Transcript+
It all comes down to computers. Communicating the information superhighway can be a confusing mix of on ramps and off ramps. Bitcoin is worthless artificial gold. Is it still rat poison? Probably rat poison squared. We need to get into the world of OK, this is actually foundational technology. What the Internet of Money does is it creates a single network which can do a microtransaction to a giga transaction. The Internet is going to be one of the major forces for reducing the role of gun. The one thing that's missing that that will soon be developed is a reliable E cash. All righty boys. Welcome back to another episode of Final Settlements. I'm here with Liam Nelson and Michael Tanguma. Today is Monday, April 28th, 2025, and we've got a big list today, boys. Big list of news items, deals, stories, maybe a little housekeeping. Before we get into the list though. Liam and I were recording with Pierre Richard on Friday. We put out the episode over the weekend. Really great conversation with him. I know Michael, you had a conflict. So we were, we were sad to miss you on that call. But really great convo talking about his new company, the, the Bitcoin bond company and really talked about sort of everything going on in the space from sort of the, the general dynamic of a, a speculative attack and the corporate adoption that seems to be accelerating at the moment. So good conversation with Pierre. Definitely check that out if you haven't already. But Liam, any other any other takeaways from from the convo? Yeah, no, it's great to have him on. He's always really thoughtful with his exposure. And it's, it's great to see just additional iterations on different types of Bitcoin vehicles in order to get, you know, there are just so many different cohorts in the market that want Bitcoin exposure in, in different ways and being able to serve them all thoughtfully is is really great. I mean, he, I would also just show the reorg too. And what he's doing at the Nakamoto Institute is just great in terms of really good Evergreen content for people who are newer to the to the Bitcoin space and really want to understand the fundamentals why this asset is so valuable. Yeah, this is a lot on education. Go ahead, Michael I. Didn't say this is bull market cadence because I think that was supposed to come out this week and we were, you know, going to, you know, have that as the formal final settlement pod for the week. But given all the news and things happening that the guys wanted it, we we agreed what we do another RIP this morning. So an extra extra bonus episode over the weekend. That's exactly right. And yeah, I was, I was just going to mention like we, we talked a lot about education with Pierre and, and the importance of it. And I thought it was noteworthy just on the, the announcement last week from 21 Capital, Mahler's at the helm of that with Tether and SoftBank involved. You know, part of their business plan is being an education and media company. And so this speaks to a lot of what we've said in the past around, you know, if you're a Bitcoin company in general, you're also sort of an education business and somewhat of a media company as well. And so I think you're starting to see that trend sort of percolate as well. Just the reality that, you know, even though there's, you know, a lot of sort of directional adoption of of Bitcoin, there's still, you know, a massive amount of of misunderstanding around what the SAS it is, what the network is, how you can sort of rationally adopt it in various ways. We need more education. And so this is all all, all very bullish in that sense that people are focused on that that side of things as well. Shall we go to the list? Yeah. And do you want to start Liam? Let's on the topic of education, this is something that we focus on a lot because there are other different products out there that are different companies in the space that, you know, position their brand similar to Bitcoin, but also offer more risky products as well that may or may not return to Bitcoin over time. So with that Coinbase Asset Management launches the Coinbase Bitcoin Yield Fund. So this is for international investors. So it's pretty much Coinbase is not necessarily Bitcoin first. They they have a lot of different products that offer yield on their other assets like Ethereum etcetera. Through staking and to address growing institutional demand for Bitcoin yield, Coinbase Asset Management is excited to introduce Coinbase Bitcoin Yield fund. This fund is a conservative strategy that seeks 48% net return in Bitcoin per year over a market cycle with investors subscribing and redeeming in Bitcoin. So the the product doesn't necessarily share a lot of what the products actually doing. It's for international investors only. But I would imagine because it's for international investors, it's probably something to do with the derivatives of Bitcoin and perpetual buying and selling of the asset because they don't necessarily offer that in the US. But we've we've kind of seen this a little bit before over different market cycles. So wanted to to turn it over to to you guys to see your initial feedback and opinion on on this which was announced this morning. Yeah. My my main take is in general, like in Bitcoin, the matter of the wallet, financial service lending product, you generally want things to be battle tested and ideally like open source. It's where we love, you know, multi institution and multi city in general. It's extended public keys and derivation paths. Anybody can spin up a wallet. There's no proprietary technology there, which is always helpful when it comes to understanding the risk. In the same way, when you think about collateralized loans and being pretty open source in the sense if it's on chain verifiable, the loan to value, very ultra conservative. I bring that up because we've seen this for the past 15 years in digital assets in Bitcoin, every cycle, every couple of years, there's new strategies that provide yield. And so it's just something that independent of it. I don't know the strategy. You know, there's probably some like Liam mentioned, some of the perps or like play the basis trade, but ultimately you just want to like hang back and see the return profile and the longevity. The so that's one part. The other part is there's no shortage. There's going to be no shortage of these kind of products in the same way there's no shortage of Bitcoin publicly traded companies or companies that are publicly traded adding Bitcoin ultimately, because there's still that gap in education on, you know, how do you actually buy Bitcoin? How do you custody it securely? And so people want market exposure, but they don't want to deal with the things that, you know, most people probably listening to this podcast are familiar with on how do you like buy the asset? And then how do you, you know, conserve, you know, in all likelihood safeguard it so it's not stolen, so these products will continue to happen. And then the worst part is once somebody gets the asset, it's not the the hardest part because getting the asset, all right, somebody had to go through that mental gymnastics. But the Fiat world, the world we live in today, tells you you're the sucker if you don't do anything with the underlying. And so then ultimately, this is how a lot of people got in trouble last cycle with Gemini and Genesis earn because Gemini didn't lose the asset, but what they did was they're ultimately the counterparty of the custodial situation. And the client got emails and said, Hey, do