Transcript+
Welcome back to the Bitcoin Treasuries Podcast. I'm Tim Kotzman, and for the first time ever, I'm here with Michael Tanguma, the founder and CEO of On Ramp Bitcoin. Michael, welcome. Thanks for your time. I can't believe you're finally here. It's May 1st. We've been doing this stuff for a while now and glad to have you on the program. Yeah, it's been an exciting ride since we first connected. We just finished a few hours ago ripping a great pod with Ted Smith on the last trade. And he had referenced you guys first meeting back in November 5th. And I think that's what kind of put everyone on the radar to him and and I think your podcast as well. And then shortly after we got connected and it's been a wild ride since and it's it feels like it's just getting started. Absolutely. Yeah. We were chatting on the podcast about none other than Strategy MSTR and whether they would decide to re up their $21 billion ATM. And we now know that they're doing that, but they're doing twice the program. So I guess they're probably talking right now about the 4242 plan, $84 billion total. As someone in the office just said to me before I walked into the studio, He said, well it's boom or bust now baby. And I said. Boom, baby, right? I don't know what else to say. Tim had a pretty wild premonition, he called it on there and we all kind of looked around and, you know, looks like it directionally that was the right number. It's pretty crazy. I don't know if there's enough Bitcoin for everyone. And again, the everything's just getting started. Specifically on the corporate treasury. We know no shortage of companies kind of, you know, trying to go public with this strategy. There's a announcement recently with Meta planning coming to the US and then 21. So it looks like this will be the standard ultimately over time. And what does that mean for a currency that only has 21 million hard cap supplies? Pretty pretty excited to think about. Yeah. And it it seems pretty apparent by now that of course things can change. And I can't speak for any management team. I can barely speak for myself half the time, but anytime that the M NAV, as we like to call it, is above 1, right? These companies are kind of just turning on that ATM and issuing a different, issuing additional shares and and buying Bitcoin. And you know, if the price is, you know, at your back at all, which is kind of a interesting flywheel. And in the opposite, not really a doom loop, right? If you're below 1X, maybe there's an opportunity there too. But it's just, yeah, definitely interesting times. Yeah, Tattoo had a pretty prudent tempered take on, you know, just understanding liquidity cycles and and markets and recognizing that they're going to get some froth in the system. But ultimately ahead of that, the amount of awareness that this is going to bring to Bitcoin, I know that's something you're passionate about is super exciting. When you think about for the past 15 years, the fever pitch that's come down the market has been related to IC OS crypto. There's always like a new kind of thing that comes about and this is, you know, obviously not direct spot exposure, but it's as close as you're going to get outside of, you know, straight ETF and ETF are going to be so exciting. But when you add the, you know, the profile of the firm, they each have their own unique kind of vibes. As we were talking about it earlier, their their profile of a business who represents them, right with a 21 with a few notable characters in the space. It's going to bring a lot of awareness and ultimately people are going to wonder what's going on, what is this thing Bitcoin and that naturally leads them to figure out, you know, most people, you'd be shocked and individual listening to this. Most individuals do not know that there's only 21 million Bitcoin. Yes. I I was. Talking to someone earlier today actually when the announcement came out and I said right, I sent him a message and said, hey, looks like another. At first it looked like another $21 billion ATM and they said, you know, they should probably pay a dividend, right? Give something back to the shareholder. And I said, well, actually they do have strike and strife preferred shares now that do pay a dividend. So even focusing on this 12 hours a day, 16 hours a day, I think I went to bed at 3:00 AM and then I was texting you at 7:00, my time, 6 year time. I mean, even being in it, as much as we're in it, it's a full time job to keep up. And anyone that's not really focused on it, it's not surprising to me that there's people in the space that are not up to date. I mean, this is 1 stock, even an analyst, right? Like a trad FI analyst is working what, 40 or 50 or 100 stocks or whatever they're doing. I mean it's just very fast moving and and pretty intricate if you're not really focused on. It a it's 24/7, 7 days a week. So that's always going to be maybe a little point of contention or friction when it comes to Wall Street and Tratify coming in because of the volatility mixed with the, you know, time up in the market. But then the other side of it, as you related to is this notion of the thing that a lot of people coming in, they think of Bitcoin as a, as an asset, maybe a can do like a stock or bond, but it's fundamentally different and it's more akin to money. Once you you learn more about it and what money requires is financial services. But then you take that a step further. And at the end of the day, financial services are relationship driven and relationships are local. And so that was very astute. And I don't know if that was a direct thinking, but when you think of David Bailey going out and I feel like he's one of the main individual pioneering or starting outside of sailor on the corporate strategy, but realizing that every market's going to need this. And so the Japanese market, given their macro tailwinds, you know, we're a prime market to execute on this strategy. And so to your point about hard to keep up, it's going to get even harder because you're going to have Latin America, Asia Pacific, you're going to have Middle East, Europe, just across the world. And we obviously know North America is, is leading the charge here, but it's a super exciting time for us. And then all the obviously for people that want to get into space, there's different niches that are to get carved out because money touches everything. And I think that's something people don't really fully grasp until you get in the the driver's seat of doing something like you're building this business that there's no shortage of opportunities. And I feel like you've really captured that And we see you on the road every feels like every week at this point. The hard one of the hardest working men in Bitcoin. It was funny and made a lot of sense. Someone made that. I think it was before we started rolling on the last trade pod today, someone just said Tim's on the move. He's always on the move. And I was glad to be able to make the joke that I was in the back of a cab and not not in a bad circumstance. But do