#1561 Arjun Sethi | Is Bitcoin Becoming the New Global Reserve Asset?
🎯 Summary
Podcast Summary: #1561 Arjun Sethi | Is Bitcoin Becoming the New Global Reserve Asset?
This episode of the Pomp Podcast features Anthony Pompliano in conversation with Arjun Sethi, Co-CEO of Kraken, focusing on the convergence of traditional finance (TradFi) and the crypto ecosystem, and the fundamental shift towards programmable, permissionless financial infrastructure.
1. Focus Area
The discussion centers on the future of global finance, arguing that it will be programmable, permissionless, and increasingly decentralized. Key themes include:
- The convergence of TradFi and crypto (e.g., Robinhood adding crypto, Kraken adding US equities).
- Bitcoin and crypto as an infrastructure layer for global liquidity, not just an asset class.
- The role of AI in finance for creating leaner, faster systems.
- The importance of tokenization (moving real-world assets on-chain).
- The development of hybrid trust models between regulated entities and decentralized primitives.
2. Key Technical Insights
- Crypto as Infrastructure: Crypto is fundamentally an infrastructure layer powering trading, payments, identity, custody, and credit, moving beyond being viewed solely as an asset class.
- Programmatic Compliance: KYC/AML compliance can and should move on-chain, enforced programmatically rather than through manual, post-facto interpretation, potentially making compliance easier and more targeted.
- Composability and Interoperability: The future requires protocol-level composability, similar to email, allowing seamless communication and asset transfer across different platforms (e.g., sending assets between Venmo and PayPal equivalents).
3. Market/Investment Angle
- Kraken’s Strategy: Kraken is positioning itself as a “financial OS of the internet,” building infrastructure for trading, custody, and payments to enable innovation rather than acting as a closed gatekeeper.
- Tokenization as the Trojan Horse: Tokenizing traditional assets (like Kraken’s X-stocks) is the key mechanism for bringing established assets onto programmable rails, unlocking innovation in DeFi lending and structured products.
- Issuer Choice: Issuers (companies) now have a choice between traditional public markets and tokenized on-chain strategies, which will drive competition between TradFi and crypto systems to win their business by offering better access to global liquidity and lower friction.
4. Notable Companies/People
- Arjun Sethi (Kraken Co-CEO): The primary expert, detailing Kraken’s strategy to build open, programmable financial rails and integrate traditional assets.
- Kraken: Highlighted as a crypto-native company proactively building infrastructure to support traditional assets (X-stocks) and aiming to be a global financial OS.
- Traditional Players (e.g., Fidelity, Bank of America, Morgan Stanley): Mentioned as examples of existing systems where moving assets between providers is intentionally difficult due to friction.
5. Regulatory/Policy Discussion
The conversation acknowledged that regulations were often passed for good reasons but are poorly implemented in the manual, post-WWII framework. Sethi argues that the future involves smarter, programmatic compliance that enforces rules at the point of interaction (e.g., redemption or collateral use) rather than broad, manual gatekeeping that excludes billions of potential users.
6. Future Implications
The industry is heading toward an open, permissionless financial system where asset ownership is user-owned (or hybrid), globally accessible, and natively digital. This shift will collapse layers of friction (custody, settlement, access) abstracted into code, leading to greater innovation and financial inclusion by lowering the barrier to entry for product development.
7. Target Audience
This episode is highly valuable for Financial Technology Professionals, Investment Strategists, Crypto Infrastructure Developers, and Institutional Investors seeking deep insight into the long-term structural evolution of global capital markets driven by crypto and AI integration.
🏢 Companies Mentioned
💬 Key Insights
"The US doesn't hold US equities on behalf of the citizens or anything like that, but it does feel like there's a significant shift now where the countries are here, and that should change things in the market pretty drastically."
"In Europe, they had the MiCA roll out, right? And so it set a baseline, in my opinion, for others to follow rather than what you typically see"
"We had MiFID II, which is a variant of what could become law in the future when we're thinking about commodities versus securities, the agency roles between the SEC and the CFTC."
"when you're going to where people are buying daily, they are priced in USDT, right? They're not priced in their local currency; they're priced in USDT."
"Real innovation isn't the tokens; it's going to be the rails they continue to run on. So, I like to think instant settlement again, 24/7, programmable ownership, global access."
"What's the shift of store of value, which is what we've been used to, to infrastructure. And I think that ends up being probably more important around what we want to be able to build."