Galaxy Digital Holdings Ltd

TSX:GLXY

Earnings Call Transcript 2019-Q4

[Operator]

Good morning. Welcome to today's Galaxy Digital conference call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to the Investor Relations team. Please, go ahead.

[Unknown Executive]

Good morning, and welcome to Galaxy Digital shareholder update conference call. We're joined today by our Founder and CEO, Mike Novogratz; President, Chris Ferraro; and Chief Financial Officer, Ash Prithipaul.Before we begin, please note that our remarks today may include forward-looking statements. Actual results may differ materially from those indicated or implied by our forward-looking statements as a result of various factors, including those identified in our filings with the Canadian Securities Regulatory Authorities on SEDAR and available on our website.Forward-looking statements speak only as of today and will not be updated. In addition, none of the information on this call constitutes a recommendation, solicitation or offered by Galaxy Digital or its affiliates to buy or sell any securities, including Galaxy Digital securities. And with that, I'll now turn it over to Mike Novogratz.

[Michael Edward Novogratz, Founder, CEO & Chairman]

Good morning, everybody. We are remote as most people are from various locations. And so bear with us if we have any glitches. We're going to do this a little differently this time. I'm going to start off and tell you why I'm really excited about what we're doing here, why I'm really excited about crypto and bitcoin specifically right now, and give you kind of the macro overlay of what we're seeing. And then I'm going to pass it to Chris, who's really going to go through our results, our businesses and what he's seeing and why he is excited. And then Ash will kind of take you through the numbers and then we'll do some Q&A.So we live in strange times. Who would have thought last I spoke that we were all hunkered down around the globe, sheltering in place with 2 or 3 people and going a little stir crazy thinking each day is Groundhog Day? Who would have thought that central banks and finance ministries around the world had done unprecedented amounts of money printing? The scale of what we're seeing in monetization of debt has never really been seen. The U.S. is already up to $3 trillion of stimulus that's literally being monetized by the Central Bank. But it's not just the U.S., you're seeing that around the world. And when you think about that as a necessary response because it seems to be a necessary response to an economy that's come to a halt, it really makes you think about why bitcoin as the first crypto was designed in the first place, right? Bitcoin came out of a financial crisis, out of the 2008 financial crisis, really because of a breakdown in trust, a trust in the financial system. And it is now coming of age in this second crisis, which is both a humanitarian crisis and a financial crisis.In lots of ways, Satoshi as brilliant as she was, designed bitcoin for this period of time. I said recently on a call, if not now, when? Like this is the moment that crypto should come of age. And I would tell you, I'm seeing so many positive signs from hedge fund managers that have never bought it, that were skeptical, calling me up and asking me how to buy it and then actually buying it to high net worth individuals putting money in funds or starting to buy it to Coinbase and the other exchanges seeing a big uptick in people signing up for their services again. And so it feels to me like we are going into a very, very good era for crypto, bitcoin specifically, but all of crypto. I'll separate crypto into 2. I'll start bitcoin as the Store of Value thesis. That I think is going to be the simplest one to play. I think we're going to spend a lot of our time focused on that from a proprietary risk-taking perspective, but also from some of the businesses. One, because it's here now. People want an alternative to asset. They're worried about their dollars. In the first move in a financial crisis, everyone wants to buy the dollar, it's a safe haven. But all of a sudden when people look up and say, "Oh, we're monetizing debt. We literally are printing money like a printing press." And since recently, "my mother told me, money doesn't grow on trees when I was a little kid." Right now, it feels like everybody thinks money grows on trees, and that can't last. And so I do think the first big winner in this, in crypto, is you're going to see bitcoin significantly higher in 6 months, significantly higher by the end of the year. And with that, I think lots of leverage in our business shows up. The other side of crypto, listen, I think Ethereum and some of the other coins attend to very well in this environment too, being dragged along by bitcoin. But there's another piece of this, right? The digitalization of the economy is going to become more important. Privacy is becoming more important. We are going to go into, as will Europe, as will Canada, some regime of contact tracing, where there will be a big invasion of our privacy to try to understand who has this virus and who -- so we can get back to work. Mark my words, that's coming -- it's coming in the next few weeks. It's bringing up all kinds of privacy concerns. We've been on the phone with the ACLU, thinking it like how do they respond. And so it's going to put more focus on building blockchain-based systems to ensure privacy. Even digital money, right, in the first pass at the Stimulus Bill in the U.S., there was a section that mandated the Fed going to digital wallets for every citizen. It got cut out, but it was significant that was actually in the debate. And so that is coming and it's coming quick. And so our investing in that infrastructure I think is going to look really, really good. And so that's -- my big message is that this has been a long journey for us and for you as investors. This is the time, I think, for us to shine, for crypto to shine. We are working our tails off here at Galaxy, even if we are remote, to try to get ahead of the curve, to get -- make sure our businesses are well positioned. And with that, I'm going to leave it to Chris to kind of take you through each of the businesses and our results from last quarter. And then we'll get back, and we'll take your questions. Thank you.