you have any take on the announcements that have come out around 21 Capital as far as Cantor, SoftBank, Tether with Jack Mahler's at the helm? I've heard at least 2 theories and to be fair, at least one of them. The guy said, look, I haven't done a lot of research. This is just kind of what came to mind. The one theory was that strike, right, Mahler's company that he's been running might get somehow rolled up in there and be a product or service, right, be the operating company within 21. And then the other which, you know, the financials were made public I think for the first time right around that same time. So that was maybe an interesting coincidence or maybe it's foretelling that sort of theory. And then the other theory was that they were actually going to make Bitcoin treasuries as a service like to other public companies like that was actually going to be the operating business, which I have not heard anything in the market about. So just curious what your take on the whole thing is and and where it could go Because it seems like either I'm not understanding it because I'm not that bright or there's just a lot of moving pieces and maybe not a lot of clear communication about everything yet. Yeah. I mean, I think there's probably a multitude of factors happening. One is things are getting stood up, being careful, being in the industry, there's a lot of intimate knowledge, you know, known. So just thinking, Speaking of generalities, there's been large stratify firms that have launched products around lending that maybe weren't fully baked out. So you get the, you know, the announcement and then you got to figure it out. And So what you reference without any inside knowledge feels like a, a confluence of getting ahead of the vibes and and getting out in the market while figuring out the strategy around to your point, what is the, the business strategy outside of just accumulation of BTC? But then I think at the end of the day, we talked about this, there's only so much kind of advantages or things you can really structure in your way if you're starting a business like this that is solely focused on accumulating Bitcoin. So in my mind, it's kind of like a a joke, but it's like it comes down to like the vibes, like it comes down to it's the same thing that we talked with Tad about his journey and, you know, understanding scarcity and being at Sotheby's and then very similar with public equities. We all know that they trade at different multiples to what their underlying value is. And so I think it's an understanding that if you're going to do this strategy, you got to find your niche and you got to find who's going to be the spokesperson. You got to figure out who are the big names around it and they got some of the biggest. So I think that would make sense. Now that strategy you said, even if it was the model, I don't see it like necessarily working. It would just be from a marketing standpoint because there's some of the best firms on the planet Earth that know how people to execute on this strategy. They're already, you know, doing that. And then the nominal amount of like dollar liquidity or revenue would not influence to really, you know, exercise that like or execute on that strategy. So at the end of the day, I think it ends up being more marketing. But I will say what's most interesting, at least personally, is there's a lot happening from East and West when you think about, you know, Russia, China, the Middle East, what's going on with Binance recently and Abu Dhabi sovereign wealth fund taking a stake. And then you kind of have in the West tether getting more involved and tethers, you know, influence in the US is starting to become greater and greater. Obviously there's a Canon relationship, but then they're, they also effectively print dollars, right, based on their business model. And so there really is something interesting about they kind of effectively print dollars or BTC because they buy BTC with those dollars and then being able to inject them in this capital market structure, get equities into the US base, be able to leverage that in other financial engineering. And I'm not very savvy on this, but it's my understanding that MicroStrategy, Microstrategy's reflexive model has them always kind of purchasing at the top. And it was my understanding that on this 21 PDF, it was talking about being able to buy Bitcoin at, you know, not discounted, but like other rates that are not traditional, like you're able to stack BTC even lower, which is not intuitive because usually the liquidity profile from the bonds or equity at the at the money market at the ATMs are higher subscribed when the price is higher. So that has micro strategy always, you know, top ticky where because they're always in this market of bonds BTC with Heather that they can actually accrete more BTC at lower rates. So I think that's kind of interesting from that, but I don't know, like part of the story we'll talk about on myself as I work at we work and have, you know, familiarity with SoftBank as everyone does. And they're pretty loud and and kind of to your point, go boom. Sometimes they can they can really go boom in the in the sense of blowing up. So it'll just be, it's going to be an interesting no matter what. Yeah. Can you walk us through a little bit of your story, your journey to Bitcoin and founding on ramp and then maybe we'll get into the big announcement? Yeah, for sure. I haven't talked a lot about this has been building for a while in this space. The thing that's most interesting I would say on my side, it relates to building this business because we're building it for individuals that have gone down this journey that most people listening here is at a traditional technology background. So I was in like SAS based sales, ended up at Google shortly after and then randomly ended up in New York City. So from Texas went to New York and ended up in 2017 right before the $4 billion SoftBank injection into we were getting hired by Adam Newman on the enterprise side of the business to go scale that. And so the story that I tell is as I was going down to the price of Bitcoin is running, so I'm sitting in meetings looking in like loading up Gemini accounts and, you know, buying, you know, Bitcoin and Ethereum. At the time, I was lighting money on fire at we work, right? So we're kind of everyone knows the story we work. And so the joke is like I was learning about money while I was lighting money on fire because I was reading the Bitcoin standard. And we talked about this a little bit earlier today, but at a similar background to Ted, Ted Smith in that I had worked for a high end auction company like in college and I just saw kind of everything under the sun when it comes to what's valuable and what's not. And also just growing up was very close to like scarce assets when you think about baseball cards, just different things that have like value that you would collect into the second. I heard about 21 million, I was like, oh crap, like that's exciting because if everyone's already