FTX is partnering with MLB, creating the leagues first crypto sponsorship. FTX Co-Founder and CEO Sam Bankman-Fried joins Yahoo Finance Live to discuss.
ZACK GUZMAN: Welcome back. In today's Crypto Corner, crypto exchange giant FTX has been on a bit of a spending spree when it comes to attracting new customers. Not only did they become the first crypto company to win naming rights to a major US arena in their sponsorship of Miami Heat's arena, but they also shelled out $210 million to rename a major esports brand TSM to TSM FTX. And now FTX is making history again, this time, becoming the first company to work out a new partnership with the MLB to get FTX brand patches on umpires for the upcoming season.
And for more on that and the current state of crypto, happy to welcome back into the show FTX's founder and CEO Sam Beckman-Fried joining us here again. And Sam, obviously, I want to get into the state of cryptos as we're seeing that play out right now. But first, I guess, we'll start on this partnership because you've been so active. What brought you to the MLB this time? And what are you looking to do with this particular deal?
SAM BANKMAN-FRIED: Yeah, I mean, you know, they're one of the organizations with absolutely massive reach and a sort of cool patch on every empire, which I think is pretty creative. But I think beyond that, we were excited about how excited they were about this. And I think that's really important for us. You know, everyone can tell if these are authentic or inauthentic. And, you know, the fact that MLB was excited to work with us-- and they've been great to work with-- they've had a ton of good ideas-- just means there's so much more opportunity to collaborate on things. And I think that that's the single thing I'm most excited about with this.
ZACK GUZMAN: Yeah, and I mean, last time we chatted in Miami at Bitcoin 2021, you were talking about how the crossover in esports made sense for a lot of maybe the customers you're trying to attract at Miami Heat. You got the MLB. I wonder what-- if this is it or if there's more pushes in the sponsorship deal, since you guys have gotten quite creative with them. I mean, how many different avenues are you looking to maybe tap into crypto curious customers out there?
SAM BANKMAN-FRIED: I'd be lying if I said there weren't anymore being planned.
AKIKO FUJITA: That's key.
SAM BANKMAN-FRIED: Yeah, I mean, you know, I can't--
AKIKO FUJITA: Yeah, we have to ask you a follow-up here on what kind of timeline you're looking at on additional announcements. Because it sounds like you've got a pretty big buildout coming.
SAM BANKMAN-FRIED: Oh, I can just see our agents texting each other, hoping I don't say anything right now. But no, I mean, I think over the next couple of months, there's going to be-- I would be surprised if there weren't at least one more thing coming out, so.
ZACK GUZMAN: When we took it-- when we look at what's going on in crypto, though, right now, Sam, you're one of the smartest guys that I talked to down at Bitcoin 2021. And when we look at the space, I mean, I know that you and I-- neither one of us really like getting the short-term kind of price calls. But when you're seeing it play out and kind of the excitement around this, the volatility angle, the idea was that, you know, you had so much institutional money flowing that we weren't going to see kind of a big drawdown like we saw play out in May. And yet that is happening. I mean, where do you put us at in this cycle? And maybe what do you see right now, as a lot of people may be nervous after that sell-off?
SAM BANKMAN-FRIED: Yeah, so on the one hand, I think the institutional money is still planning to come in. It's going to be months to years. You know, these are a lot of slow-moving, careful institutions that are making decade-long decisions about what they're going to do with their businesses. They don't move overnight. And, you know, I think we're going to see some starting to trickle in now. But I think, frankly, it's going to be a year or two before a lot of them have started getting involved. So, you know, a lot of things can happen between now and then, I think, before that money really does start going into the ecosystem.
The one thing I will say is that some of this sell-off has been driven by liquidations, leveraged long positions that got blown out. And the potential for those to drive things down is down. There's a lot less of that now just open interest is not a lot. You know, a lot of people who could get liquidated did get liquidated. There's a lot less froth in the market. And you can see this for a lot of different aspects.
One thing I often look at is the interest rate curse in crypto, whether you're looking at borrow costs or whether you're looking at futures premiums. Both of them, for the first time in a year, are showing negative interest rates looking over the next few months, which is, while not a bullish sentiment, it is a sign that, you know, people are no longer holding a lot of net risky long positions.
AKIKO FUJITA: Hm, if you look at some of the notes we've gotten from some banks, I mean, it seems to suggest if we're talking about institutional investors, there are those who have sort of exited their positions maybe on the back of some of the volatility. I wonder what you've seen on that front. And if we're talking about a catalyst to push the price even higher, does it ultimately just come back down to institutional money or other levers that you're looking at?