[Christopher C. Ferraro, President & Director]

Thanks, Mike. Let me start off by echoing some of Mike's comments and acknowledging the fact that the last 7 weeks have been a challenging time, not just in the financial markets, but in the real economy and in the world more broadly. We here at Galaxy, as we navigate the COVID-19 crisis, the safety and well-being of our employees, their families and our broader communities here in New York and globally are a top priority for us. And as such, Galaxy Digital implemented a set of business continuity plans several weeks ago, which includes full remote working arrangements for all of our teams. So we now have a distributed network of employees, collaborating remotely on a daily basis. And I have to say we haven't missed a beat. I'm extremely proud of the commitment and the focus the team has shown during this unprecedented time. In the first quarter of 2020, as we began to feel the impacts of COVID-19 quite acutely here in North America, global investors began a rush to liquidity, leading to a sell-off of nearly all risk in illiquid assets. I do want to give everyone a brief rundown year-to-date of global asset performance, just for perspective to start my section.U.S. and Japanese equities, minus 18% year-to-date. European equities, minus 25%. Leveraged loans and high-yield bonds, minus 12% to minus 15%. Oil, minus 60%. The VIX, plus 275%. Meanwhile, gold has outperformed at plus 9%, and the U.S. 10-year treasury has rallied and applied to safety from 188 basis points to 74 basis points. So where does that leave crypto? As Mike said, BTC is flat on the year, while the Bloomberg Galaxy Crypto Index or BGCI is plus 13% year-to-date. I highlight this to point out that our market and our business thus far has been relatively insulated from the impacts being felt by traditional brick-and-mortar products and services businesses. Furthermore, we strongly believe that our market and business pieces stand to benefit from potential changes in behavior post crisis. Simple examples being future inflation concerns, faster adoption of digital money, physical services being digitized, et cetera.While we remain very cautious about all markets and are spending a significant amount of time with our portfolio companies in order to assess potential risks amidst the crisis, I can tell you with confidence that the team here at Galaxy is more energized than ever and in the middle of [ substantive ] conversations with more impactful commercial opportunities across all of our businesses than we've ever been before. I'll shamelessly borrow a quote from one of my favorite portfolio company's CEO that he recently used in describing his business, and say, "we do not plan on participating in this recession," credit Zac from BlockFi.Turning to the fourth quarter and full year of 2019, Galaxy Digital made significant progress in the second half of the year across all of our businesses, as I shared previously. This progress and momentum at the end of last year left us well positioned to respond to the global crisis in the first quarter. For the first -- for full year 2019, Galaxy had USD 26 million of comprehensive income, $54 million when adjusting for noncash equity-based comp, which is reflective of year-over-year increases in operating revenues across advisory services, management fee incoming in asset management business, interest income from our lending activities and flow trading income across spot and derivative markets. Successful monetization of our private investments with net realized/unrealized gains and also net realized/unrealized gains in our digital asset holdings. As of December 31, 2019, our net book value stood at USD 355 million, representing an increase of 16% compared to $306 million as of December 2018. Book value per share was CAD 1.62 or USD 1.24 as of the end of the fourth quarter. As we discussed on the last quarter call, we continue to maintain a sharp focus on our operating expenses, maybe even more acute by the events in the last few weeks as the COVID crisis has continued to unfold. To that end, in the first quarter, pre-COVID, we took steps to reduce overall operating expenses, while still maintaining our commitment to business building in each of our verticals, taking our total projected cash operating expense base down to approximately $40 million versus an excess of $50 million in FY 2019.Again, I'll reiterate that we have not discontinued any major initiative in our business -- in our primary business lines, but have worked