feverish about it and there's only 21, that means it has some value. Now let's start to figure it out. So I had about a four week period where it was all coins and BTC. And then I was like, what am I doing here? Like everything can have value. So was able to get out of that altcoin trade by, you know, that was January and really never looked back since I was going down the rabbit hole in 2018. And as one does and a lot of your listeners do and yourself, once you see this trade, it's a one way direction from your own Personal Capital, but then ultimately your intellectual capital and your professional life if you go far enough. And so was looking around, but in 2018, there's roughly nothing that exists in the market that is not a scam. This is ICO craze at its peak. There's very few Bitcoin firms. And so during that process, I had built a material position for myself in Bitcoin and knew I needed to get it off in exchange. I came from, you know, back in the day and it's it's still the same somewhat, but definitely an 18 like not your keys, not your coins. It was just you can't leave it on a third party exchange. There was all the knowledge of whether it's Bitfinex hack, the obviously Mount Gox was there, but there was no shortage of things blowing up In 2018, Rodrigo I think happened. It was either 18 or 19. And Quadrigo was a Canadian exchange where the guy literally faked his death and moved to Canada and said he lost all the Bitcoin. So this is just like a trope that was built in real fundamentals. And so I had all this, you know, capital sitting on Gemini and you didn't need to take it off. But I also didn't feel comfortable sitting on a plastic hardware device alone on an island. And so through that led me to there's a there's a few collaborative custody providers out there. They focused on custody. It's kind of this really nice hybrid model between you're alone on an island, but also you don't have to trust a third party exchange. At the time, it was only Unchained in Casa. I happened to gravitate towards Unchained because they were Texas based. I was from Texas and ultimately became good friends with that team, leveraged the solution and then they were kind of recruiting me. Eventually, you know, if you ever come back to Texas, you should join. And so Fast forward, I got lucky and right before COVID I was so November of 19, I left and went to back home to Texas, joined Unchained and built out that business. So I was one of the first employees and then one of the one of the first clients and employees. And we scaled that business from effectively like friends and family capital to about $10 billion by the time I left. Raised, you know, hundreds of millions of dollars, hired over 100 people. And through that process really got a taste for how you build financial services in this ecosystem, how you build on principle and relationships. And ultimately that there's a large gap that exists in this market that nobody's really serving. And it's roughly in, in our estimate and there's a lot of on chain data about $1.4 trillion in Bitcoin sits on the little plastic devices. And as we would go through these conversations, there was always a ceiling for the individual and then definitely at the corporate and fiduciary where they loved us. But they're like, man, I can't like do this. They wouldn't even really want to. You'd have the evangelist like us 2 or individual that we know, but they would come like with their tail stuck between their legs after they went to chat with their board because or we would never hear from them again. Because once you think about harder devices, see phrases segregation. What happens if a tornado hits wildfire pass away. If a if a employee leaves, you got to burn everything and restart it generally because like if they have a piece of cryptographic material, they can, you know, move the assets. And so in parallel to kind of like seeing this like gap in the market where we knew people shouldn't leave long term material amounts of Bitcoin on a third party exchange, just empirically based on data of the losses. I also understood that where Bitcoin was going to scale, it couldn't have a single custodian, but also individuals to really commercialize the space and get millions and billions of people. They're also not going to hold all their wealth underneath their metaphorical mattress. And so that kind of was the launching of on RAN, the thing that coincided with it. That was really the linchpin and individuals. This is more for people listening. If you think this market structure has been built out, it's nowhere near. It's just starting was building in this space. We're we've been raised or we've grown up to see that like not only trad 5, but the higher ups kind of always know what they're doing. They're leading the market. We have a little, we can take a little small piece of the world and maybe carve out a niche or make some money. And I found out that just wasn't true. And it definitely wasn't true in the digital asset space because everybody that was the darling effectively blew up in 22. So you got three AC, Genesis, TCGFTX, Celsius. I mean, you can go for more than, you know, 10 fingers and probably 10 toes on just things that didn't exist anymore. And we took a conservative approach and we never lost clients funds. We never lost on the lending side. And so I knew how to build a business the right way. And it was that missing piece of how do you actually commercialize that where we were able to go to 0 to $10 billion while shipping devices and going to like, you know, drive around Texas and get on calls, spend 8 weeks in onboarding where now we can onboard somebody to multi institution custody in about 8 minutes. And so I'll pause there because I know that was a little bit of a rant, but you know, can can jump into wherever you want. Bitcoin custody is evolving and On Ramp leads this change with multi institution custody eliminating single points of failure instead of 1 institution or complex private keys. Onramp secures your Bitcoin in a segregated cold storage multi sig vault backed by three independent institutional grade custodians. No single custodian can move funds by themselves, providing an unprecedented level of security that traditional custody solutions simply can't match. Protected by a $100 million Lloyd's of London insurance policy, all transactions are fully auditable on chain, never rehypothecated and executed only at your explicit direction. This means complete transparency and control over your assets at all times beyond custody. Onramp delivers comprehensive Bitcoin financial services including lending, trading, inheritance, planning, Iras, and more. On Ramp functions as your private banking partner, coordinating key holder activity, removing technical burdens, and providing A personalized trust. Minimize experience tailored to your specific wealth preservation goals. Whether you're new to Bitcoin or an experienced holder, Onramp's approach helps secure generational wealth with unmatched security and Peace of