Fireside: Galaxy's Mike Novogratz

Galaxy Digital CEO Mike Novogratz took the stage at Breakpoint 2024 in Abu Dhabi alongside Helius CEO Mert Mumtaz to announce a major milestone for Solana: the launch of Sweep, a tokenized money market fund built in partnership with State Street, one of the world's largest asset managers. But beyond the product announcement, Novogratz delivered a candid and wide-ranging assessment of crypto's current crossroads—where storytelling must finally give way to real-world utility.

Summary

Top Projects

Lulo

Score: 7,586.13

Bonk

Score: 4,806.12

Sphere

Score: 2,544.42

Moonwalk

Score: 2,026.11

The conversation opened with the reveal of Sweep, which Novogratz described as State Street's answer to BlackRock's BUIDL product, but with a critical difference: instant redemption into PayPal's PYUSD stablecoin. This design effectively creates an interest-bearing cash alternative for users worldwide, bypassing current U.S. regulatory restrictions on interest-bearing stablecoins. Novogratz painted a vision where global users hold tokenized Treasury money market funds in their digital wallets, earning yield until the moment they need to spend.

Galaxy has been systematically building on Solana, having already achieved SEC approval for the first tokenized equity in the United States. While that tokenized stock currently trades on a platform called Superstate—which Novogratz candidly called "a walled garden" and "trade by appointment"—the broader regulatory shift under the new SEC administration signals a dramatically different future. According to Novogratz, the SEC has done "a complete 180 degree turn" and expressed a desire to move everything on-chain.

The Galaxy CEO offered a nuanced view of blockchain competition, emphasizing that community remains the most important valuation metric in crypto, but that communities now need to be backed by "shit that matters." He expressed particular enthusiasm for Solana's speed and its design for capital markets applications, noting Galaxy's strategic partnership with Jump Capital to build infrastructure. However, he was clear: for Solana to maintain its trajectory, real-world adoption and utility must follow.

On markets, Novogratz acknowledged the confusing price action in 2024, attributing it to a generational wealth transfer as long-time Bitcoin holders take profits after the psychological victory of $100,000 while new institutional buyers—particularly U.S. wealth advisors managing $45 trillion—slowly enter the market. Despite short-term uncertainty, he left Abu Dhabi more bullish than when he arrived, confident that digital assets will be "far more important" in the coming years.

Key Points:

Sweep: A New Tokenized Money Market Fund on Solana

Sweep represents a significant step forward in tokenized financial products. Developed in partnership with State Street, which manages $5 trillion in assets, Sweep functions as a tokenized money market fund with instant redemption into PayPal's PYUSD stablecoin. This architecture creates a workaround for current U.S. regulations that prohibit interest-bearing stablecoins directly.

The product targets global users who want to earn yield on their holdings until they need to spend. Rather than holding idle cash that generates no return, users can hold Sweep and convert to stablecoin instantly when needed. Novogratz emphasized that while this is initially launching exclusively on Solana, the broader vision is to extend financial access to billions of people worldwide—particularly in regions like South Asia, Africa, and the Middle East, where traditional financial services remain limited.

Galaxy's Tokenized Equity and SEC Regulatory Shift

Galaxy became the first company to receive SEC approval for a tokenized equity, a milestone that Novogratz presented as groundbreaking even while acknowledging current limitations. The tokenized stock trades on Superstate, but liquidity remains constrained in what he described as a "walled garden."

The real excitement, according to Novogratz, lies in the dramatic regulatory pivot under the new SEC leadership. Paul Atkins and the current administration have signaled an intent to move financial markets on-chain—a statement Novogratz said surprised even him. Galaxy is actively pursuing a "sandbox exemption" that would allow their tokenized stock to trade on decentralized platforms, which he believes would represent a "radical shift" for the industry.

Blockchain Competition and the Importance of Community

Novogratz offered a sophisticated framework for understanding blockchain valuation. He emphasized that community remains the primary driver of value in crypto, pointing to XRP as an example of a token with tremendous market cap despite limited chain usage—purely due to its passionate community.