you want to get an additional 2 to 5% on it? And people love to get some yield because again, you're a sucker if you don't just leave it in cold storage and get your, you know, whatever the 20 to 40% cater is on Bitcoin. So this is just an overarching sentiment. This really comes back to the education and buying, holding spot Bitcoin custody over the long enough time arising, nobody's outperformed it no matter what they say and their their perspectives back. So just keep that in mind. Yeah, I would say this is, you know, not surprising at all. I think you're totally right. We're going to see a lot of these types of products. Part of me is honestly surprised it took quite basically this long to launch something, particularly because this looks like it's only for international folks. So like what's held them back historically of, you know, from launching something like in the US is the sort of prevailing regulatory environment, particularly around perpetual swaps, which, Liam, I think your intuition is right. That's probably what's underlying this like 4 to 8% yield. The other take away though, for me is like, you know, I think this just speaks to sort of what you're alluding to, Michael, around like the lack of education around Bitcoin, what it is, what it can do over the long term. And like, do you really need 4 to 8% yield on the best performing asset of all time? Like that's what I always anchor back to. It's like anything, any product like this is layering on additional layers of not only counterparty risk, but execution risk in terms of whatever the underlying yield generation strategy is. And so is that 48% worth those additional risks? Like in my mind, it's probably not. But you do make a good point, like you want to, you want to see these things exist for a little bit, establish some sort of track record so that you can sort of assess how they are integrating those various risks on top of just long Bitcoin. So, yeah, yeah, there are a lot of people obsessed with cash flowing assets. And I would just tell them that, you know, you can take some of your Bitcoin and sell it off at a monthly, quarterly basis if you want cash flow. And it's probably going to do a lot better than, you know, whatever else you're thinking. Yeah, what we'll cover this at some point and on the topic list, but I think the basic after just thinking deeply about what the hell is going on in space the past week, it's I've come to conclusion like all these products, the reason why they exist and have value is ultimately because the individual hasn't been educated enough to buy a significant amount of Bitcoin and feel comfortable that it's in spot. So they're ultimately out chasing other products because they view them as either less risky or diversified exposure when they're all back to the underlying. And so that's, that's ultimately, once somebody gets comfortable with getting a 20 to 80% bulletproof allocation to the underline, then you just like sit back and chill and then it does its thing. And then you go back to your life and set up whatever all this is going to happen. I think that's ultimately what this is all about. And we'll probably set some of the themes with doing a jump ahead. But these these updates in the market, there's a lot of, you know, products and services out there that are built out with the idea that this whole assets class is built out and it's still very early I. I would even go as far as to say like, it's probably like, I think you're right, Like it's, it probably has to do with someone's lack of exposure or, you know, small amount of exposure to Bitcoin. And then it's it's almost like they want more risk on top of it because they feel like they're short Bitcoin. They feel like they're short the asset. So they need some other way to generate even higher returns than they will get with their just long Bitcoin. All right, what's next? What's next? Where do you want? To go let's Galaxy put out a report on the state of the crypto lending market there. This was a really great long in depth report, but the main point that is most notable here is that the market got up to 35 billion in total lending size at least based on the report by one Q of 2022. Obviously a lot blew up from here and then and now it's just over $10 billion in terms of total crypto lending, especially in the the centralized lending market. There have been more growth of different off chain or on chain products too. But wanted to to get your guys feedback. Is the market start of capital? Is this a healthy amount? Is this actually what's going on with the Bitcoin lending market? What are your initial thoughts? What was the percentage? I didn't get a chance to do a deep dive but I saw that it was drastically lower than the peak. What do you have all the have off the top of your head with the where we're at in like C5 versus 20 like twos peak of? Loans, Yeah, Brian, if you could go down a little bit. Too. Yeah, this one. But it's it's essentially, yeah, it's down about let's say 2/3 from its peak. 2/3 Yeah. I mean, I think there's a few components there. I think Alex Thorne get a really good podcast if anybody wants to go deep on the specific side of the market on his on Galaxy Brains. But I think ultimately there's a few factors. There's one, higher interest rates, lower demand with the market being suppressed and then ultimately everyone getting blown up and not really being in the space, you know, over the past two years. And well, Bitcoin lending or digital asset lending isn't hard. It does take some reps because of the volatility profile and really the 24/7 nature. And that's what it gets really difficult for Tratify to step in and then not only understand how to manage the volatility to custody, but then also how to be on 24/7 and mitigate risk. So I think it's interesting, like the D5 stuff, the thing that's interesting about D5IS, I don't know if like these charts show it, but I've always looked at it as like a plaything. Like it's a fun thing for somebody that's interested in the sick class. Like when you remember people used to be interested in Aetherium and they get interested in like Defy and Maker and stuff. But nobody was like putting material wealth there unless they were like the jumps of the world that were, you know, are being out and create, you know, creating more tokens out of thin air. But there's no like real money that sits in between that, at least serious money. The way I've always thought about defy and lending in the space is very similar to like the mental models of AI in humans or technology in humans. You want some component of governance built in the protocol, IE like what we talked about multi institution. That's, in my opinion, like decentralized finance, because no single counterparty holds the underlying, but you still have covenants and govern and governance built into like centralized entities that have legal frameworks and liability. And so I think that's where this all ends. But in between now and there, I think we probably see this market come up drastically and then a lot of people get, yeah. I would I would agree with all that. And I think, you know, it's no different than like you know, often I've talked about like the most important component of sort of constructing a long term Bitcoin thesis is how you think about custody. It's the same thing if you're using Bitcoin as collateral, right? That that remains the most important thing. And so respond on, Michael, I think like the real defy is something that looks, you know, more like multi institution custody, where