Kevin O’Leary Discusses Crypto Investments, Market Trends, and Future Predictions

Kevin O’Leary Discusses Crypto, Investments, and the Future

Kevin O’Leary, the chairman of O’Leary Ventures and popularly known as “Mr. Wonderful” from “Shark Tank,” recently engaged in a captivating conversation with CoinDesk’s Jennifer Sanasie. Below is a lightly edited transcript of their insightful interview.

Jennifer Sanasie: Kevin, your background is absolutely stunning. Are you relaxing by a pool in the Hamptons right now?

Kevin O’Leary: Yes, indeed! The Hamptons is where I am. I thought it would be fitting to celebrate this beautiful summer, especially with the exciting developments in crypto policy. Why not enjoy the moment?

JS: That sounds delightful! It seems you’ve had quite an enjoyable summer. I saw you performing with the Jeff Tuohy band on X, just living life to the fullest, Kevin.

KO: Absolutely! I perform with Jeff’s band every year to keep my musical skills sharp. He keeps improving, and we celebrate that together. Just recently, I had a wonderful lunch with Jamie, who founded Ring, a well-known Shark Tank deal that got away. He sold it to Amazon for a whopping $1.2 billion. We’ve become close friends and spent time with our families at Cisco Brewery before I jammed on stage. It’s a fantastic way to celebrate the 4th of July.

JS: Speaking of Ring, I have to ask about your best and worst investments. Did you invest in Ring?

KO: No, I was the only shark who made him an offer. I proposed $600,000 in debt with 2.5% non-dilutive warrants. He ultimately declined, which I understand, but it would have been a monumental success in Shark Tank history. Not every opportunity can be seized!

JS: Reflecting on your entire career, what do you consider your worst investment?

KO: I’ve certainly made my share of poor investments, but I’ve learned valuable lessons over time. One key takeaway is to trust your gut feeling. If a deal doesn’t sit well with you, there’s likely a good reason for it, and it may end up failing. I’ve learned to rely on my instincts through experience. While I don’t always get it right, I’ve had enough successes to keep me engaged. Ultimately, the winners in your portfolio define your overall success. Interestingly, the deals I think will be my biggest successes often aren’t, while the ones I deem risky sometimes yield massive returns. This is why diversification is crucial in any investment strategy, especially in venture capital.

JS: That lesson seems particularly relevant in the crypto market, where numerous high-risk projects launch daily. Would you say your advice applies to crypto investors?

KO: Absolutely, and I’d add another layer: liquidity. When you’re investing millions in a crypto asset, you must consider whether you can easily exit that investment. Very few tokens offer the liquidity needed for substantial investments, say in the range of $20 to $40 million. My largest holdings are in Ethereum and Bitcoin, and I prefer not to hold them in ETFs because it incurs unnecessary fees. I utilize exchanges instead, focusing on their compliance, liquidity, and security. I’m involved with M2 in the UAE and own a significant stake in WunderFi in Canada, where compliance is robust and they offer over 60 tokens.

JS: Let’s circle back to your experiences in the Hamptons. When fans approach you in public, what investment advice do they typically seek?

KO: Many people are genuinely curious about crypto these days. The narrative has shifted from skepticism to acceptance among the general public. I’d estimate that around 70% of the questions I receive now revolve around crypto—what to invest in, how to allocate it within their portfolios, and where it fits into the broader context of alternative assets.

JS: Considering you have around 18% of your portfolio in crypto—has that changed since we last spoke?

KO: Yes, it has! We recently assessed our investments, and it’s now at 18%. We’re likely to hit 20% soon. Additionally, I have positions in companies like Circle, which I see as key players in the digital payment space. For instance, owning a piece of Circle is like having a stake in the early days of the Nasdaq or the New York Stock Exchange—you benefit from transaction fees regardless of asset price fluctuations.

JS: You mentioned you’re not keen on ETFs. With recent approvals of ETH ETFs, do you anticipate significant inflows into these products, and will they appeal more to older investors?