However, he stressed that community alone is no longer sufficient. Blockchains are essentially "giant databases that are decentralized"—or as he put it, different versions of Excel spreadsheets. To maintain narrative relevance, chains must demonstrate real growth and utility. Novogratz expressed particular enthusiasm for Solana's architecture, noting it was "tailor built to be the capital markets chain" and highlighting Galaxy's partnership with Jump Capital as a strategic move to leverage their infrastructure expertise.

The Crypto Industry's Proving Ground

Novogratz characterized the current moment as a critical transition in crypto's evolution. The first chapter was about telling the story of crypto's importance—a narrative anyone could repeat. But blockchains weren't fast enough, regulation was hostile, and real building was limited. Crypto's primary uses became Bitcoin as a store of value, stablecoins as an experiment, and "token gambling platforms" with leveraged trading.

That era is ending. With faster blockchains like Solana and a supportive regulatory environment emerging in the United States, the industry must now prove itself. "It's time to build shit that people use," Novogratz declared. Products like Sweep, tokenized equities, and other real-world applications represent the proving ground that will determine which projects and chains survive.

Market Dynamics and the Bitcoin Generational Transfer

Novogratz provided insight into the puzzling market dynamics of 2024. Despite favorable macro conditions—stocks at highs, Fed cutting rates, pro-crypto administration—Bitcoin and Solana prices have disappointed. He attributed this to a generational shift in ownership.

When Bitcoin hit $100,000, it triggered a psychological "we did it" moment for long-time holders who had survived 13 years of volatility. One Galaxy client alone sold $9 billion in Bitcoin—one-third of BlackRock's total yearly inflows. Meanwhile, new institutional money from U.S. wealth advisors ($45 trillion in assets) is slowly entering but hasn't yet offset the selling pressure.

Global Tokenization and Financial Access

Novogratz identified two dimensions of tokenization's value: efficiency and access. While efficiency gains in settlement, collateral management, and operations are important, the larger opportunity lies in democratizing access to financial products.

He envisions a future where a "young kid in Paraguay" can purchase Apple stock or SpaceX tokens through Galaxy's tokenization infrastructure. This represents crypto's most compelling use case: providing financial services to the 6-7 billion people who lack access to traditional banking and investment products. The geographical setting of Abu Dhabi underscored this point—a 500-mile radius encompasses massive populations in South Asia, Africa, and the Middle East.

Facts + Figures

• Sweep launches exclusively on Solana as a tokenized money market fund developed with State Street, a $5 trillion asset manager
• Sweep enables instant redemption into PayPal's PYUSD stablecoin, effectively creating interest-bearing cash functionality
• Galaxy achieved the first SEC-approved tokenized equity in the United States
• One Galaxy client sold $9 billion worth of Bitcoin—equivalent to one-third of BlackRock's total annual Bitcoin purchases
• U.S. registered investment advisors manage approximately $45 trillion in wealth, representing the next wave of crypto buyers
• The U.S. represents 65% of global equity market capitalization, making U.S. regulatory approval critical for industry growth
• Galaxy partners with Jump Capital on the DEX infrastructure project
• Novogratz met with SEC Chair Paul Atkins two weeks prior to discuss tokenized securities trading on decentralized platforms
• The new SEC administration has expressed explicit interest in moving financial systems on-chain
• Novogratz described himself as leaving Abu Dhabi "more bullish" than when he arrived after discussions with global institutional investors

Top quotes

"Crypto was mostly used outside of Bitcoin as a store of value and stablecoins as an experiment and a token gambling platform."

"We're now at the era where crypto has to work, where crypto has to make a difference to normal people's lives."

"The SEC in the U.S. has taken a complete 180 degree turn from the old SEC. The era of Gary Gensler ended, this new administration says, we want everything to move on chain."

"Galaxy alone had one client that sold $9 billion of Bitcoin. That's one third of everything that BlackRock bought this year."

"It's time to build shit that people use."

"The most important valuation metric in crypto is community. All of these chains at one level are multi-level marketing schemes."

"We love Solana because it's so damn fast. It was tailor built to be the capital markets chain."