hard to realign resources and will take a deliberate approach from here in growing the team as we monitor the ongoing operating environment closely. Now I'd like to take a moment to discuss the progress in each of our business lines. Our trading business grew its active onboarded counterparties to 367 in the fourth quarter. As we outlined in the last call, trading volumes were down market-wide in the second half of 2019, which did drive lower absolute volume outflow through our trading desk but as well as others. In contrast, in the first 3 months of 2020, our business has seen a significant uptick in both volume and volatility across the market, and we believe that we are well positioned to take advantage of current market conditions going forward. Our top priorities in 2020 in our trading business are simple: continue the rollout of our electronic trading product in order to improve counterparty experience and streamline operations; expand our trading product suite beyond spot OTC into OTC derivatives, structured products and electronic market making; and provide thoughtful institutional quality financing solutions to market participants who require additional efficiency in their capital utilization. In Asset Management, as we discussed previously, the fourth quarter of 2019 saw us launch our family of bitcoin funds, an institutional solution with blue-chip service provider roster, including custodians, ICES' Bakkt and Fidelity, to meet anticipated strong market demand for bitcoin. To one more time echo Mike's commentary, we believe the case for bitcoin has never been stronger with over USD 6 trillion stimulus alone and likely more coming, and we believe will ultimately result in large-scale monetization of Fed-funded indebtedness. Gold has clearly responded to initial long run inflation concerns, and we believe that bitcoin with its fixed and known supply will be the digital goal for future generations. And so we cannot be more fundamentally aligned with the strategy than with our bitcoin fund offering. A simple, secure, low-cost way to gain direct bitcoin exposure. Our FY 2020 priorities for our Funds Management business, which also includes our Bloomberg Galaxy Index fund product, include expanding distribution beyond our own platform in order to access wealth channels previously untapped by us or our competitors and continued corporate partnerships on co-branding and product. Also in our Asset Management division, our Galaxy Interactive team managing the Galaxy U.S. fund continue to take advantage of their access and informational edge in the fourth quarter of 2019 and made 6 new investments plus one follow-on investment with a continued focus on the intersection of interactive content, digital objects and blockchain. The list of companies we're excited to partner with through that fund now include Network, Tempo Storm, Forte, Socash Studios and Genvid Technologies. Overall, in Asset Management, we ended the fourth quarter with $357 million in AUM, up sequentially from $336 million at the end of the third quarter. I'll now proceed to Galaxy's third operating segment, the Advisory Services group. In the fourth quarter, our advisory team helped lead the 2 crypto IPOs of 2019 as a comanager on Silvergate's IPO on the New York Stock Exchange as well as a joint book runner on Cadence NASDAQ IPO. This was a great foundational start for our franchise, and the team has begun FY 2020 with one successful closed transaction in Q1 and a strong list of active ongoing engagements that include M&A advisory, project financing and general corporate advisory services. As I look to our balance sheet and our principal investments, our team has continued to pursue opportunities across both debt and equity. The team made 5 investments, totaling $7.5 million in the fourth quarter, and we deployed approximately $49 million for the full year 2019, which included 9 new investments and 16 follow-on investments for the year. Finally, I would point out, in the past several months that we continue to act as a thought leader amongst both the crypto and institutional communities, both in terms of institutional dialogue and our proprietary research and podcast series. Part of Galaxy's broader mission is to be a bridge between the crypto and traditional worlds, and we'd encourage anyone who wants to learn more and use our broadly available content as a resource. With that, I would now like to turn it over to Ash to walk everyone through the specifics of our financial performance for 2019. Ash?