Mind. Visit onrampbitcoin.com today to learn more, sign up or book a free consultation with their team of Bitcoin custody experts. Are you looking for comprehensive analytics on corporate Bitcoin adoption? Strategy Tracker delivers real time insights into how companies are executing their Bitcoin strategies. Completely free. Monitor NAV premiums, cost basis performance and track how corporate Bitcoin treasuries perform against the market. Upgrade to Premium for just 399 a month and unlock exclusive benefits like detailed market rankings, real time trading volume analysis, and advanced performance metrics for corporations embracing Bitcoin. Apply Code KOTZ at checkout for 100% off your first month of Premium. Strategy Tracker is your essential tool for measuring the effectiveness of corporate Bitcoin strategies. Visit strategytracker.com and gain the analytical edge in understanding the Bitcoin treasury phenomenon. Join us May 27th through the 29th for Bitcoin 2025 in Las Vegas. Use code KOTZ for 10% off tickets. Can you walk through? Where on ramp is today as far as like the flagship product and then the rest of the menu and then maybe that would be a good segue into what we're announcing today and and this week. So I'll pull up on my screen for anybody listening what I'm pulling up and this is really always fun to talk about. I usually talk about it behind the scenes with clients and and folks that are interested in our business is effectively a screen that shows the two types of custody that exists for Bitcoin and digital assets, but ultimately have existed for every asset and for every asset for thousands of years. You have self custody and 3rd party custody and 3rd party custody has worked for assets because generally when you think of stocks, bonds, and other financial instruments, they're effectively a Ledger and if anything ever happens to them, you can always reverse that transaction. Somebody logs into your bank account, checking account, add to your Gmail like you can get access to that. Now self custody again, individuals generally in Bitcoin will liken or claim that there's this novel, you know, thing about Bitcoin itself custody. I'll say the novel thing that you can hold a lot of it in your hand versus gold, but it's still very similar. And so there's a common trope that comes into this space that because we have now the version of self custody of a digital bearer instrument, we never need a financial intermediary. Everybody wants to be the their own bank and that's fundamentally not true because we already have historical precedent for thousands of years. There's a reason why we use intermediaries, financial institutions to coordinate economic activity so people don't rob our houses. So this is just not fully widely understood. But with the kicker is the reason why $1.4 trillion, about 70% of the total Bitcoin market cap sits on these little Ledger devices is because historically that was the most sophisticated way to make sure you didn't lose the assets by taking them offline and severing that Internet connection. And so to put a little meat behind it, this is kind of the, the reality is about $700 billion total has been lost in 15 years. And we get like super kind of sedated with numbers getting thrown out given the amount of liquidity that's been injected in the system. But to contextualize with $700 billion is the GFC had that amount of liquidity injected in 2008 to stop the deleveraging event. And that's what's been lost, just evaporated. And why I share this with you is because this is what keeps our friends and families out of the space. It's not that they don't think Bitcoins interesting. Bitcoins actually not that interesting to or not not that hard to understand once you know there's only 21 million. The problem is that everyone thinks it's a Ponzi because they ultimately feel they'll end up on this screen because the common trope is from a grandmother or friend. It's like N Koreans are going to take it or it's going to end up in a landfill. So they either never allocate or they allocate such a small percentage and it's usually risk capital. It's not like an actual store of value. And so that's like the key idea here is that everyone knows that's been holding Bitcoin long enough. Their life gets easier when you hold a harder asset and can have better purchasing power and just do more in the world. The problem is nobody knows how to hold it long term through all of this because they don't have a good form of custody. And so that ties into our effectively our flagship product that we launched. It was November of 22, so close to three years now and it's ultimately multi institution custody. It's super simple actually to to understand it's instead of having you deal with self custody, how do you go down the rabbit hole in understanding C phrases, hardware devices? And by the way, that's easy to understand. The hard part is putting all of your capital there. That's the hard part. It's easy to put 100 bucks on 12 words. It's a different thing to put 50% of all your money. That's the thing that gets missed in this industry is it's not hard to self custody. It's hard to self custody when all your money's on there and somebody you know robs your house or you get hit with, you know, wildfires like in that were in California. But the other side of it, it's very easy to buy via a third party exchange. The hard part is historically people have ended up on that losses creed. So what multi institution does is it simplifies the process while 10X in the security. And so when you log in or set up via part of this announcement is now self onboarding live because historically to get this amount of robust security, you literally had to take again, 2 to 8 weeks. So there's like now 10 collaborative custody providers out there. I would encourage anybody that wants to learn about self custody to take a look at it because it gives you ultimate power, but there's a lot of responsibility and that's where people generally get the the ceiling on how much they can allocate to it. And So what we've been able to do via our partners bit go coin cover and then on ramp is when you on board you're able to build a multi institution wallet where all of those keys from each of those institutions are offline segregated in bank vaults, they're sharded. It's everything that's wrapped around institutional security that like a MicroStrategy we have, but you get it three times and you need two of three of those custodians to sign on your behalf. You are the director and you have to do video verifications with independent institutions before those assets ever move. And so it's really transformative and effectively democratizing the ability for people to get material wealth in the space without having to do three years of legwork on how do you actually secure this. When I first met you guys, I knew of course what it was like to buy Bitcoin on an exchange. Was familiar because of following the story of the ETFs, right? The spot ETFs coming to market became more familiar with self custody