you're actually distributing counterparty risk and ensuring that there's not a single point of failure where, you know, you could wake up one day and, and your collateral's gone. And so I agree. I, I expect this chart to trend upwards, particularly I think what could make this explode to the upside is obviously like, you know, banks and other financial institutions getting into the mix, because right now this is basically just Tether and some smaller players here. So once, you know, I think more traditional financial institutions get into the game, I think this is going to be an area of focus for them. So expect this to to rise over the next few years. Yeah, Bitcoin bond company is an interesting idea for just simple exposure for different parties that could be interested in this too. But I think one thing that's important to mention or point out is a lot of hedge funds are likely buying I bit on margin and that's just not going to show up in here. And so there's probably just more leverage in the system that people can't necessarily see through, you know, just the centralized lending market. Yeah, 2 great call. Yeah. I think the one thing to call out here that I don't know if you guys have feedback is it makes natural sense that like the banks are stepping in. The banks have, you know, lowest cost of capital. It came out last week that some of the larger digital asset firms were like, you know, applying for licenses so they could hold deposits. But I think like 1 angle that we've seen blow up. But at least if you can see how it can be conservative if you manage risk appropriately is Bitcoin back loans. That's pretty straightforward. I think what people were they get in general in in trouble and where I'm afraid banks might get in trouble is so you do Bitcoin back loans and you're taking, you know, whatever percentage rate, annual percentage rate from the client. But then if you get a little greedy or opportunistic or look for higher margin, which is what all banks do, and then you lend out that BTC, that's when it gets real like crazy because and that's the thing that I'm kind of like more concerned with because that whole market starts to get opaque really quickly once it's lent out multiple times over. So that's just something to keep, you know, be aware of. And I think we keep reverting back to this multi institution aspect. But the reason why is because that's it's effectively what not only on RIP is built around, but one of the core tenets and thesises of early writers. At the end of the day, the definition of alpha is like the thing that others do not have or do not see. And it's there's a form of like living in the future that we benefited from by seeing things blow up, seeing things that work, and then ultimately seeing how the difference between this asset Bitcoin versus the rest of the market is. And what are the different like properties that make it different? Is this this notion of governance built into the underlying that prevents a lot of these things from happening when you think about rehypothecation. And then also if a counterparty decides to default or disappear, your assets aren't stuck, you can actually move them. And so if that is correct, we believe it is, then there's going to be no shortage of opportunities across things that we can see today, whether it's lending, trading, underlying, custody, IRA products, insurance, but then second and 3rd order derivatives of that, you know, example setting like oil trade, how do you actually send a billion dollars of oil? You know, with a BTC transaction, you're probably going to want some additional governments and escrow built into the underlying. So I just want to like highlight that because I think it's an important function of if anyone's listening or you recognize that and you're actually looking to build on those kind of primitives, there's going to be a whole opportunity set out there. Because it doesn't really cost a lot of money to build a business, at least starting in that section of the world. And it looks fundamentally different than everything else, which allows it to reap outsize returns as we're seeing it all. Well said. What's next, Liam? This one is a little bit older now, but finance is acting as crypto advisor to governments on on regulations as well as creating strategic reserves. I know Coinbase, the head of institutional trading, also just said that there's additional demand for that. They've seen nation states buying what what are your thoughts here? Is this a little bit of just kind of creating FOMO for everybody else to, you know, realize that there's only 21 million Bitcoin and get involved? Or do you think that this is this is legit? I didn't read this article because I don't pay for the Financial Times, but if someone wants to give me an overview of what it said. I think. I mean, I think, I don't know if this is the same one, but I think it came out that CZ was an advisor to Pakistan. Was it Pakistan? Yeah. Is is this similar or this is a different report? Well, that happened too, but then the CEO, Richard Tang is also, you know, helping nation states get exposure as well as crafting their own crypto regulations too. So my thoughts this is legit and the reason why is because the tether stuff like I haven't thought deeply about this, but there's a whitewashing that's currently happening with tether that everyone that was around previously like each other. You can go deep down and YDFS suing them and you know, the history of like their founding. It was just like it was a shady organization. And when you start to think about what are the second third over effects of bringing in, you know, capital from offshore, not only bring it into the equities markets, but then also you can think part of like what they described is getting lower cost BTC because they can get it naturally because of their business model. They can infuse it into the equities, they can get shares, they can access the financial markets. Like there's just a lot happening there. And I don't think people aren't paying attention. So when you think about the UAE taking that position in finance and then also Pakistan in these other countries, looking at it's like there it's the same concept with Bitcoin and crypto in the sense there's only so many people that understand this stuff and can help you like think through not only the game theory, but how do you like actually build products and services the on ramps from your local Fiat currencies. So I think it's legit. I think it makes sense because if they see the writing on the wall and this is going to be entrenched into their, you know, the the global monetary order effectively that I would go and try to get close to Binance if tethers, you know, a competitor. Yeah, it kind of makes sense from that perspective of like if you're sitting X US, who do you go to for advice, consulting? Like you're probably not going to go to Coinbase that sits in the US predominantly. So you're going to go to the other sort of most long standing entity, which is Binance. So. So I think it's kind of makes sense from that perspective of like, how else would you go about this if you're some government X US that wants to, you know, put your put your chips on the table and figure out sort of what your plan is going to be. Probably need some advice, some guidance on that. Because like you said, Michael, like most people just don't understand this thing. And so, yeah, I think it's kind of like, where else would they go is just my take. Yeah, I mean, honestly, correct me if I'm wrong because I don't