MicroStrategy Founder and Executive Chairman Michael Saylor joins Yahoo Finance Live to discuss the fallout from the FTX collapse, Binance’s recovery fund, and how instability in the crypto space could add to bitcoin’s strength.

Video Transcript

- All right. It has been an eventful couple of days for cryptocurrencies, to say the very least, as the ripple effects of the FTX crash make their way through the wider market. Despite this, some crypto Bulls are staying put. Our next guest might well be the most high profile Bitcoin champion of recent times. And he's still beating the drum, saying Bitcoin might well come out on top.

We're happy to be joined by Michael Saylor, MicroStrategy founder and executive chairman. Michael, always nice to see you. You heard Jared talk about this recovery fund being put forth by CZ. What are your thoughts on that recovery fund? And does that help to rebuild trust in the industry?

MICHAEL SAYLOR: I think that Binance is the best managed and, of course, the most well known of the crypto exchanges. But the most important point to be made here is the collapse of FTX and FTT represents a corrupt crypto bank collapse fueled by an inflationary fiat cryptocurrency. So as Gary Gensler has said, the vast majority of all the cryptos are unregistered securities. They're trading on unregulated exchanges.

Proof of stake tokens are backed by nothing, which is why FTT could be printed into the $8 billion zone. And this is simply a very expensive lesson for the crypto ecosystem and the difference between crypto and Bitcoin.

- Michael, we've just recently seen Bitcoin come off of its 52-week low, but it's also winter low in terms of the price action here. So with that in mind, do you believe that crypto whales are looking at the price right now and still seeing some type of opportunity? And what type of concentration among Bitcoin ownership do you think even at these lows, which are still amid a washout in some of the confidence for other investors in crypto, what does that mean in terms of the concentration of ownership going forward?

MICHAEL SAYLOR: I think it's another event that's massively distributing more Bitcoin all around the world. I think there's a massive amount of accumulation of Bitcoin right now. The BTC is moving from weak hands to strong hands. I think this is one of those annealing events. 2 and 1/2 years ago in March of 2020, we saw a similar circumstance with Bitcoin trading in the $4,000 range.

If you look at the volumes of Bitcoin trading today versus then, they're up by a factor of 5 to 10x. So there's extraordinary institutional interest and investor interest in the asset class. And I think that this is going to be really helpful for Bitcoin because this is an educational moment. And people are realizing the benefits of buying a crypto asset that's backed by the world's most powerful computing network and by 10 gigawatts of energy and the difference between that and the 20,000 other cryptos that are, in essence, backed by nothing and they're just like other fiat currencies.

- So Michael, let's pick up on that point. I mean, it sounds like you're saying there's going to be real divergence here between the likes of a Bitcoin or an Ether versus some of these other digital tokens. What does that shake down look like? And, ultimately, how many of those tokens survive?

MICHAEL SAYLOR: Well, I think this crash accelerates regulatory intervention. I mean, in fact, in a sense, right, SBF is like the Jordan Belfort of the crypto era. Instead of the "Wolf of Wall Street," they'll make a movie called "The King of Crypto." This is going to bring in the SEC, the CFTC at a much greater rate. And the future of the entire industry is digital assets trading on registration-- its registered digital assets trading on regulated exchanges.

So to the extent that there's something good in the crypto industry, the good stuff is a digital exchange that trades 24/7, 365, trading on 8 billion Android and iPhones, digital currency available to Argentinians and Lebanese and people all through Africa and Asia that are blocked from the US financial system, the ability to issue tokens if you're a creator and monetize your brand, and the ability to deliver digital securities that trade 24/7, 365 at the speed of light friction free outside of the traditional banking system, which is, in essence, a monopoly on assets.

So those are the good things. The problem is those have been pursued by the crypto industry in an unethical, unstable, technically irresponsible fashion. And this is just highlighting the fact that a good idea pursued in an unethical, irresponsible fashion is a bad idea. I think that the regulators have it right.

The idea is you should be able to register your digital asset. If you have a stablecoin, you should register it with the SEC. If you have a security, you should register it. If you want your crypto token to be designated a commodity and an asset without an issuer, you ought to have a registration process. And if you want to run a digital exchange that trades all these tokens, you should be regulated, transparent exchange that's trustworthy. And I think the regulators get it. I think the politicians get it. I think it's been a very expensive process going through Terra and Luna and Celsius and Three Arrows and now FTX's collapse.

But at this point, I don't think there's anybody in the Western world that doesn't understand the risks of allowing people to promote unregistered securities on unregulated exchanges. And so what's going to happen? You're going to see a massive shakeout. 99% of these air tokens are going to go away. They're literally the penny stocks of our era. The joke, of course, is penny stocks used to trade for a nickel, whereas some of these dog coins are trading for fractions of a penny.

They're not even penny stocks. At one point, they created a token, which was $0.000001 so that you couldn't even read the price of the token on an eight significant digit display on a crypto exchange. So that stuff's got to go. And what needs to replace it is ethically sound, technically sound, economically sound digital assets. The industry needs to grow up.

- Michael, as a statesman in this industry, those words, comparing SBF to Jordan Belfort, those are some big words here. So is there another way to look at it in that you view SBF as a corrupt player in this industry and he needs to be made an example of, put in jail for what he has done to the space?

MICHAEL SAYLOR: He was using counterfeit money and stolen money to lobby against all the virtues in the industry, against proof of work, against Bitcoin. He was working to corrupt regulations, corrupt the political process. When you have actors that use corrupt counterfeit stolen money in order to undermine the industry, it's not good for anybody.

And so, yeah, I mean, I think that people need to decipher this. FTX generated an FTT token. If you trade your own token on your own exchange with wash trading with leverage, you can park the price at any number you want. So you want to make $1,000,000,000, you jack the price by $3 by wash trading with yourself. Then you generate dollars of collateral. Then you look for a bank that'll loan you money against the collateral. And of course, nobody in their right mind should be loaning money against an air token that you manipulated yourself.

But of course, Sam happened to be the CEO of a bank that made loans. So he applied for a loan from his own bank. And he granted it to himself. And then he took real assets like Bitcoin from his honest customers. And then he rehypothecated them, traded them, lost them. And so this is just an egregious ethical lapse. And it can't go on. These exchanges cannot continue to be unregistered, unregulated, offshore.