through people I had met that are working in that space. But I had not heard about or realized that multi institution custody was even an option. And what's so interesting about that is you never know, just sharing what you do, right, what you're excited about when you share it with someone, just very naturally where that's going to go. And in, in one case, the one gentleman, I, I just shared what was going on. You know, I'll have to ask him. But I would think it'd be far fetched to say that this guy was not aware of ETFs and was not aware that you could just go onto an exchange in the US or some other country and just buy Bitcoin, right? It's all kind of very obvious and heavily marketed. So when I was telling him what was going on and said, hey, I'm working with onramp, it was just a very natural progression for him. And it was almost like for me, it was the first time of like not even trying to direct someone in a certain place. But I think for him, it was just like the first time that I had seen someone actually just go from near zero to, oh, here's this well constructed solution that makes a lot of sense for all these reasons. And you can just kind of like walk someone right up to the gate and say, here you go. It's all built and ready to go. So yeah, that was a really unique experience for me. Yeah, I mean, that resonates because that's ultimately when we work and talk with clients. That's the thing that once people get peek behind the hood, they love it, right, Because at the end of the day, it provides them Peace of Mind. That's the core thing that like we're working on and what we deliver is Peace of Mind for individuals. Part of the announcement we'll share is Peace of Mind is lacking across the board, kind of just in society and for humans in general. And what I mean by that is individuals, if they're being debased and everything's getting more expensive, whether they just can't, you know, buy less eggs every week or even it's a high net worth that retires, they're losing the Peace of Mind because they're on a rat race and they're purchasing power like they're their retirement is becoming worth less. Their trips are going to get less, you know, less that they can buy with their retirement or ultimately what they leave their loved ones. And then once they get past that, well, let's just say they figure out Bitcoin. Well, most people don't go too far down understanding Bitcoin because again, it goes back to it's always fleeting. It's a speculative asset. Nobody really focuses only on Bitcoin, which is a key theme of on ramp. It's like we go very deep on the education. That's a core like something that's super important because most institutions, high net worths end up as exit liquidity in the space because they come in trading the momentum similar to most meme stocks and and meme assets. And then when everything crashes, nobody's there to tell them why it crashed. And you know, they say they blame it on Bitcoin. It's not really Bitcoin, it's the market. And if you're well educated, you're actually happy to buy when the price crashes. And so that Peace of Mind and helping them get off their route race. But then at the end of the day, then there's all the Peace of Mind that's lost once you get a material position because you're always worried as it grows what happens with the third party exchange, social engineering all day long. There's no shortage of bad actors looking to take it the first time. A digital bearer asset. And then if you figured out how to take self custody, well, it works for a while and then the price double s and triples because that's where all my previous firm RAUM came in, was in two. I call it the character stick. You know, the price double s or triples and that's the carrot. And now you get uncomfortable because it's the same amount of PTC, but now your legacy is on the on the hook of is my family going to disown me? Are they going to roll over in their graves if I lose this thing? And then the stick is, well, God forbid if I mess this up, I'll never be able to live with myself because what 10 Bitcoin at 10,000 is fundamentally 10 different than 10 Bitcoin at $1,000,000. And so then you get the Peace of Mind from not only, you know, having redundancy and fault tolerance with multiple institutions safeguarding it, but then we end with a Peace of Mind where your legacy and your generational wealth can be handed down. Because that's where a lot of clients come to us is they say they're comfortable with almost everything except for how does their family access the BTC if God forbid, they get hit by that metaphorical bus or an actual bus. And so that's really where individual, like you said that you referred to us, when they see it, it's very intuitive. You see 3 institutions, you recognize multi sig is open source, it's scaled proportionally because this is very exciting when it comes to other financial products, whether it's lending, I have, I will make anyone a bet they can reach out. We can talk about it publicly like this is how all ETFs will be held long term. It's how micro strategy and all corporate treasures will be held once the market is educated. Because at the end of the day, when you're holding fiduciary, you're a fiduciary and you're holding shareholder capital, the like, from a regulated perspective, they're going to require it. And let's say you have a trillion dollars. Trillion sounds like an insane number, but Coinbase is, you know, I think, I don't know, 500 to 700 billion total crypto assets. And they'll be at a trillion. You know, as the price runs up, the market's going to require that a single institution over time, as they fail and things happen, can't just unilaterally lose all the assets. And so we've had ETF providers on our shows and behind closed doors, they'll say this thing's bulletproof. The problem is that it melts brains because now you have to explain to somebody why nobody has unilateral control of the asset. And you have to explain, you know, that Bitcoin doesn't sit anywhere, it sits on a blockchain. But that's all the exciting stuff that we're working on and where we found a lot of traction where clients are coming in. And the fun part is as the price rises, the increase in flow of opportunities, we're talking about the largest institutions, the whole keys in our quorums looking at lending products, We have tax advantage accounts today, the ability to trade, you know, business accounts. We just see that market growing. As people get educated, they're going to realize that, you know, again, Coinbase account doesn't make the most sense if you're going to put 25% or 75% of your life savings the same side of hardware device only, you know, scale so much when it's that amount of capital. The one the other thing I'll share is the way I think about this, the best analogy I have is like the browser in 1995, you know, Mosaic was the browser that Marc Andreessen helped Co found and it really democratize access to the corporate World Wide Web. It opened up, you know, the web to everyone. Before that you had to