follow politics that closely, but like the the main things that Trump has really done or said that are different than the past is tariffs and his stance around Bitcoin. Like that's pretty much it in my view. Like he hasn't really done anything differently with taxes yet or, or anything else. And so obviously every time like the leader of the largest country in the world and most powerful says something that's different than in the past, you're going to pay attention. And so I think that that others are definitely trying to pay attention and and get more sophisticated on the asset. And with that Russia's finance ministry and central bank to launch crypto exchange for super qualified investors. So my understanding is that they this is only available to those people who have essentially roughly $1 million. It's given the exchange rate and will essentially, I think this is just a buy, sell exchange, but it's just getting exposure for those people who are fairly high net worth individuals in Russia. They're launching it in with the central bank and they're going to be legalized. This is a pretty stark move relative to their stance for retail exposure of Bitcoin and essentially pretty much banning it for retail investors. What are the initial thoughts here? So it's still banned for retail is that, is that correct? Like this is just only for people. Sort of like a pilot program for high net worth people. Yeah, exactly. You have to have $1 million in order to get involved. Yeah. I mean, the signal to me is that it's, you know, it's sort of akin, but on a different sort of level to like the approvals of spot ETFs in the US of like you want to make it OK and permissible for your populace at least, you know, in this specific respect the the high net worth of your populace to accumulate the asset that is sort of transitioning to become a global nation state level strategic asset. And so, you know, we've heard the rumors over the past couple years of, you know, mining infrastructure being built out in Russia. So it's, it's safe to assume that Russia has a decent amount of Bitcoin and is mining Bitcoin. And so I think this is just an effort to say, hey, guys, like we're embracing this asset. So now it's OK for you, Mr. Investor living in Russia, to buy the asset, basically? Yeah, It's interesting because when we spent our time last year in the UAE, there was a lot of discussions around post the sanctions with the treasuries and how much capital fleed out of Russia into that market and was mined like these huge properties alongside the ocean, just like straighten Bitcoin. So a lot of the big development groups out there have to like figure out how to accept Bitcoin. So I think there's a notion of Russia's always kind of been there with understanding of Bitcoin. I think it's rumor. They've been mining for years now. But I do think this is interesting because I haven't followed their digital asset framework. But if this is big news, it, it would tell me that there's been somewhat antagonistic from retail coming in, in the same way that India and Pakistan I think have been somewhat antagonistic from retail coming in. And so there seems to be like this mosaic forming around East versus West. When I think about like finance and the East, not that finance is involved here, but that there's like a block functioning. You think about Russia, China, India, Pakistan and potentially like finance involvement specifically in the UAE and the GCC. And then you think about Tether and what in the Western, you know, Europe all the way to the US and Latin America. I don't know what it looks like. It's just something I'm picking up on after this conversation and seeing that that's an interesting dynamic. And it tells me like the thing that I wonder if finance is going to have their stable start to like think about how does it proliferate and get more involved in like BRICS nations, you know, pegging to like whether it's BTC or some kind of G like gold deal? Because that's the interesting part about tethers. I think they have one of the largest, like highest liquid tokens attached to gold. Yeah. Yeah. I mean, and finance, I'm pretty sure it was in Tether too, but that whole $2 billion investment from MGX, which was spun out of the UAE Sovereign investment fund that was paid in Staples still. And so there's got to be more interest in. I don't know if they're piloting, settling trade in Bitcoin with different countries, but they're they're definitely piloting trade between different countries and stable coins tail just because it's going to be faster and and more liquid than or not. Not necessarily more liquid, but cheaper than, you know, using the banking systems to do it too. But, but on that similar thread, the next one is is very similar to which is Ruya, which is a UAE digital. The UA ES digital first Islamic Bank has become the first Islamic bank to globally to offer customers direct access to virtual asset investments, including Bitcoin through its mobile app. This is made possible through fuse, but it's pretty much just going on the same thread that we've been talking about earlier. I mean the the which is there is just increasing demand and availability all across the world to get access and exposure to Bitcoin. I mean, I think the ETF here in the US as well as just a more positive feedback from, you know, the the president, everybody involved here is just like kind of opening the floodgates for everybody to be able to offer some sort of solution either to retail or, or to hide out worse around the world. Yeah, we should get MO if he's willing to join. Who's in the CEO of Fuse? He's he's a great guy. I've met a few times in the UAE, Fuse is interesting. They remind me of and I I choked to them on this, but it was meant to be a positive, not a negative. Like prime trust they're building like B to B to C solutions or products. So they're ultimately like that middleware for banks and other fintechs to get exposure on and off ramps, liquidity custody. But yeah, I mean, from the time we spent out there and the stuff Ralph and on right mean is doing, there's an insane amount of interest and appetite to just leapfrog the rest of the world when it comes to this stuff and not be, you know, jump ahead. I think that obviously comes with some risk when you think about the, you know, digital assets and the the associated risk around it. But it's definitely interesting that banks are are getting more and more involved in that market. That's that's kind of where I was going to go with. It was like, you know, I'll be curious to see how this plays out and how, how Bitcoin centric a lot of what they do ends up being relative to digital assets, virtual assets, whatever they want to call them. You know, I think when we were visiting there, it was apparent that, you know, there was much more of a focus on sort of the broader crypto digital assets base relative to Bitcoin at the time. I think that shifted a little bit over the past year or so as it has sort of globally. But I think if you know what they're going after here is really positioning this as a Sharia compliant bank and financial service offering like that would speak specifically to more of a Bitcoin only strategy in my mind at least. Like I don't I don't view the rest of digital assets as necessarily Sharia compliant. Obviously U.S. dollar stable coins are credit based and most other all coins are, you know, nefarious in nature, have an issue are are not credibly neutral. And so I think it doesn't align as much with sort of the ethical Islamic banking sort of