[Ashwin Prithipaul, CFO & MD]

Thanks, Chris. I'll now provide some color on our financial results for the quarter and the year. Our comprehensive income for the year 2019 was $25.8 million with a comprehensive loss in the 3 months ending December 31 of $32.7 million. The fourth quarter loss was largely a result of realized loss on digital assets, cryptocurrencies, which trade continuously in the market, and operating expenses. The full year 2019 figure includes $28.1 million of equity-based compensation expense, which is a noncash charge and has no net effect on equity. This brings our total equity on net book value to $355.1 million as of December 31 or CAD 1.62 net value per share and USD 1.24 of net book value per share in USD. As of December 31, the number of compensatory cost pay units and stock options outstanding were $18.6 million and $17.7 million, respectively. The aggregate compensatory awards as of December 31, have a value of $17.5 million remaining to be amortized over their life. Operating expenses for the 3 months and year ended December 31 was $17.2 million and $82.2 million, respectively, inclusive of equity-based compensation of $4.7 million and $28.1 million over the same periods.Regarding our balance sheet, $7.5 million of follow investments, and a decrease in net unrealized gains of $1.9 million during the fourth quarter brought year-end investment balance to $158.2 million. As of December 31, we held 46 individual investment positions, excluding our cryptocurrency holdings with no single investment position, representing more than 8.2% of our net asset value. We are pleased to report that even after accounting for forward commitments and projected future expenses, we had $134 million of liquidity as of year-end, inclusive of net digital assets, providing ample liquidity with which to continue to operate the business.With that, I'll now turn the call back to the operator so we can address questions from our equity analysts and investors. Operator, any questions from our equity analysts?

[Operator]

Our question is from Deepak Kaushal with GMP.

[Deepak Kaushal, Director and Technology & Communications Analyst]

Guys, can you hear me?

[Michael Edward Novogratz, Founder, CEO & Chairman]

Hey, Deepak, we hear you.

[Ashwin Prithipaul, CFO & MD]

Yes. We can.

[Deepak Kaushal, Director and Technology & Communications Analyst]

Glad to hear you guys are doing well through the pandemic. I got a handful of high-level questions. We're still just trying to digest the filings from this morning. Just for Mike. So it sounds like -- I guess the question is, are you guys giving bitcoin a pass or a fail as a safe haven through the first crisis that it's gone through since its inception?

[Michael Edward Novogratz, Founder, CEO & Chairman]

Listen, I think, well, we have a category 10 hurricane. And we, to be fair, weren't fast enough on this. Every risk asset gets sold. It doesn't matter if your gold, if your treasuries, even long bond, there was a deleveraging that happened across the world faster and more furious than any deleveraging in history, including '08, and bitcoin got caught up in that. You have to remember that a large portion of participants in crypto, in general, including bitcoin, are still retail. And there is a tremendous amount of leverage in the system. The Asian crypto exchanges, BitMEX, Binance, Huobi provide staggering amounts of leverage to their customers. And when I say staggering, you get 100:1 leverage on BitMEX. In U.S. stocks, you can get 2:1 leverage, right? And so it's a pretty staggering difference. And so there was a monster deleveraging of assets, including crypto and including bitcoin. I think more importantly, since then, bitcoin is back to unchanged on the year with stocks down 20%, 25% because actually up on the year a couple of percent. And so it's regaining its status as a potential debasement of Fiat currency hedge. And like I said earlier, most importantly, I'm seeing real smart macro investors and smart investors calling me up and actually getting into bitcoin for the first time, seeing this as an alternative to Fiat and an alternative to gold. And so it's a mixed answer. We should have been smart enough to realize that in a deleveraging of that magnitude, everything was going to get crushed. And I wish I would have sold a lot of bitcoin and then bought it all back, I didn't. And so we kind of rode the P&L up, down and riding it back up. But I don't think it invalidates bitcoin's thesis. Remember, we still have to delever, it's only 11 years old. And so -- and it's a little unfair to say it went all the way to $4,000, there was a kind of a flash crash. But it did go from $10,000 to $5,000, a full 50% downdraft from top to bottom of the year. Last thing I'd say, and I didn't mention this, what surprised me at the beginning of the year was just how strong crypto started. Literally, I was pretty pessimistic in December, and I don't know where -- and it wasn't just bitcoin, it was all the cryptos. And so there was kind of a resurgence beneath the surface of enthusiasm for crypto. Remember, bitcoin had a huge start to the year as did Ethereum and lots of the other tokens. And so I think that shows, to some degree, that there's vibrancy in the system. And so my guess is we come back pretty quick.

[Deepak Kaushal, Director and Technology & Communications Analyst]

Okay. And I don't want to get too hung up on the comments around the hang up the spurs. But I mean to some extent, is this still a make or break year for bitcoin? If it doesn't, retesting by this year or...