set up, you know, a modem, a router, and it was only the tinkers, the people really interested to go in and they were able to, you know, reap outside returns, whether it was knowledge that they got businesses that they started. And I think of where we're heading with this like corporate treasury adoption, mass global adoption, and then also something like multi institution custody. The fact that we've been able from a technological perspective get 10X better security at 110th the price of any other custody solution. It allows for anybody to come in once it's understood as a standard and most people won't have to overtime. It's just same way nobody knows how a browser works. You click the button and it works and give you access to everything. That is going to open up the opportunity for everyone to get material exposure to BTC. And it's at this great inflection point because as the price is rising, everyone's going to seek out the best products and they're going to seek out exposure. But again, over time, we've seen that centralized custody of a digital bearer asset that's a fixed supply doesn't make a lot of sense because you end up at honeypots. You end up with people attacking it. And the other side is, you know, all the way from the mom and dad that are trying to struggle to make ends meet to the billionaire. They don't have time to figure all this stuff out. That's the hard part about all this Bitcoin digital assets custody. You just need standards and financial service firms that are customer centric and have brands and reputations. And then the beauty is you don't actually have to anybody building a Bitcoin that's really building a Bitcoin. They always take themselves out of the position to lose clients assets. That's a low key thing that doesn't get talked about enough that you never want to be in position to go to sleep at night and you lose all your clients funds. And nobody can effectively say that if you have a centralized custody solution, whether it's bad actors, collusion, malfunction with how you set up the custody, whatever it is, you can't say it's bulletproof. The beauty of what we set ourselves up to do is that there is no single counterparty that can lose the assets. You need multiple institutions to effectively collude or fail. And we actually have Lloyd's of London insurance around that. So it just changes the whole dynamic and risk profile around getting the allocation goes back to the effectively thesis on what do you underwrite bitcoins potential appreciation and then you remove all of the like friction point and assumptions on will it actually be there in the future? Which ties into like bit bonds and everything else that I'd make the case that you can't really execute on all these other strategies until you get rid of the execution risk around custody. This episode is brought to you by Arch Lending, the premier provider of crypto backed loans designed for both individual and institutional investors. At Arch, your digital assets work. For you without selling them. Arch offers flexible loan options tailored to your needs. Backed by industry leaders like Morgan Creek Digital, Castle Island Ventures, and Galaxy Ventures, Arch Lending is setting a new standard in crypto backed lending. Are you ready to unlock the potential of your crypto assets? Visit archlending.com to learn more and configure your loan today. Europe's richest Bitcoin heritage site Prague BTC Prague. The biggest Bitcoin conference on the continent. Join us June 19th through the 21st for Bitcoin Prague 2025. Use code COTSMAN when you buy your ticket at btcprague.com. Hey guys, today's episode is brought to you by stamp seed. If you're in cold storage, you know how important it is to protect your seed phrase. That's why I recommend you head over to stampse-ed.com and check it out for yourself. This seed phrase storage device is 1 solid piece of titanium. There are no loose pieces and you can hammer your seed phrase in letter by letter. When you go to stampse-ed.com, use promo code Tim 15 for a 15% discount across the website. That's Tim 15. Can you touch? On early riders for a few minutes, What is it, how did it come about and what are what is the what's under the umbrella today? Yeah. So part of the story that I, I kind of glossed over was while I was at Unchained help set up one of the larger Bitcoin focused investment funds. And so had a lot of background in, you know, even previous to Bitcoin, I was very deep into the technology world and venture capital, just interest and always assumed I would get into the space at some point. What we're building Unchained. The thing that I really found out was especially again going back to 18/19/20, there was very little interest in the Bitcoin only space. So it's very hard to raise capital, very hard to build a Bitcoin only business. And I knew we were doing good work and it always took a liking to, well, it's helpful to bring in capital to go and, you know, invest in companies that are doing the right work. So I linked up with a venture firm and, and part of like, you know, when individuals come into this space, you end up building deep relationships with them and they generally don't go all into BTC. So what they'll generally do is take their position and then they want a seat at the table to see what's being built. How do I get access? How do I invest? How do I see, you know, who's building? Because they always, this is the thing we should touch on is that most individuals, once they get this space, and I know you're true North Crown probably really feels this is they're kind of like, feel like they're almost living a lie. They're living the old world and they're trying to figure out how do they get into this new world. And so we raised that fund and and what I found doing that was. A lot of the good ways to do things and also a lot of just like the bad ways. I think ultimately liquidity drowned out all soundness in decision making and fundamentals in a business. I saw this at We Work and then I saw this coming into the Bitcoin space because when you get venture capital money, you're told to just grow, grow as fast as you can. And that hasn't been a good strategy in general, but it's even worse strategy in Bitcoin because it's on accelerated business cycle. That's how I think about Bitcoin market cycles, just accelerated business cycle. So you go up and then you go straight back down. And if you build in a way that the old school VC world tells you to where you're effectively just going to cut your business in half because you go higher in the bowl and then you have to fire everybody in the bear. And so Long story short, left kind of both firms in 22 after I just saw everything kind of felt a little off from the Bitcoin side, but also just amount of liquidity. And I thought we were on to something very big at on ramp. I looked at Grayscale and their business and providing, you know, 600,000 BT sat in that product, the trust and it was objectively had product market fit to get people exposure pre ETF. But it was objectively a bad