KO: I believe there will be a dual approach. I expect about 20% of the flow to be funneled into the ETF, as many financial advisers prefer to show their clients ETFs that are compliant. However, I personally wouldn’t pay those fees. With the advent of exchanges like M2 or WunderFi, which provide secure, compliant wallets, I believe that a significant majority (around 80%) of people will gravitate towards direct investment in crypto assets rather than ETFs.

JS: I recently spoke with Anthony Scaramucci, who suggested that Gary Gensler’s regulatory approach has ultimately benefited the industry by weeding out fraudulent actors. What are your thoughts on that?

KO: I’ve faced criticism for my views on Gensler, but I see his consistency as valuable. He has maintained a clear stance on compliance, which is crucial for legitimizing this industry. His aggressive pursuit of bad actors like the FTX and Binance teams may not have been popular, but it’s ultimately strengthened the market’s integrity. I’m now more comfortable investing in compliant platforms like M2 and WunderFi, which align with Gensler’s vision.

JS: Some in the industry feel uneasy about the slow progress toward regulation. How would you address those concerns?

KO: I’d encourage those individuals to understand that embracing Gensler’s approach is necessary to attract the larger institutional investments that require compliance. Large financial institutions won’t engage in the crypto space until they feel secure, and Gensler’s regulations provide that safety net. The survival of early crypto pioneers hinges on this compliance, and I believe it will continue being a critical factor moving forward.

JS: What would you say is your best investment to date?

KO: My best investment has always been in myself—the decision to venture out on my own and become an entrepreneur. Many people hesitate to take that leap due to the associated risks. I encourage everyone to invest in themselves, as it leads to personal freedom and fulfillment that far outweighs monetary gains. Entrepreneurship isn’t easy, but it offers unparalleled rewards and opportunities.

JS: Can you share a recent investment success story?

KO: Certainly! A few years ago, I invested in a cat DNA testing kit company pitched by a passionate entrepreneur named Aniskaya. Initially, I was skeptical, but her enthusiasm and vision convinced me to invest $250,000. The company eventually grew significantly and was acquired by Zoetis, a spin-off from Pfizer, in an all-cash deal. This success exemplifies how you can never predict which investments will pay off. Additionally, I’ve found that many of my most successful investments are in companies run by women, showcasing their incredible management abilities and focus.

JS: As for the bitcoin mining space, do you believe the land used for mining operations will eventually hold more value than the mining business itself?

KO: You’re spot on. Finding states with accessible power, fiber, permits, and supportive regulations is crucial. It’s taken years to build relationships in states like Oklahoma, West Virginia, and North Dakota, where the environment is more conducive to bitcoin mining. In contrast, places like New York have become more challenging due to their regulatory climate. I actively seek opportunities in states that embrace crypto and digital payment systems.

JS: Before we wrap up, let’s discuss the upcoming U.S. elections. President Biden has announced he won’t run for reelection, and Trump is positioning himself as a pro-crypto candidate. How do you see this affecting the crypto landscape?

KO: Trump’s support for crypto and digital payment systems is clear. However, the race is still unfolding as we await further details on the Democratic side. Kamala Harris has not yet outlined her policies, particularly regarding crypto. The upcoming election will likely hinge on policy rather than party affiliation, and I hope to see a focus on pro-crypto, pro-digitization strategies, as these will benefit entrepreneurship and the economy.

JS: Lastly, you mentioned Jamie Dimon and his potential interest in the Treasury Secretary position. What implications would that have for the crypto industry if he were appointed?

KO: Jamie is a pragmatic leader. While he may not be a fan of bitcoin, he recognizes the demand from his clients. As the largest asset manager globally, Larry Fink has signaled an openness to bitcoin, which will inevitably influence the broader market. Having someone with Dimon’s expertise in a financial policy role would be beneficial, as it’s essential to focus on sound policy rather than political affiliations.