framework. So I'll be interested to see how this plays out and where where a lot of the demand actually stems from in terms of people using these offering offerings in these services. Whether you know Bitcoin dominance is high in in that region will be interesting to see. Yeah, I mean the sad part is the Islamic finance concept has been corrupted or Co opted by the traditional finance. So whatever that they're saying, Islamic finance, they're pretty like it's pretty strict against usury and what they deem as Reba, I'm pretty confident like those banks probably engage in that and if they don't engage in it directly, they just come up with like a third party way to do it. So point being is that would be too bullish on the it's still a long ways away and similar to the West when it comes to Bitcoin versus digital assets. But the bullish part to your point is it is directly infused into their culture and religion that there should be a form of money that you know, it cannot be Co opted and inflated and all the things associated. There just needs to be the education there. So that's where it's a right region for that. And especially because they have the energy which directly tied back to commodity money that they're they're perfectly suited to get this stuff. It just you just need the right account everyone. Thanks again for listening to an episode of Final Settlement. We wanted to take a quick pause and share a little bit more about multi institution custody and honoring outside of our core multi institution product. We also offer a whole suite of financial services from the ability to buy, sell Iras via your tax advantage account, Lloyd's of London insurance up to $100 million per incident. If you're interested in learning more about that or anything else on Ramp provides, you can reach out to us at hello at on rampbitcoin.com and we'd love to speak. With you. Now on to the rest of the show. I'm. Already there to help? Absolutely. What's the excellent? Well, next I thought we could talk about both the Bitcoin dominance as well as the new 21 capital. So Bitcoin dominance fell slightly just below 64% now, but we're increasingly seeing more micro strategy type competitors. The list of companies who, especially public ones who are launching just grows increasingly long by the day Bitcoins thesis and fundamentals are completely unchanged. The rest of the digital asset space is shaky at best. But you know, I think most of the demand for alternative crypto currencies to Bitcoin is just the the fact that people want to gamble faster. And, you know, these different liquid assets like micro strategy 21 capital, they're going to offer different M nabs, they're going to and then anybody can buy options on top of it too. And so in my view, it's pretty much just like taking over the traditional altcoin space. And we'll only see this grow, especially if if they can deliver what micro strategy has done thus far in in the new Bitcoin dominance. Maybe you know the percentage that is held in spot versus the percentage that is held in Bitcoin securities. But back to 21 capital. They are expected to launch with over 42,000 Bitcoin right now they are in the SPAC. The SPAC is, last I checked, trading at a massive premium to the amount of Bitcoin they would have. I think that's just, you know, a lot to do with the nature of getting some hype early on. A lot of people that are are interested in want. I feel like they missed the boat on both Bitcoin and then micro strategy at 1st and then want to get exposure to this new asset. It's really interesting that, you know, Tether and Cantor Fitzgerald are both involved. SoftBank as well. Cantor being involved is most notable to me. I think it just sends a big message to the rest of Wall Street that that that this is this is something that is viable and they want to put their name behind and reputation behind. It's it's not that surprising to me given JP Morgan and Goldman did the last convertible note for micro strategy. But feels like this is going to be how most of Wall Street kind of gets involved in this space in, in terms of from the asset manager side of things, from the lending and custodial side of things. And maybe maybe different, but I kind of ranted for a little bit there. What are your initial thoughts, initial gut reactions to this launch part of it? For me is sort of what Mike, you mentioned earlier around like the sort of geopolitical alliances that are forming. And I would say the formation of 21 is most interesting to me in terms of Softbank's involvement. And basically what I think is being constructed here is effectively a vehicle to accomplish what we've talked about here in the past around, you know, what I think that this current US administration wants to push forward is this idea of saving in Bitcoin and spending in dollars and proliferating U.S. dollar stable coins all around the world. And so, you know, what better sort of amalgamation of partners would you want to to influence that sort of direction or that vision then the largest stable coin insurance Tether, you know, sort of legacy Wall Street firm in Cantor and then a foreign ally who is also has a vested interest in basically dollar dominance in Japan. And so that to me is the most fascinating aspect of all this. I think it, it's the implications of it are more than just like an MSTR copycat. Like, I think what they are going to attempt to do is probably going to be way more focused on like the stable coin side of the house. And you could imagine, you know, just spitballing here, like I, I would imagine that they launch a new version of USDT that is in some way partially collateralized by Bitcoin. Maybe they offer a Bitcoin denominated yield on top of that stable coin. Like this is something we've talked about like will MicroStrategy do this? And maybe they just got leapfrogged in terms of 21 being able to offer this faster than that. Yeah. I mean, there's a lot of, there's a lot of things to talk about here. I think 1 is, I guess 1 is like the reflexive nature of what a little bit of what you just referenced Brian and Liam mentioned on Cantor, like kind of makes sense. Cantor's been, you know, the treasury issuer or custodian for Tether for a while. If there's a notion I don't follow MSTR understanding mechanics, but there's an understanding my at least the the what I've seen is they have like this Immaculate Conception that you can never repeat what they've done. It's like before a SPAC, a SPAC and that there's no catching up to them. And I'm almost don't think like it's meant for tethered or whatever this is to catch up to them in that direct sense, but more of his way to LeBron references. Take offshore dollars via treasuries or onshore if they launch something and be able to sweep because they're sweeping the excess cash flows into BTC and then you load it into here. And so now you have this like thing in the middle of the equity markets that you can start to financialize around it. So I think I think at the at the core, like it makes complete sense that Wall Street wants to create products. That's what they do. They can generate fees. So that there's that. I don't think that signs like that interesting. I think what's interesting from the macro, the more market sentiment, which you described about the dominance and in general rule, the idea, and I don't know how much legs this has, but I wanted to bring it up, was this notion of like Solana SPAC or not even SPAC. It was just like the $500 million raise. But it's, it's like the idea of the price of what is the CEP rose