product and assumed that if we could get anywhere near there, we would be really printing Bitcoin from a revenue perspective. And so made the concerted decision that we would, you know, take our own capital to build the business. So most people think that's crazy. You're in a bear market, you're spending your own capital, build a business and what and your own Bitcoin. And what I found was that it made us the most discerning allocators because that's all an entrepreneur is. It's an allocator of capital to produce more capital, positive return and found that this made us the most efficient business. I won't say it's a 10 out of 10, but much closer than any other business that's building on a dollar standard. Because ultimately what happens on a dollar standard for any investors out there, they'll, they'll, they'll, you know, recognize this is LP's are always trying to get rid of their dollars because they're always fleeting. It's why everyone's always trying to seek yield because at the end of the day, everyone knows you're a sucker for your whole dollar. So you're less discerning on who your capital manager is. Your asset manager, even if you feel like you're doing the diligence, it's never at the most optimal because it's, it's dollars. They're, they make more of them every day. And then if you're the GP, well, you're always trying to raise more dollars because you want a larger fund. You want to deploy those dollars as fast as possible because then you can raise a bigger fund. And so those dollars are always fleeting because if you raise them, that's your mandate. And also dollars are made more of everyday. So you got to get them out in the market. And then again, the ultimate allocator, which is the founder gets those dollars from the VC, doesn't matter if it's a traditional VC or Bitcoin VC. And then they're told go run as fast as you can because what happens is most venture capitalists have never built anything. So they don't know any model other than what was taught in like corporate finance or an MBA and said, hey, like this is how you scale. You got to hyper grow. And so then the entrepreneur gets told go hire, go build. And then again that accelerated market happens. You fire everyone and you just like literally, you know, destroyed all your investor capital. This happens in the existing traditional venture space as well as this happened in the Bitcoin space. And so I saw that and ultimately said, OK, when we build this business, we're going to build fundamentally different. And while we're doing that, I was like, oh God, this is how all capital formation will be done in the future because a, this is the most efficient way to deploy. It's not to say you don't spend the money. It just means that you're alter discerning and efficient with how you spend to where how you hire. How do you think creatively around that to how you build the business to how you think about your liquidity partner to your the way you build custody and it's what's known from anybody that's a builder is constraints or the ultimate like breeding of creativity. It's how you can actually, you know, this is how like societies are built on as like constraints. And so Long story short, having the experience in the venture space was realized. Well, this is how all businesses will be built. Specifically the businesses that are built this way will out compete the others that are built with the fat and bloat. And then also just realizing from a very first principle perspective, individuals, we're all society is made-up of individuals. And if me and you and everyone listening starts to determine that Bitcoin is our hurdle rate, Bitcoin is the thing that they're trying to make more of. It's not to say they don't spend the Bitcoin, that's what money is meant for, it's optionality in the future, but it's meant that if you're going to spend the Bitcoin, you need to know that you're going to make more of it. You're going to get more return back to you. And so coming at from those two directions of it's just the economically rational thing where we're heading. Once everybody gets this knowledge that Bitcoin is the thing and that's the hurdle rate, well then it's the natural thing to build a business that's going to, you know, make sure that it out competes or returns more BTC and on the other side of that, that all businesses will be built. And so that's how early riders came to be to the 1st and I think only Bitcoin denominated fund. Very often people will say, man, that sounds risky, that's in hard mode. But when we break down how we can achieve that and what we do fundamentally to do it, everyone's like old and that makes complete sense. But it usually has to be explained to somebody because generally people aren't actively building, they're allocating and they just see bitcoins cager and they're like, how could you ever do that? But when you're building valuable businesses, it's not hard to return more money than you put in it. You just have to actually have, you know, value to bring to the world and creativity on how you you deliver that. Makes sense. Do you want to touch on any of the other, I don't know if you'd call them portfolio companies under the early riders umbrella and or kind of where we're going from here on the on ramp side? Yeah, for sure. So on the early riders umbrella, the reality is there's a notion of like alpha or axis that's talked about in the venture community, whether it's, again traditional venture or Bitcoin. And it's all BS, Like everyone will take everyone's money because that's what people they need. They need to build businesses and they go out so everybody sees the same deal. You can look at all the portfolios and they pretty much have pretty static overlap. And part of the reason for launching the fund was not only do we discover kind of like what we talked about in the hurdle rate and capital allocation, but the reality is we have just too many ideas. And the reason we have too many ideas is because what makes early riders unique and on ramp and why I think we have a a chance to be a very, very large company in this space moving forward. And what I've missed seeing in the traditional Bitcoin space is, and this goes back to all technological cycles, is usually when people come in, they're the tinkerers first. It's the people that are interested in the way I liken it is somebody that likes to cook, maybe a great cook, but that's fundamentally different than starting a business and turn it into a franchise and scale in it. It's very similar to most technological innovations. Specifically with BTC, somebody gets Bitcoin in 2012 or 2013 at certain things in their mind that were a little off. And so they may be great individuals, but to like run and sustain a business, they're fundamentally different. And so the easy way to put it is they're building products for themselves versus for the the mass market. And So what was lacking and something we made a concerted effort when building our partner team and also our advisor team, which you're included on and also on ramp