably going to
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start sooner than normal this fall into
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winter. And he needs to extend his the
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Republican lead in both houses, right?
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Uh and uh in both the House and the
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Senate. Uh otherwise, he'll be a
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complete lame duck. and he has a lot
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more to do in terms of lowering
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regulations
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uh getting the government out of our
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hair and uh really allowing innovation
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to take us to a place that will benefit
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everybody. And I might sound like an
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evangelist on this and I am not making
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this political but this is cuz believe
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me I was scratching my head saying what
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the heck are you doing because tariffs
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tax increases that's what they are to me
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and I don't like those and so but I
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think I think at the end of the day
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we're going to have much fairer trade at
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the end of the day across the board
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because the worst part of trade for us
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was the non-tariff trade barriers that
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we faced and a lot of those are coming
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down. I can't wait to see a paper
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written about that. Uh and so to be
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honest, I'm I'm very well not be honest
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to as I've just said, I'm very
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optimistic about what's going to happen.
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If you ask me what's my biggest concern,
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it is the commoditization coming out of
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China and how that is going to make its
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way through the system. Of course, it'll
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mean much lower inflation, but for many
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companies, it could mean much lower
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profits, too. So, uh really trying to
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understand that dynamic if I'm being
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realistic about the risks out there as
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well. Uh but, you know, I think we'll
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look back and this chaos chaos will have
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obfiscated
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a lot in terms of the progress that
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we're going to see. And I'll give you
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one illustration of what happened in his
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first administration. How did he cut uh
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the corporate tax rate from 35% to 21%
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given the very he had a narrower margin
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in in his first administration. How'd
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that happen? It's because he was
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distracting everybody with all of these
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crazy ideas and policy makers just said
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like, "Okay, we have to get something
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done here and this this seems at least
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threatening of what he wants." um he's
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going to lower the corporate tax rate
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again, but not explicitly. It will be
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through uh the 100 expensing uh of
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capital spending in year 1. that will
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get us to the equivalent of a 14 15%
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corporate tax rate which will make the
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US the most competitive uh nation I
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think in the world combined with the
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deregulation and I think you you hear
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many people they're very bearish they're
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saying oh the dollar is going to go down
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the US is you know
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investors are moving away from the US
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into these other areas and some of that
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has been going on But I believe the
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return on invested capital uh in the US
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will increase relative to that anywhere
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else in the world and that we will
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attract capital uh attract more
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investors and the dollar will go up in
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the years ahead.