[Michael Edward Novogratz, Founder, CEO & Chairman]

Listen, that was said somewhat tongue-in-cheek in that trying to show how impassioned I am right now in that. This is the macro environment. And listen, if we end the year and bitcoin is lower than here, I got my thesis wrong, and I'm going to have to rethink my thesis. It doesn't mean crypto's over, right? Listen, the blockchain is going to be here for the next 100 years. And it's going to get more important and more important every year. But bitcoin as a Store of Value, that thesis, this is a time for it. And so if at the end of the year, bitcoin is lower as a Store of Value than it is today, I got something wrong.

[Deepak Kaushal, Director and Technology & Communications Analyst]

Got it. We don't necessarily disagree, but I just had to ask the questions. So Mike, you spent your -- most of your career looking at macro. What are you looking for here, both in terms of key indicators for the overall market and economy in terms of a bottom? And how would that -- those indicators impact your thesis on bitcoin as those come through?

[Michael Edward Novogratz, Founder, CEO & Chairman]

So listen, I think the next few months will be tricky with bitcoin because it's going to be tricky with the economy, right? We're going to go through a monster deflationary impulse, right? I mean you watch the front oil contract might go as low as $15 next month, right? No one's using gasoline because no one is driving. And there's no place to store the oil. And so you're going to have this big inflationary -- deflationary impulse first. And so it's going to confuse people a little bit. It's like, well, is that bearish or bullish for bitcoin, right? That is going to be followed quickly by this fear that we're all becoming Venezuela. It's just shocking how fast fiscal packages are being just spun out. And the Federal Reserve -- it'd be one thing if the government was spending money and the Fed wasn't buying anything. But the Federal Reserve bought more treasuries in the first week after they started this new QE than they did in the entire 2008 financial crisis. And so we're seeing monetization of debt on a scale we've never seen. So I think the market will look past this deflation, but it's going to be why it's not going to be a pure straight-line right away. And it probably comes when we get back to work and the economy starts kind of picking up again, and we're like, "oh, my God, we've got all this liquidity, we're going to keep putting it in," is when bitcoin really takes off.Listen, when you monetize things, sometimes stock markets take off, right? The Zimbabwe stock market went much higher, even though the currency became worthless. And so assets -- I like hard assets. I like bitcoin, I like gold, I like real estate in this environment. Now when is that going to happen is a different question. It's really complicated to get people back to work right now. There's a testing regime that needs to get put in place. We're currently testing about 300,000 people a day in the United States. That needs to be 5 million-plus to even have a chance of getting people to get back work without the virus spreading like crazy all over again. And so you're going to see in the next few weeks, a big shift in discussion and focus the next few days to how fast we can build a national testing system here. And I think you'll see that in lots of other countries. My senses were the markets get too enthusiastic about what we start, like optimism reigns too well that there's probably a little more sobriety needed. And this is going to take us a few months to really get people really starting to go back to work. I mean you'll start in the next few weeks, small amounts. But you won't see the economy starting to pick up again until Q3. But I do think stock market probably trades in a range 2,000 to 2,800. And bitcoin right now is a little correlated to stocks because it's still -- people buy assets when they have money. And so they feel like assets should go up. Bitcoin has got some correlation. I think that correlation will break down, and we're starting to see a breakdown already. And so again, I would think positive for bitcoin in the next 2 to 3 months. And then as the story gets clear, like, "oh, God, what do we do?" Look, we crossed this rubicon that I don't think people did consciously of money growing on trees. Like we were already at a 5% budget deficit. 5% of GDP deficit when the economy was in full employment, that was insanity. That was Trump's vanity wanting to just have such great economy so he'd get reelected. Now we're going to be at like a 15% budget deficit, it's unheard of. And so that's kind of my macro backdrop. But again, it's not -- these things aren't completely linear, right? There are going to be tos and fros to it. I just feel really confident that at the end of the year, we're going to be a lot higher.

[Deepak Kaushal, Director and Technology & Communications Analyst]

Got it. I appreciate that. And then just going back to bitcoin. As we approach the halving -- what were kind of the lessons learned for your team on the Litecoin halving? Are there anything to watch for with the bitcoin SV or bitcoin cash halving in the coming weeks? And how do you kind of position yourself ahead of this halving? It seems like at the end of Q4, you sold off all your -- your all coin holdings, Ethereum and EOS and the others. How should we think of that going forward?

