Fireside: Galaxy's Mike Novogratz

One of crypto's most influential voices just revealed that a single Galaxy client sold $9 billion worth of Bitcoin this year—equivalent to one-third of BlackRock's entire 2024 Bitcoin purchases—while simultaneously announcing a groundbreaking new tokenized money market fund launching exclusively on Solana.

Summary

At Breakpoint 2025 in Abu Dhabi, Galaxy CEO Mike Novogratz sat down with Helius CEO Mert Mumtaz for a wide-ranging conversation that touched on everything from institutional crypto adoption to the future of blockchain competition. The headline announcement was Sweep, a new tokenized money market fund created in partnership with State Street (a $5 trillion asset manager) that will allow instant redemption into PayPal's PUSD stablecoin—exclusively on Solana.

Novogratz painted a picture of an industry at a critical inflection point. After years of telling the story of crypto's potential importance, he argues the industry has now entered an era where it must actually deliver products that matter to ordinary people. The regulatory environment, particularly in the United States, has undergone what he described as a "180-degree turn" from the Gensler era, with the new SEC explicitly stating they want "everything to move on-chain."

Perhaps most revealing was Novogratz's candid assessment of recent market dynamics. He attributed Bitcoin's struggle to break decisively above $100,000 to a generational wealth transfer—long-time crypto holders who weathered years of volatility finally taking profits, while new institutional capital from US wealth advisors slowly enters the market. That $45 trillion pool of baby boomer wealth managed by registered investment advisors, he suggested, represents the next major wave of crypto adoption.

Despite acknowledging short-term price uncertainty, Novogratz left Abu Dhabi more bullish than he arrived, citing conversations with major global investors that convinced him the movement toward blockchain-based digital assets is accelerating rather than slowing.

Key Points:

Sweep: A New Paradigm for Interest-Bearing Digital Cash

Sweep represents State Street's answer to BlackRock's Biddle product, but with a crucial innovation. Unlike traditional money market funds, Sweep allows instant redemption into PYUSD, PayPal's stablecoin. Novogratz envisions this as a workaround to current US regulations that prohibit interest-bearing stablecoins directly.

The practical implication is profound: instead of carrying non-interest-bearing cash in a digital wallet, users can hold Treasury-backed money market fund tokens that earn yield, then convert to spendable stablecoin when needed. While US regulations still create friction, Novogratz sees this product primarily serving the billions of people outside the United States who lack access to sophisticated financial products. The exclusive launch on Solana underscores Galaxy's conviction that the blockchain's speed and efficiency make it ideal for capital markets applications.

Galaxy's First-Mover Status in Tokenized Equities

Galaxy achieved a significant regulatory milestone by becoming the first company to receive SEC approval for tokenized equity. Their stock now trades on Superstate, though Novogratz candidly acknowledged this currently operates as a "walled garden" with limited liquidity—essentially "trading by appointment."

The real excitement lies in what comes next. Novogratz revealed he met with SEC Chair Paul Atkins just two weeks prior to discuss obtaining a "sandbox exemption" that would allow Galaxy's tokenized stock to trade on decentralized platforms. This represents a fundamental shift in how securities might be traded in the future, potentially enabling 24/7 global access to US equities through blockchain infrastructure.

The SEC's Complete Policy Reversal

Novogratz described the current regulatory environment as a "radical departure" from the Gensler era. The new SEC leadership has explicitly stated they want "everything to move on-chain"—a statement Novogratz suggested the regulators may not have fully understood when they made it, but are nonetheless pursuing seriously.

This policy shift has massive implications for the entire crypto industry. The era of regulatory uncertainty that prevented companies from building confidently—when launching a token could result in a Wells notice, lawsuit, or even arrest—appears to be ending. Novogratz emphasized that both Republicans and Democrats, along with key regulators, are now aligned on the need for sensible crypto legislation.

Why Solana Won Galaxy's Business

Galaxy's strong preference for Solana stems from its technical architecture. Novogratz explained that Solana was "tailor-built to be the capital markets chain," which is why high-frequency trading giant Jump Capital became Galaxy's partner in the decentralized exchange space. The relationship was strategic: Novogratz wanted proximity to Jump's infrastructure-building expertise.

While acknowledging that the future likely holds multiple interoperable blockchains connected by bridges—similar to how the Interstate Highway Commission connects US states—Novogratz was clear that individual chains will need compelling narratives backed by real-world usage to maintain value. Community alone, while important, will no longer suffice.

The $9 Billion Bitcoin Sale and Market Dynamics

In perhaps the most striking revelation of the conversation, Novogratz disclosed that a single Galaxy client sold $9 billion worth of Bitcoin over the past year—representing one-third of BlackRock's total Bitcoin purchases through their ETF during the same period.

He attributed this massive selling to a psychological shift when Bitcoin crossed $100,000. For holders who bought at $1, $100, or $1,000, the six-figure milestone represented a "marathon victory" after 13 years of volatility. Many decided to diversify their portfolios, triggering a wave of profit-taking that became "a virus" among long-term holders.

