Diaries of an ETH Maxi on Wall Street | Sam Jernigan

The most bullish thing about ETH right now is the fact that the ex understanding of of TradFi is that it's this crypto asset like Bitcoin.

Because I think when they fully understand it, it's going to blow their brains out.

Welcome to Bankless, where today we're exploring the diaries of an ETH Maxi on Wall Street. Yes, David and I came up with that title, and I think it's a perfect description. As usual, this is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. Our guest today is Sam Jernigan. He is the unofficial ETH Maxi of Wall Street. Now, those are his words. Sam's been evangelizing Ethereum to institutional funds and to billionaires, really rich people, from inside the house for the past five years, and giving them the ETH narrative so the ETH killers don't take all of the marketing oxygen. That was a discussion we had in today's episode. And I think this was a fascinating look at the inside baseball of Wall Street's crypto adoption and the Ethereum narrative. We're early is an expression Sam kept coming back to. And uh I definitely felt like that in the episodes, very early in Wall Street's understanding of the Ethereum narrative today.

Sam's been on Wall Street longer than some of you listeners have been alive, probably. Um so he's he's seen a thing or two about Wall Street and has just is one of those guys that was open enough to crypto to really get pilled on crypto, like in a very deep way. Uh and Sam's connected to a lot of just like the Ethereum OGs, people like Justin Drake have been like going back and forth about like the Ethereum narrative, why it fits inside of Wall Street. But for a long time, Sam's been more or less hat like wearing the Wall Street gag. Uh, if you work in Wall Street, you can't really talk. You don't really have total freedom of ability to express your thoughts and opinions about things. Uh, but Sam has since left Wall Street. Uh, so we get uh an exclusive peek into uh the stories that Sam has uh from being on Wall Street in 15 years, as well as just all of the times that different crypto people have come into the world of Wall Street to pitch their layer one, among other things. Uh and so just hearing the takes about like somebody who's a Wall Street veteran that's also crypto native, uh, who's finally get to tell their story after such a long time is always a pretty interesting episode.

Alright guys, let's get right to the episode with Sam. But before we do, we want to thank the sponsors that made this episode possible, including Bankless Nation. Today we have an opportunity to pick the brain of someone who I think perfectly straddles both TradFi and Ethereum. Sam Jernigan is a macro investor who spent the last 15 years trading many different asset classes, including crypto. He built and ran crypto at More Capital, which is one of the largest, oldest macro funds in the world, space in New York. And before that, Sam launched a global macro fund that could trade digital assets. This is one of the first out of Mike Novogratz's family office. So he's done so many things in finance. He helped pioneered crypto options, uh, executed the first ever option on ETH. And before that, he even spent some time in the belly of the beast at Bear Stearns and JP Morgan. And uh to give you a sense of the straddle and what he's up to right now, Sam is currently both a participant at the US Monetary Policy Forum. So that sounds pretty central banker, and also at the same time an Ethereum ZK EVM uh advisor to the project scroll as a layer two, which you've heard about. So that is deep crypto and central bank, uh again, straddling these two worlds. Uh Sam, this episode has been a long time coming. We've wanted to get you on for a while, but you have not been able to because I think uh you've been under some trad fi rule sets that uh have um you know not allowed you to speak out and talk about crypto in the way we're about to talk about it. So welcome to the bankless episode.

Thank you guys. So thank you for having me. I am a longtime listener. I rarely miss an episode, and I'm a big fan. I think you guys do a public good.

Appreciate it.

So uh let's talk about we want to get your background in it in a minute and how you kind of ended up here and like what you've been up to, just like the behind the scenes, because that's uh super interesting for for bankless listeners what it's like in the belly of the beast. But the I think the context for this episode is we want to talk about Ethereum and Ether and how to sell it to TradFi, like what narratives resonate. In order to do that, I think we need to set up um this term, TradFi. It's something that crypto natives use. I don't know that institutions call themselves TradFi. They're just like Fi, they're just like finance, right? But I think that like for crypto natives, yeah, finance. For crypto natives, right? It's basically anything not crypto is trad fi. I mean, that is maybe a simple way to explain it. But when we say the word trad fi, like what does that mean in your world?

Right. Um, I remember the first time one of my best friends is uh chief economist at uh one of the

The largest banks. And I remember the first time I we were we were out one night. I remember the first time I said this word trad five to him. He's like, what is that? What does that mean?

And um that was not long ago. Um

I think um I would say, you know, we think about when I say finance, um, you know, I think about basically like the investment banking world. So it's sales, trading, research, investment banking.