in like a part of it in my mind comes to like the mimification of equities or even tokens. Like people just like tickers and they like momentum. And So what happens when the top 10 plus crypto currencies, you know, take their, if they have their own foundation treasuries and then they go reverse and goes like SPAC, the asset, they give the ticker to whoever wants it. You can get it in your brokerage where you don't have to leave to go over to Coinbase. And it goes back to this like thing of, you know, it's just all coining on public equity markets. And so I think this is just like where this all ends because it's just the status of the world and that people are looking to generate. It's not even yield or returns. It's that they're just trading around because there's no fundamental understanding of where value derives from. And you're going to end up with, I think more of like these kind of public equities that are going to trade as proxy crypto exposure without having to log in a coin base. I think that's definitely possible. Wouldn't surprise me if if that happens. I mean, I think we've only seen the one example of that Solana raise wouldn't wouldn't surprise me if that happens. I guess the bigger question in my mind is like sort of what Liam was saying was like, does is the actual incentive and driving force behind, you know, all coins historically and now these Bitcoin treasury companies effectively grade and wanting higher return, higher beta to Bitcoin. And if that is the case, then does do these Bitcoin treasury companies which again will have different risk profiles, different M Navs, different leverage ratios etcetera, will those replace the effectively like greed seeking gambling cohort of people that want higher returns, will that replace the altcoin? Yeah, but the kick the kicker is because of the low float with altcoins, if you bring that that liquidity in the market, then you theoretically can have a higher upside return profile. So like that's that's the the other side of. It Yeah I do think that that Solana whatever company it is now that's going public I don't even know what to call it yeah people are just going to feel like oh, I missed Bitcoin, I missed micro strategy I'm going to get this Solana vehicle exposure and next it's going to be this ripple vehicle exposure and and whatever it is next. But I mean, we all kind of understand that Bitcoin has sound fundamentals, fixed supply, 21 million, that makes it a great store value over time, which these other assets just don't necessarily have till. And so I think that what's going to happen is a lot of these large holders will, you know, do whatever they need to do in terms of propping up the currency when there's the next bear market. Who knows when that is for not just Bitcoin, but everything else that's going to dump significantly harder. And whether it's this bear market or the next one, these these are going to all kind of implode on themselves. Yeah. Maybe one thing to keep in mind as all this develops is like putting an asset on your balance sheet does not make it a like a treasury reserve asset from like an objective monetary property perspective. And so just because somebody does something doesn't mean that it's like a long term strategic asset. Yeah, after that and I think, I don't know, I think like we're going to talk more about this to figure out how do we like articulate this. But I guess the the thing I not been wrestling with, but I find just the least interesting about all this is there's nothing in my mind innovative outside of financial engineering. And ultimately everyone understands the problem that is stand from loose money. The the the products and services have ultimately not benefited the end user or end person investor from Wall Street's perspective. And so when these individuals don't know how to like innovate or create actual value in the world, they have to come up with these other products and services and they're just naturally inorganic, like independent of ideology. It's like you think about, and Brian said this very well. It's like, you know, you take a decentralized asset, it's inconsistent, make zero sense to park it at a centralized custodian. That's like how you know it's fundamental to like the underlying, you want it secure and decentralized. And so there's something very inorganic around taking access to dollars with the marginal cost of production being zero and then buying an asset and then centralizing it. Like long term just at that framework in itself should put up smoke, smoke. And that ultimately, as Liam said, we'll have some kind of not a happy ending. And so, and it makes complete sense because these individuals have never really produced real value for the world. So they can't think of anything outside of like what would you open up a book or computer and how would you get some generate some fees? And I think that's for the long game. It's a different machine playing a two to five year game versus like, where does this all end up? And where this ends up is you're going to want to build products that reduce counterparty risk, that add value to the end user and then are building towards the mark where the market is going because ultimately that's what's going to reap the outsized returns. It just is behind whatever this is. And most people can't see behind what's directly in front of them. Yeah, I guess one, not a not fully a counter, but just a thought experiment. Like if all of these Bitcoin treasury companies were using MIC and distributing counterparty risk, Like would you then say it is possible to create some quote, UN quote value in terms of different financial products, again, like cohorts of capital that have specific mandates to whether it's equity or debt? You know, if all these instruments and products were more sound in terms of their custodial framework, I think there is there is the argument that like you could create value just in terms of broadening the ability for people to get Bitcoin exposure. I I think at the margins, yes, but the reality is direct exposure via whether it's a fun style product along with underlying custody and education is whatever argument that would be made that will they, they can't get exposure. It's like they can't. We talked about this internally with, you know, folks that work that worked at the highest levels of, you know, trade fights, like if they want to get exposure, they can figure it out. And ultimately what this stems from is what we talked about in the beginning of the podcast that they're looking to de risk the underlying because they don't feel comfortable and getting that exposure. And that's like pure synthetic, like, you know, just spot BTC. And so they will they opt for these other products which are embedded with a bunch of risk. It's very similar to when we used to lend against, compete with Block Fi and our loans would be maybe a little bit more expensive, but we'd say risk adjusted. It's much cheaper. It's the same thing here. It's like much cheaper for them to buy BTC even though it might feel a little bit more riskier, might cost more via custody fees or direct exposure. There's a bunch of execution risks that this thing has to go right where they could end up holding 0 BTC versus why wouldn't they just hold Bitcoin that is performed that way. And if they hire the right people, they could probably figure out in their docks to make it work to get the exposure. Yeah, I mean that I don't know the exact answer though. I, I do think that there are pools of capital that literally need to invest in