The Future of Blockchain Valuation

Novogratz offered a nuanced framework for understanding how blockchains should be valued. He identified two primary drivers: community and usage. Community functions almost like a "multi-level marketing scheme"—chains need passionate believers who will spread the story.

However, he emphasized that the narrative is shifting. Traditional discounted cash flow models don't fully capture blockchain value, but pure community enthusiasm without real products won't sustain prices either. New projects like Hyperliquid, with clear token economics tied to actual exchange revenue through buybacks, are forcing older chains to demonstrate concrete utility.

Facts + Figures

• State Street manages $5 trillion in assets and is partnering with Galaxy on the Sweep fund
• A single Galaxy client sold $9 billion of Bitcoin this year—one-third of BlackRock's total Bitcoin ETF purchases
• US wealth held by registered investment advisors totals $45 trillion and is just beginning to enter crypto
• The United States represents 65% of global equity market capitalization
• Galaxy became the first company to receive SEC approval for tokenized equity
• Novogratz met with SEC Chair Paul Atkins approximately two weeks before the interview
• Sweep will allow instant redemption into PayPal's PYUSD stablecoin
• Galaxy is developing the DAD (decentralized exchange) in partnership with Jump Capital and Multicoin
• Novogratz described the regulatory shift as a "180-degree turn" from the Gensler era
• Bitcoin reached the psychological $100,000 milestone, triggering significant profit-taking among long-term holders

Top Quotes

"The era of Gary Gensler ended, this new administration says, we want everything to move on chain. I was like, excuse me, we want everything to move on chain."

"For the first chapter, the story broadly was, this is a really important industry. It's gonna change everything... Now crypto has to work, where crypto has to make a difference to normal people's lives."

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

"All of these chains at one level are multi-level marketing schemes. You've got to bring people in the community, you've got to tell the story."

"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."

"If you want value in your chain, you gotta tell the story of the chain and the story has gotta be backed up by shit that matters."

"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. And I don't feel that anymore."

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

Questions Answered

What is Sweep and how does it differ from other tokenized funds?

Sweep is a tokenized money market fund created by Galaxy in partnership with State Street, one of the world's largest asset managers with $5 trillion under management. Unlike BlackRock's Biddle or other tokenized treasury products, Sweep offers instant redemption into PayPal's PYUSD stablecoin. This creates a practical workaround to US regulations that currently prohibit interest-bearing stablecoins. Users can hold Treasury-backed tokens that earn yield, then instantly convert to spendable stablecoin when they want to make a purchase—essentially creating interest-bearing digital cash.

Why did Galaxy choose Solana for these products?

Galaxy chose Solana because it was "tailor-built to be the capital markets chain," according to Novogratz. The blockchain's speed and efficiency make it ideal for financial applications that require rapid settlement and high throughput. Galaxy's partnership with Jump Capital, a leading high-frequency trading firm, reinforced this choice—Jump's expertise in building trading infrastructure aligned with Solana's technical capabilities. Galaxy has now launched multiple tokenized products exclusively on Solana, including Sweep and their tokenized equity.

What's causing Bitcoin's price to struggle despite positive fundamentals?

Novogratz attributes the price stagnation to a generational wealth transfer happening within the crypto ecosystem. When Bitcoin crossed $100,000, it triggered a psychological shift among long-term holders who had survived years of volatility—many decided to take profits and diversify. One Galaxy client alone sold $9 billion in Bitcoin. At the same time, new institutional capital from US wealth advisors managing $45 trillion in baby boomer assets is only slowly entering the market. This transition from old holders selling to new buyers entering creates short-term price pressure.

How has the regulatory environment changed under the new SEC leadership?

The regulatory environment has undergone what Novogratz calls a "180-degree turn" from the Gensler era. The new SEC leadership has explicitly stated they want "everything to move on-chain," representing a fundamental shift in approach. Previously, companies feared Wells notices, lawsuits, or even arrests for launching tokens. Now, both Republicans and Democrats, along with key regulators, appear aligned on creating sensible crypto legislation. Novogratz personally met with SEC Chair Paul Atkins to discuss sandbox exemptions for tokenized securities trading on decentralized platforms.

How should investors think about blockchain valuations?

Novogratz suggests blockchain valuations combine two factors: community and actual usage. Community functions almost like a "multi-level marketing scheme"—passionate believers who spread the story create value. However, pure community enthusiasm without real products won't sustain prices in the new era. Traditional discounted cash flow models don't fully capture blockchain value, but chains now need compelling narratives backed by real-world utility. Projects like Hyperliquid, with clear token economics tied to actual revenue through buybacks, are forcing the industry to demonstrate concrete value creation.

What is the future of tokenization and who will benefit most?

Tokenization has two major dimensions: efficiency and access. Efficiency benefits include better collateral management and settlement for existing financial institutions. But the bigger opportunity lies in access—primarily for people outside the United States who lack sophisticated financial products. Novogratz envisions young people in Paraguay or South Asia buying Apple stock or SpaceX tokens for the first time through tokenization. Companies like Galaxy aim to serve as the "banker" or conduit between major US brands and the 6-7 billion people globally who currently lack access to these investment opportunities.