And then that's what we call the the sell side. And then the buy side would be

what most people would usually consider like hedge funds and private equity um funds. Venture funds are really outside of Wall Street, really. Um

You know, I I was pointing out to somebody that like Andreessen Horowitz may be a huge fund, but I doubt they're even a client of JP Morgan. So they're they're just they're not. Um, I think they probably use Morgan Stanley or something, maybe, right? But the in in general, venture funds are just separate really from Wall Street or what I call TradFi,

or what most people I think call TradFi. I think it you would be thinking of Goldman, JP Morgan, Citibank,

you know, et cetera, the the investment banking world that comprises institutional.

Um buy and sell side.

So why uh what I want to get out of this episode, Sam, uh is we are entering the era in which crypto and trad fi are becoming closer than ever.

Yeah.

Uh we now have the Bitcoin ETF. We're about to have the Ethereum ETF. Uh and now our conversations are going to go directly into the ears of quote unquote TradFi. And so I I'm trying to learn how to best sell what crypto has to offer. And right now that's Bitcoin and that that's it. That's ETH. But in order to really like put the correct words in the correct order, we really need to understand the audience. And so understanding that the audience is not venture capital, but it is Wall Street. Let's keep on going down that that path. Like what is what's the makeup of TradFi? Who are these people that we are actually like connecting to via the ETFs?

Right. Well, I mean, I think the ETFs,

I mean, there are some hedge funds that probably okay. So I mean, I think uh I remember probably a couple years ago. I actually uh in a chat I mentioned you guys that most major funds are now papered up. That means that they are now papered, they have legal documents in place with, say, Coinbase in particular,

to actually trade spot.

Um, that can be a very long process. I I would say we got about

Maybe a third of the way through that process in the last cycle.

I remember at one point, like

I think Coinbase had a backlog of like a thousand funds that were waiting to onboard. They simply couldn't do it. And then the

things kind of went off the rails. Um, and then I would say like half those docs probably didn't get done, and

it they have of the last year, or a third didn't get done, and then the last third probably have been getting done over the last um

brief kind of emerging bull market.

Um

so yeah, so most funds are actually now like more wired or papered, as we say, to trade uh um crypto. And the the infrastructure for that's gotten a lot better, like Coinbase Prime, which will be the primary platform that institutions are going to use.

I can't even describe to you like the evolution of that platform, has gotten a lot better. It's also much more crypto native. We um that we could say that for another another conversation, but the the the web wallet integration, particularly on the back of their win at the SEC.

Is gonna really change things. I don't I haven't seen that picked up on uh crypto Twitter, but

um so yeah, so the the infrastructure is very good. Um

that kind of actually goes back to my origin. You know, Tegomi is the smart order router that was acquired by um

Coinbase and is now what's integrated into Prime. And I was one of the first people ever demoed that back in 2018.

Um so

yeah, so the infrastructure is very good, and a lot of accounts are are quote, papered up to be able to trade spot.

But there are still other funds. And I would say, like, even like just smaller prop shops and

and then like family offices. Some family offices I would consider like

TradFi institutional,

right? In the Wall Street sense. And then the next tier, I would kind of, you know, I would almost kind of put them in the next tier out

because they don't trade a lot or they're not as active.

The next tier out are going to be,

you know, more like pensions and endowments. And they're obviously also, you know, part of TradFi, but this is kind of like permanent allocated portfolio capital. And there's

That's actually a very compelling story. I'm actually not surprised by the adoption of Bitcoin ETFs by

large long term allocators.

And you know, we can we can get into this the the portfolio allocation benefits. Um and that was uh to to having not just Bitcoin, but ETH and other crypto assets.

That was that understanding that story from an academic standpoint, based on some work a former

Senior Fed official friend of mine had done while he was actually at the IMF,

is what actually convinced me to start the first fund. So

I guess that's a long way of saying,

you know, TradFi is definitely going to be very involved. I think in terms of selling it, Bitcoin is digital gold. Um, maybe we're seeing a little bit of a change to that with OPCAT and some of these other initiatives. I I saw uh the Starkware actual little video earlier uh from earlier today.

Um, really kind of try trying to prod the Bitcoin community into embracing scaling, embracing a lot of the technologies that Ethereum has pioneered, by the

way. Um,

but

for the time being, you know, Bitcoin is just digital gold. It's um, and I look, I understand why that has been very attractive for Bitcoin investors, right? It's like if we ever get to the size of gold, like we're all rich, we've done great. Like, what more do we why risk? Why take any any of these risks,

you know, or potential risks that they perceive, anyways, to try and do more.