SAM BANKMAN-FRIED: Yeah, so first of all, I totally agree. I think short-term is just very bad for institutions. And in terms of their excitement about crypto, I think you see them delay their entrance to the space by months. And I think it did cause some of them to sell out. And I don't think it's going to stop them from coming in. But I think it's just going to be slower.
You know, other than that, what could cause further excitement? You know, I mean, anything could. Who knows, right? Like, if Elon falls back in love with Bitcoin, you know, who knows what would happen to markets? But, you know, I think that, like, one example could be starting to see more integrations of crypto into the world, starting to see it used for payments, starting to see it used-- I mean, you had the El Salvador announcement. I don't think that's that big in and of itself. But if it is the sign of further government acceptance, that would be big.
Starting to see regulatory clarity, which I think will come. But it could be a little while. But if that starts to come out, especially out of the United States, I think that will help give the space the comfort to move forward on some things. And starting to see a lot of infrastructure providers start to integrate crypto into their services. I think those are all things that could help drive crypto adoption.
ZACK GUZMAN: But we also-- I mean, we also saw Chinese miners moving out, right, and the clampdown there.
SAM BANKMAN-FRIED: Yep.
ZACK GUZMAN: I mean, in the short-term, a lot of volatility, we saw that play out just because you have pieces of the network moving off and coming back online in other spots. I mean, are you surprised at maybe how that's gone and how the network's been able to maintain itself through all this and maybe the fact that it's been overlooked that things kind of went smoothly?
SAM BANKMAN-FRIED: Yeah, it did go surprisingly smoothly. You know, I think part of this, honestly, is, like, they're sort of the lowest cost ways to mine Bitcoin. But there is enormous potential to quickly spin up higher cost ways to mine Bitcoin. So there's a limit to how much this can blow out and how much the network can decay from this.
These miners had months of warning. They weren't sure, I think, that they were going to need to move out. But they knew there was a chance. Many of them were making plans, securing alternative sites in other jurisdictions. By the time it happened, I think a lot of them were ready for it. And there's been a growth in mining in other countries, including the United States recently, to help buffer this a fair bit.
And then the last thing that I'll say, frankly, is the fact that a lot of hot air is out of the system right now means that there's less short-term demand for transactions. And so the network can sustain a bit of a hash rate hit better than it could a month and a half ago.
ZACK GUZMAN: And lastly, I mean, you were tweeting-- it caught my eye just because, you know, we work here mostly Monday through Fridays. We've talked a lot about tokenized stock offerings and platforms offering that. FTX, of course, partners with Switzerland-based Digital Assets AG. You offer customers who've already gone through KYC, Know Your Customer, documentation to trade 55 stocks 24/7.
And I mean, it was kind of weird to watch Coinbase list on the NASDAQ. You think about the largest US exchange on another exchange and maybe at one point, if those were to flip in size. I mean, how do you see maybe traditional stock exchanges, exchanges like yours, and other ones out there kind of colliding in this space if you are able to trade tokenized stocks now? How do you see that evolving in the next few years?
SAM BANKMAN-FRIED: It's a super interesting question. No one knows for sure. But I think you're raising a really good point here. And I think people focus a lot on DeFi applications of tokenized stocks, which I think is super exciting. But there is this other thing where there are kind of alternative fintech rails being built out between the crypto native products and the stock native products. And both of those are going to maybe end up offering both stocks and crypto. But the format is going to look a little bit different. And I mean, look, we'll see what happens.
All I have to say is, you know, I've sort of made my choice about what I think is going to give the best product experience. FTX is basically the only 24/7 stock market in the world on ftx.com. It's cross-margin with all of the other products on the exchange, instant settlement. And I think there is a ton of room to innovate in all of these categories and a ton of room to build a really beautiful, powerful user experience in a way that I think everyone feels they're not quite getting with their current products.
And this is, like, a core thing, I think, we come back to again and again. Do people love the experience they have right now? And for stock trading, the answer is no. No one will tell you they love the experience they're having with their applications. They're OK with it. You know, it's kind of enough to get by. There's a lot more they'd want. There are some issues, but, like, they can do it. And I think that's a sign that there is progress to be made there.
ZACK GUZMAN: And I think it's probably a sign as to why you're spending so much on these marketing deals to get more people to be taking a closer look at FTX. But Sam Bankman-Fried, always love having you on, man. We could talk for hours, but hopefully we get you back on soon. Be well.