is every individual comes and I say everyone has 10 plus years of professional experience. And then they layer in a deep understanding of Bitcoin, which is important because they're taking a mental model of the existing world. And then they're layering in a very, a very bespoke understanding of BTC and fitting that in. Because there's a nuance that we're not going to recreate the wheel of Bitcoin, we're just repurposing it. We're going to naturally infuse Bitcoin into other products and services. So you need to know how the existing world operated and worked and how Bitcoin comes in. And so by doing that and all day long build in the market, we actually have the definition of access because while we're building, we're spotting all the gaps we're getting. We're talking to entrepreneurs. I want to join our firm. We're talking to builders that are saying we need XY and Z. And then the idea is that we now start to place bets in the market. One of the very first ones that we place was with Acropolis, who you're very familiar with. You're the only to my knowledge corporate treasury firm like on capital markets advisory with Bitcoin and then also on built on multi institution custody. We made a concerted effort to build that versus or invest in that versus build it at on ramp specifically because again, financial services require they're very bespoke and require a particular not only strategy, but understanding of the market. And so you're not going to have everything boil the like the you're not going to have, like Coinbase said, deliver services for everything in Bitcoin. They're going to start to get very specific. So Acropolis was one seen insane demand given the amount of interest in corporate treasuries. We have honor at Mina, which is the only Bitcoin only Middle Eastern firm in North Africa, Middle East, North Africa. They're working with the central bank to get licensed currently and then Flash is a payments company and then obviously on ramp is part of that portfolio. And we're looking at a few trad FI opportunities in the RA that slash gold to Bitcoin rails. Got it. And I guess as we wrap up, anything on the on ramp front as far as where we go from here that you want to touch on and then kind of wrap up from there I guess? Yeah. So part of this part and we're super excited is we, we referenced the Peace of Mind earlier and we bring clients Peace of Mind that are either starting to allocate or allocate material size. The Peace of Mind that still lacks in the world is people are have dollars or equities or bonds and they're naturally starting to turn negative yielding they need access to BTC. And so we're not we're announcing today this will come out and on ramp to on ramp. So we're going to bring out the industry leading Bitcoin only exchange at the most cost effective prices. So right now it'll start if you onboard it. Actually this is part of what's exciting is so if you sign up by the end of June, you're actually going to get no trade fees all the way until October. But once you have trade fees, it'll be 75 basis points. And I'm going to make a commitment that if anybody wants to or tries to undercut our fees, we're we're going to be less than them. And the reason why we're going to do that is ultimately because our business model isn't reliant on just trading. This is a big part of the market that we see as a gap that everyone kind of conflates or kind of like hides, like the reality that custody has been subsidized by too much money. So usually a custody is free at an exchange because they want you trading. So it's baked into the trading fees or if you go to one of the collaborative custody providers, it's usually free or very close to free because it's been subsidized by venture. But there's risk embedded in all of that. And so we have a fundamental business that spans not only cross multi institution custody, but Iras, lending trade, you know, insurance. And so the core idea is that if somebody just wants to get started with on RIM or into the Bitcoin ecosystem, or maybe they're already buying on somewhere else and they just want to come in and get industry low fees, that's the Peace of Mind to start for themselves or friends and family. And then the idea is it's a basically all under the sun umbrella for when you're ready to upgrade to multi institution and you want your segregated account on chain. With everything that we talked about earlier in the pod, you'll be able to get that. So we're pretty pumped about the excitement and we got a you can tell us on the pod what's your you're going to have a referral code for you. So if somebody comes in, you know they know that where they came from and you want it to be Treasury or is it Kotzman or you got something more interesting? Yeah, usually it's just Kotz, Kotz. OK, so you heard it here. If you use a KOTZ, you're going to naturally get the you'll get no trade fees for until October, and then Kotzman will be taken care of on the back end for for listening and signing up with his referral code. I mean, it sounds like a win win, right? You're going to buy Bitcoin anyways. Why are you going to pay more than you need to to to get it where it needs to go? Yeah, that's the big thing is historically people in Bitcoin have had to play hot potato with the assets. You either start at one exchange, then go to the next one, then go to the next. You know, single sig to collaborative custody to go into ETS because they became too much. The idea is that you have Peace of Mind on your counterparty when you first start buying and knowing you don't have to move them. And God forbid something happens to you, your family will be able to recover them via the multi institution process to get them in the beneficiary's name. I think everyone that listens to this pod hopefully knows that it's on rampbitcoin.com or my favorite website on rampbitcoin.com, back slash Cotsman, right? That's my preferred website. But where can people follow you, interact with you and any other resources that that you'd like to call out as we kind of wrap up here? Yeah, I think you called it honor bitcoin.com on Twitter, mtangumaemailsmichael@honorbitcoin.com if you want to shoot a note, we're super responsive. We're very focused on client services and relationship building, so you'll always get somebody to talk to, whether it's support or a consultation to understand what we do, if we're a right fit. And a lot of this, what we're building is ultimately for folks, friends and family. I think a lot of individuals that may feel sophisticated in this space may not need our services, but their friends and family will, that they want Peace of Mind that they're taking care of. And so our goal will take care of them. And then our understanding of the market as the price rises, what we build is we'll start to make more and more sense and then they'll be ready for our services as well. Awesome. Michael Tanguma, founder and CEO of 1 Ramp Bitcoin. Thanks for your time today. Appreciate your time, it was great.
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