"You're gonna have the young kid in Paraguay who wants to buy some Apple stock or some SpaceX token that never had access to it."

"There is zero doubt in my mind that digital assets are gonna be a far more important part of the world in two years and four years and six years."

"Eight years ago when kids came into the industry, I was like, 'I think this is gonna work, but you might spend four years and be shit out of luck.' I don't feel that anymore."

Questions Answered

What is Sweep and why does it matter?

Sweep is a tokenized money market fund created by Galaxy Digital in partnership with State Street, launching exclusively on Solana. It functions similarly to BlackRock's BUIDL product but with a crucial innovation: instant redemption into PayPal's PYUSD stablecoin. This design allows users to earn interest on their holdings while maintaining immediate access to spend their funds. Since interest-bearing stablecoins are currently prohibited under U.S. law, Sweep provides a workaround that gives users the practical benefits of earning yield on their cash without violating regulations. The product aims to serve global users, particularly in regions with limited banking access.

Why did Galaxy choose Solana for these tokenized products?

Galaxy selected Solana primarily because of its speed and design for capital markets applications. Novogratz explicitly stated that Solana was "tailor built to be the capital markets chain." The company's partnership with Jump Capital—a leading high-frequency trading firm known for building crypto infrastructure—reinforced this strategic direction. Galaxy views Solana's technical capabilities as essential for products requiring fast settlement and high throughput, making it the natural choice for tokenized financial products like money market funds and equities.

How has the SEC's stance on crypto changed?

According to Novogratz, the SEC under the new administration has undergone a "complete 180 degree turn" from the Gensler era. Rather than pursuing enforcement actions and creating regulatory uncertainty, the current SEC leadership has expressed explicit interest in moving financial systems on-chain. Novogratz noted that he met with SEC Chair Paul Atkins to discuss allowing Galaxy's tokenized stock to trade on decentralized platforms through a "sandbox exemption." This regulatory shift is critical because U.S. capital markets represent 65% of global equity value, making American regulatory acceptance essential for crypto's mainstream adoption.

Why haven't crypto prices performed better despite favorable conditions?

Novogratz identified a generational wealth transfer as the primary cause of disappointing 2024 price action. When Bitcoin hit $100,000, long-time holders who had survived 13 years of volatility experienced a psychological "we did it" moment, triggering profit-taking. One Galaxy client alone sold $9 billion in Bitcoin. Meanwhile, new institutional money from U.S. wealth advisors—managing approximately $45 trillion in assets—is entering slowly. The market is essentially transitioning from early believers selling to new institutional buyers accumulating, creating choppy price action despite positive macro conditions.

What makes crypto valuable beyond speculation?

Novogratz emphasized that crypto's most compelling use case is democratizing access to financial services for billions of people worldwide. While efficiency gains from tokenization matter, the larger opportunity is enabling a "young kid in Paraguay" to purchase Apple stock or SpaceX tokens—assets previously inaccessible. The geographic concentration of underbanked populations in South Asia, Africa, and the Middle East represents massive potential demand for tokenized products. Stablecoins and tokenized securities can provide financial services to people who have never had access to traditional banking, which Novogratz views as crypto's ultimate value proposition.

What determines which blockchains will succeed?

According to Novogratz, community remains the most important valuation metric for blockchains, but the nature of community is changing. He acknowledged that chains like XRP maintain significant value purely through passionate communities despite limited usage. However, going forward, communities must be supported by real utility and growth. Blockchains are essentially competing versions of decentralized databases, and as the industry matures, the narrative of importance must be replaced by demonstrated adoption. Chains that fail to show real-world usage will see their community narratives collapse.

What is Galaxy's long-term vision for tokenization?

Galaxy aims to become the primary conduit between major financial brands and global consumers through tokenization. The company envisions tokenizing equities, credit products, and other financial instruments from well-known U.S. companies, then distributing access to billions of people worldwide. This "banker" role would leverage Galaxy's regulatory expertise and infrastructure partnerships to bring traditional finance products to crypto rails. Combined with products like Sweep, Galaxy is positioning itself as critical infrastructure for the convergence of traditional and decentralized finance.