The Fascinating Complexity of Building Financial Systems

This is Eric Golden, and my guest today is Matt Walsh. Before we start, in addition to our opening disclaimer, I wanted to share that I have known Matt for many years. I’m an investor in his fund, and currently, or in the future, could work with some of the companies he mentions during this episode. With that said, Matt is one of the founding partners of Castle Island Ventures, which invests exclusively in the crypto industry. Including monetary networks, financial services infrastructure, and Web3. Before founding his VC firm, Matt worked at Fidelity, where he led a number of the companies crypto initiatives. In our discussion, which is far ranging, we discuss how his early experiences in crypto led to building a crypto VC, what themes his fund focuses on, his take on the 2022 collapse, the comparison of prior cycles, and his personal view on the appropriate regulatory response. Please enjoy my conversation with Matt Walsh.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:02:38] - [First question] - Being labeled as one of the first people to understand Bitcoin

[00:06:20] - Partnering with Nick Carter and how they came together 

[00:07:14] - What drove his decision to finally take the leap and become an entrepreneur

[00:08:40] - Lessons learned from setting up and deploying his first fund

[00:10:20] - Comparing the crypto space in 2022 to what it was in 2018 

[00:14:15] - How regulation serves customers better than a libertarian outlook

[00:16:04] - Thoughts on the best way forward given crypto’s regulatory shortcomings 

[00:18:13] - Commissioner Hester Peirce - A Regulator’s View of Crypto 

[00:18:47] - How far away we are from having an active congress involved in crypto 

[00:20:57] - The notion of retail and yield generating products and why that part of the industry imploded on itself 

[00:23:22] - Whether or not he’d invest in crypto again given its current state of affairs

[00:24:14] - Areas and macro trends he’s most excited about today 

[00:27:26] - How the concept of crypto is more enticing for brands than a public database 

[00:32:38] - The difficulty of figuring out the real market value of any given project 

[00:36:20] - How he would approach handling privacy and KYC in DeFi 

[00:38:31] - Defining financial service infrastructure and where they invest in it 

[00:40:01] - Some of the market structure bets they’ve made over the years 

[00:42:17] - How a prime broker would have helped in light of the FTX scandal 

[00:44:05] - His view on where things stand with Genesis and FTX and how they’ll unfold 

[00:52:14] - Why some countries and governments will push back against stablecoins 

[00:53:26] - Some of the craziest ideas that have come across his desk 

[00:54:23] - Trying to get to the base of an idea when it comes to due diligence 

[00:55:57] - What he’s most excited to build over the next six months and six years 

[00:57:09] - Whether we’ll get regulation in crypto or a migration of traditional assets to crypto rails first 

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