bonds or need to invest in equities. So like it's not necessarily like the friction of onboarding to a direct Bitcoin exposure that's like they don't want to deal with it. It's that it's literally not within their mandate to invest in something that's not like a bond or an equity that makes sense like that. That's kind of where I'm getting at. That makes sense, but I always revert back to the micro like the individual. I know it's different, but it's the the concept of when they reference bit bonds and it's like, well, you get a family and they put $10 in and and then they get you know, $9 in a bond and $1.00 in the BTC exposure. It's like you could convince them all that or maybe you could have just convinced them to put the dollar in BTC and then they would got educated and bought more of it. It's the same thing with like the argument that, well, if you already have to get them comfortable with some form of Bitcoin exposure, that means they have to underwrite it. And if they underwrote, like what the value of BTC is, then they more than likely can figure out within their mandate to how they can. Like, it's just there's something off, there's something that doesn't track with it because even with the converts, they're converting to equity on the bond level. So like, I think, yeah, yeah. Agreed, this is helpful for just general education of everybody though and the arbitrage between dollar based cost of capital and Bitcoin based cost of capital. I did have a couple friends who definitely know that I love Bitcoin and they were just traditional finance guys. And they're like, wait, what are these things traded a premium to the underlying. And if you go through the financial mechanism of just, you know, sound asset that has a finite supply versus, you know, infinite asset with, you know, cost of capital that isn't necessarily tied to anything. It makes sense to continue to print more of the the asset with limited cost, right, And continue to buy the fixed cost. Just like kind of Pierre walked through and his speculative attack on on Friday. Yeah. And I think we we need to flush this out more. But it goes back to the idea of like, if somebody has that mandate, they're better suited like the the idea of bit bonds, right? Because you're limiting your upside on the Bitcoin exposure because you're sharing it. You're just better suited to buy less Bitcoin hold like get the exposure in your bond exposure, whatever the return profile is. And then put instead of 10% that you're splitting, just put 5% and figure out how to purchase it and then get the direct exposure. And like, if somebody's not telling them that, it's because they have a product to sell them, because that's what they should do. And then they should go articulate it with whoever is governing that to explain it. It's just never made sense because the idea is that you have to go to institutional capital and explain this, this product that's inherently new. And then the way I think about it, and it's just to be hyperbolic, but it's like you're telling, you're trying to sell a mistake and then you're throwing poison. You're sprinkling it on top because you have to sell them on the underline. And then you're telling them, well, then we're going to put the strategy and they already think of it as risky because if they didn't think it was risky, they would have already allocated or they would just say, I'll just size this appropriately. It's kind of very similar with the Arbs that try to reduce Bitcoin volatility for investors. It's like they'll take the different, you know, trend lines and sell and then buy. So well, why don't you just as an individual investor, not invest there and take the man, all the fees and the decay and just buy the spot Bitcoin at a much lower reduced exposure to your personal portfolio. And then you won't, you won't care about the volatility and you'll get the upside without any downside of the execution risk. It just doesn't, like I'm not, I'm not in that world, but if I was in that world, I can guarantee you there's a way to solve for this without having to like pepper it in with like 4 layers of masa sun and, and you know the rest of what's going on there. Yeah. I think one other thing that's important to know is like, I bet most of these convertible bond investors don't actually care about the convertible bond or any Bitcoin exposure at all. They're buying the. Volatile. Bond and then they're shorting the stock with some specific date, they're locking in their gains and then they're like, all right, let's go home like these. I don't care what I think the Bitcoin thing does. That's exactly right. And they love the volatility. And that's the idea that everyone's hiding around right now. And we need to like get to the bottom or, you know, work with Glenn, either producer, reporter or just talk about this. But ultimately, like the story is people can't get exposure to Bitcoin because they're mandates. So they have to buy these other products. But the products inherently are proxies for some form of Bitcoin exposure, which they still have to like and get their firm comfortable with. And think about what we know about Bitcoin. Once you get comfortable with it, you're like, why the fuck don't we just own the underline? That's the thing nobody like talks about because they're not they're, they're incentivized to sell you this, these other products, these other things. Yeah, that's a good point. Like if we want a Bitcoin bond company, we should sell bonds and then sell 5% spot BTC like ultra synthetic high grade Colombian BTC, right? Like, you know, like that's, that's the that's a killer product because you reduce the counterparty risk, you have the bonds segregated and then you get the best of both worlds and you get the upside without having to share in the the other side. Yeah, it's just the markets. Uneducated basically. It's a reasonable take. It's a lack of education. It's also what you're referencing around the incentives of people selling products. Like that's just the reality. Well, hopefully more people got exposure now or, or this is just a new top of the funnel, you know, and it's, it used to be like people log into their Coinbase, they buy some Bitcoin and they also, you know, buy some Solana too. But now this is just going to like be buy, buy the best performing momentum asset and then like understand the underlying after. Exactly, I can't be on all of this for saying everything is good for Bitcoin, but our job specifically on the on ramp side is to help educate people. And so the idea is if we're out with these themes and concepts, eventually people get shaken out of their positions or the counterparty risk because there's a lot of counterparty risk custodian, the execution of it and whatever else that we can't see. And then ultimately we'll see like, well, shit, why don't I just buy the underline? And that'll be the point of like these concepts is people will wake up and eventually realize it. We just don't want our clients to be the people that do that. Welcome. All right. We got a few minutes left. Liam, anything else on the list? Let's do last one. Schwab plans to launch spot Bitcoin trading after 400% surge in visits to crypto site. You know, this is something that they didn't launch initially, but they're seeing massive amounts of demand for it. They are seeing it de risked from their site and their consumers. The entire world is talking about Bitcoin, at least in in our world, maybe not so much in the the rest of the world, but you know, it's it's pretty much just every financial