[Michael Edward Novogratz, Founder, CEO & Chairman]

Listen, I think we will, at times, strategically be long and short different coins, I think there's a longer -- if you think of most coins being just speculative at this point because most coins are just speculative at this point, the story around bitcoin is so powerful as the brand of Store of Value. All of the other coins, which will, I think, in the long run, do wonderful things, some of them, they have a dual story. They have this story that they're going to be used for something, right? Ethereum is going to be the base layer trust of the blockchain of the future if it has its way. You need more data points that that becomes true for really to pick up enthusiasm. And so right now, the price appreciation is that Ethereum community getting more excited about those stories and drafting off the bitcoin. But we're not seeing new customers coming to us to say, "Hey, you got to get me some of that XRP, you got to give me some of that Ethereum and you got to give me some of that," right? So the demand we see from the new participants is mostly centered around bitcoin. So I think from a risk perspective, we'll be focused more on bitcoin. That's not to diss the other tokens, quite frankly. And we will trade them proprietarily when we think there's opportunities. The halving is stuff I think is getting over -- it's getting overwhelmed by what's happening in the macro world. And so I think it's probably less important. So when you step back, in simple terms, we just took the inflation rate and cut it in half in a world where people are worried that other central banks are printing more and more liquidity. And so it's kind of a beautiful pork in the stomach of -- to everybody of saying, "Hey, this is how bitcoin works. You guys are printing more money and we're actually printing less." And so I think it comes at a unique time because it really does help accentuate the kind of the monetary and [ selling ] that's going on.

[Operator]

Thank you. We will now turn to the online questions.

[Unknown Executive]

Great. Thank you. Our first question is, how does this macro environment change your operating approach at Galaxy? And what's your view of liquidity and your burn rate? Do you have the right cost structure?

[Michael Edward Novogratz, Founder, CEO & Chairman]

Chris, you want to take that?

[Christopher C. Ferraro, President & Director]

Yes. Sure. Yes. So I think the -- hitting in reverse order. As Ash pointed out in the notes, at the end of the year, we ended the year with similar level of significant liquidity that gives us visibility to continue to invest in growing the business for the foreseeable future through the first -- through today, that hasn't changed materially. And in fact, it's actually improved a little bit. And so we feel pretty confident that in our liquidity position. As I also articulated, we did at the beginning of the year, evaluate what the cost structure of the business should be based on what we were seeing in the markets, pre real impact of COVID. And we did do a head count reduction, really more of a realignment of resources in the business of approximately 15% and took our expected gross operating expense number down. As I articulated, it's closer to $40 million from $50 million that we realized we saw in fiscal '19. I think the COVID environment -- the COVID crisis and the pandemic and the knock-on effects to the economy, does change the go-forward outlook for us from the perspective of -- we will -- we still continue to have open reqs and have seats in the business that we want to fill for different initiatives that we think are catching and that have big growth opportunities. But we will do that with a much more keener eye on and a much more day-to-day focus on where is the economy really going and what potential effects could that have on us, on our business that we just don't see yet today. So I think in short, the team is lean and mean and building across all the parts of the business that we think are the most attractive places to be investing our resources into today, and we don't intend to change that. But the world is dynamic, and therefore, we're just really focused on looking around corners and thinking out 9, 12 months from now as we think about what to do with the operating expense going forward, mostly in terms of growing it and investing more in the business growth.

[Unknown Executive]

Thank you. Our next question is, what's going on with your stock? And why isn't it trading well?