institution has a green light Federal Reserve and every financial regulator is coming out as incrementally more pro Bitcoin every day. What do you think? Will this continue to be a trend? Is this kind of noise? Any initial thoughts here? Mike, I'll let you start. I personally, I think these guys are going to fumble the bag hard. And the reason why is a like, it's always a proxy for how much bureaucracy, how far somebody will be to actually get this right. And my understanding of Schwab is they've had a lot of conversations. They've wanted to do something in space, but they can't actually figure out how to make money because they look at the, you know, inorganic nature of ETFs that are ultimately like loss leaders for other products. That's why they're 15 bibs or 20 bibs and they, they, so they can't figure that out. And so the closest they've come to is the trading aspect. I believe it's public that they're doing something with EDX. Is it EDX who they invested in? The problem with that is they're going to, you know, offer again. Once you start going down the all coins, like where do you stop? And it always kills me when I see notable brands that do things the right way, which I think Schwab has put their brand next to, you know, the Ripples and Solanos and Ethereums of the world, because they're ultimately, you know, we all know that they're they destroy capital. So I think it makes sense that they're stepping in. I guess it's a better version than what who was it Vanguard that like CEO got fired because they still have not taken any friendly stance to this asset class. So I think it's positive. Again, everything in Bitcoin. I think ultimately though, they may not deliver the best products for the end user. Yeah, I would agree with all that. I think it's better than what they were doing, which was like pretty much absolutely nothing. But they they were obviously seeing traction and demand from their clients who are asking like why haven't you guys done anything basically. And so the risk there to them is that assets leave their platform, leave their coffers as people, their underlying clients want exposure to these things. They're not offering it. So they take assets off the platform. So that that's sort of the existential risk that they were facing and realizing they need to do to do something. I agree with you, Michael. They're probably not the the something that they're doing is probably not the best angle to take. It's going to be a a buffet of crypto currencies, as you like to say. And like, I guess I didn't even realize this part of it down at the bottom here though, that they've partnered with DJT, the Truth Social company to do part of this, I guess, which I don't know why you would want their expertise in lost in launching a, you know, you know, crypto exchange or crypto trading platform. So. Interesting. You know what this reminds me of like to, to summarize, like all of these concepts is 2 years ago when Fink came out, we would joke and like go back on the pot on last trade and it was like they were going to tokenize Bitcoin. And that's basically what's happening here is they're going to tokenize Bitcoin and pretend to either outpace Bitcoin, so have a higher return or give you some kind of Bitcoin yield. But we all know like value doesn't come out of nowhere. So somebody has to win and somebody has to lose. And you could see it, it would be tokenizing Bitcoin via like public equities that hold BTC ETF's or tokenized formats and then just traditional equities being tokenized. And those are all going to be swamped around with also stables. And so that'll just be like this ecosystem and everyone will be wondering how do you outpace Bitcoin? And then the people that just realize that you figure out a way to reduce the counterparty risk hold spot will end up being the long term winners. But between here and there is where we talked about in the beginning around education, because most people don't know the things you know about like Bitcoin properties and where it's going. So they'll ultimately try to trade around it versus just hold the underline. Yep, all set. Just keep it simple. Anything else, any other anything we're looking forward to this week? Is ER posters coming out today or Yeah, today because this will this will be coming out tomorrow. Nice. Yeah. There's been a lot of questions or comments around like what is early writers? What do we do? What's you know, it's involvement with on ramp. So there's a quick piece that the team put together that'll come out that'll be exciting. And that we'll we'll recap it next week, maybe have a Guild or investor join us to talk through kind of what we're looking at, why they decided to get involved. That's on my side. I don't know anything on your guys side that you're excited for this week. You know, like we're going to hit 100 Ki. Wouldn't be surprised by weekend that feels it feels doable for 95 right now. A. Lot of momentum. Never, never underestimate it. That's for sure. Ever bearish? All right, boys, we can wrap it for there. Thanks for thanks for joining us on this on this Monday morning and talk to you guys later. There it is. Hey guys, thanks for listening to another episode of Final Settlement. It was an exciting conversation and pretty lively talking about the Pierre Rashard recent episode as well as the corporate adoption and financial financialization of Bitcoin. Send us a note, let us know what you think and on for a word from on ramp. We had a lot of conversations recently about individuals really liking our product. As Bitcoin is evolving, so should custody with our multi institution product that changes the game when it comes to having to rely on yourself and self custody via, you know, hardware devices, wallet configuration files and all the things associated, but also having to rely on a single third party to potentially rug you or lose your assets. There's a new way with multi institution custody where you have multiple regulated institutions that are holding the cryptographic material, those private keys, but they only move at the individual's direction. Now, clients really like the product and service that we offer. But one of the things that comes up is, well, can you help me move my assets off of the platform that they're currently using, whether it's Ledger Live, a collaborative custody platform, or Coinbase? And the answer is yes. If you reach out to us or on board via our self onboarding, which most clients don't know, or prospective clients, you can actually go in, login, set up an account within minutes and have a multi institution wallet. But if you get stuck there and want some additional support via our private wealth team, you can reach out to us and we'll gladly walk you through the process. We've onboarded billions of dollars, thousands of clients to Multi Sig and we're happy to help you as well. Reach out to onramp@onrampbitcoin.com or hello at onrampbitcoin.com then we gladly take a look. It all comes down to computers. Communicating the information superhighway can be a confusing mix of on ramps and off ramps. Bitcoin is worthless artificial gold. Is it still rat poison? Probably rat poison squared. We need to get into the world of OK, this is actually foundational technology. What the Internet of Money does is it creates a single network which can do a microtransaction to a giga transaction. The Internet is going to be one of the major forces for reducing the role of gun. The one thing that's missing that that will soon be developed is a reliable E cash.
Transcript source: fountain