[Michael Edward Novogratz, Founder, CEO & Chairman]

Yes. Let me take that. I'm as frustrated as many of the shareholders. And I would tell you a few things. One is we trade with very, very little volume. And the Canadian capital markets, especially the TSXV appetite for crypto has just not been there for any of the crypto companies. You saw our published [ D31 ] Canadian book of CAD 1.62. You can make any assumption you want as to what you think has happened to a venture portfolio given that asset prices around the world are lower. Bitcoin is bitcoin and cash is cash. And so if you kind of do the math, we're trading at a significant discount to book. I don't think that makes sense at all. I think our $350 million balance sheet is strong. We like what's on it. Half of it or close to half of it is either bitcoin and cash. And so that's pretty easily remarkable. Like I said, you can take whatever discount you want. And then we have 3 businesses that are starting to do well that should get some enterprise value. And if they were private companies, they wouldn't get an enterprise value, right? If we were in the VC world. And so it doesn't make a lot of sense to me. There's not that much we can do about it. We are trying. And so our real focus is, let's build a great business and let's grow the book. And let's build the business. And in time, people will catch on. Until that, we have a stock buying plan that happens automatically because we're often in a blackout. And so we collect stock when it's -- when we're in a blackout to provide some liquidity to the market. But it has been frustrating. And I think our stock is cheap.

[Unknown Executive]

Great. Our next question is, where do we think the crypto and blockchain industry heads from here? And what's the time line? How similar or dissimilar is it to most other venture-backed technology sectors?

[Michael Edward Novogratz, Founder, CEO & Chairman]

Yes. I'll take a first cut at that. So listen, I think the -- I talked a lot about bitcoin. I think that this is a moment for bitcoin. It's also a moment for the digitalization of currencies. And you're going to see -- I mean even from something as simple as people don't want to pass money back and forth because it might have a virus on it to just the convenience of having a digital currency. The Fed really -- so the treasury really wished they had the ability to -- they're trying to get money to everyone in this country, and it's taking 6 to 8 weeks because we don't have an easy system. And so there will be a push, mark my words, for digital wallets, where every citizen has a digital wallet. And if the treasury wants to dump either UBI or stimulus payment into someone's wallet, they hit a button, it's done. Again, I said that before, that was already being discussed in the stimulus bill. And so the venture portfolio that we try to -- are building with Greg Wasserman is -- part of that is really to what's the infrastructure build going to be around a digitalized economy, around a crypto economy. The rails that are needed, the security that's needed, the custody that's needed and the trading that's needed. And so I think that part of the business is well set up. I think you'll continue to -- listen, all of ventures going to suffer a little bit of a problem raising capital for the next few months, right? People aren't, "hey, let me put money into venture" when the world's on fire. And so I think fundraising is a little slower for all of venture. And so we're working with our portfolio companies to make sure they've got the right liquidity, that they're getting the right assistance that they need. But I think both bitcoin and crypto is a Store to Value, but also as part of the new infrastructure for the world is well suited, it's well positioned, I mean. And so I don't think this is an existential moment where you say, "s***, this business no longer has relevance." I think it's the opposite. I think this business has more relevance.

[Christopher C. Ferraro, President & Director]

Yes. I just have a few thoughts on the -- Mike, what you just said. I think the question on how is the time line of adoption and growth of crypto and blockchain similar/dissimilar to other venture-backed technology sectors. The thing I'll add is just, from my perspective, not all, but a lot of technology-focused venture plays are meant to solve known problems that have varying degrees of difficulty to solve. And like just one example like Peloton, for example, great company, started out as an early stage venture business, has been widely successful and now a public company. But they went out to solve a problem of how can we bring workout access to more people rather than forcing a run into a gym. That's a -- as a known problem, they came out with a novel way to solve it. They've been widely successful. The things that crypto currency and blockchain technology has set out to solve are really big problems. And problems that are really big topics that are so embedded in the fabric of the way society operates today. Money, identity, data storage, data transmission -- that I just -- we always felt like the growth in the adoption curve of this sector was going to be -- was going to be a very different shape than other new technologies. And this we are -- we look at what -- as Mike said, we look at what's happened during this crisis, and we just see lots of areas where this crisis may very well have accelerated the adoption or the interest level and the growth of the application of what we've been telling the world we should be running at for the last couple of years. So that's just my add-on note too.

[Unknown Executive]

Great. Well, that's all the time we have for questions today. Thank you to everyone who submitted. And with that, I'll turn it back over to Mike to close.

[Michael Edward Novogratz, Founder, CEO & Chairman]

I just want to thank you for your support. Hope you're healthy and you stay healthy, and your families are safe, and we're going to be working our tails off for you. And thanks a lot.

[Christopher C. Ferraro, President & Director]

Thanks, everybody.

[Ashwin Prithipaul, CFO & MD]

Thank you.

[Operator]

This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.