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Thank you for joining us today. We're excited to bring you a brand new show from the On Ramp Media umbrella. Wake Up Call is a weekly show that will be streamed live on LinkedIn every Monday morning. To catch the premiere of each episode, follow On Ramps LinkedIn page and add Wake Up Call events to your calendar. After the live premiere on LinkedIn, we will distribute each episode across On Ramp Media's podcast channels and YouTube page. Wake Up Call aims to educate financial professionals on the merits of the Bitcoin investment thesis, how this asset represents both a threat to legacy financial service businesses and an opportunity to differentiate oneselves and retain and attract new clients. Hosted by Mark Connors on Ramps, Head of Global Macro Strategy and Rich Kerr on Ramps, President of Managed Wealth, this show seeks to provide financial professionals the wake up call they need, prompt them to have an open mind with respect to Bitcoin, rethink their prior assumptions, become more educated on the topic, and learn from others who are already farther down this path. Mark and Rich bring a combined 60 plus years of experience across traditional markets and financial services and will share their unique perspectives and how their peers and colleagues can approach the realm of Bitcoin. Wake Up Call will feature guests from various backgrounds and industries will also share their own journeys to Bitcoin and how others can get up to speed. Now time for the show. Well, good morning everybody and welcome to the wake up call. I'm your host, Rich Kerr, who's the President of On Ramp Managed Wealth and joined today with my Co host Mark Connor. So Mark, good morning to you. I know that you just got back from Nashville. I'd love it if you could share some thoughts or impressions. Thanks, Rich. Yes. So this is our second, my second Bitcoin conference. And for those not familiar, it's by the majority of our of our audience in the advisor world. There's an annual conference has been for years in Miami mostly the last several years. And in Nashville from Thursday to Saturday, you had about 25,000 attendees. The difference about this year, Rich was that you had more institutional people. You know, some people lament the fact that BlackRock was there. You know, Fidelity's always been, you know, a kindred spirit with the Bitcoin ethos. But what what we There were three takeaways to cut to the chase on 25,000 people descending on on the country music capital of the world. One was it's first time you've seen a Republican or Democratic National candidate attend. Last year you had RFK Junior, this year you had RFK, this year you had Donald Trump attend. So that's got all the headlines. I think what was a little bit behind the headlines and not spoken about is that as opposed to Bitcoin Conference 2022, which was a bull market, you had people in like rolling swimming pools on the back of trucks. It was kind of like a almost a bacchanalia. This was relatively subdued still. And some people said, hey, this isn't we're in a bull market. Why isn't it frothy? And the answer is because it's not. We have not hit bull market phase yet. So even though you had Trump come and say we're going to first day in office, I'm firing Gary Gensler, I'm going to take our 200,000 Bitcoin that's in the DOJ, put it in a strategic reserve and other pro Bitcoin and crypto comments as he made, he kind of conflated it too. Shows you that he's on board, but not as alert as other politicians like Lummus. So that's the main thing, a lot of people, but you had people at the legislative Representative Lummus, who said that she's going to create a legislation that would make Bitcoin a, a strategic reserve, which is huge. Maybe why we're flirting with 70,000 today and yet we're still not in the bull market. That's a major take away. That's outstanding. Hey, Glenn, I'm, I'm curious and I'll introduce our guest, Glenn Cameron real quickly to you all. Glenn is joining us from the UK. So he is, he's in a completely different time zone. But Glenn joins us. He is in senior investment consultant with Cartwright and Cartwright is a prestigious pension management, pension administration, investment consultancy, actuarial services company that has been in existence since 1986, I believe, out in the UK, serving pensions and all sorts of different schemas. And so we're delighted to have Glenn here today. But Glenn, before we start diving into maybe your expertise and, and, and a little bit about the journey that you and your firm kind of went through and Bitcoin, any impressions that you had? Did you get a chance to watch any of the live show over in Nashville and and and how was that? Received. Yeah. Well, thanks both for having me. Mark Rich, it's a pleasure to be with you. I did watch some of it. I didn't watch all of it. Some kind of evaluating things on a subset of probably what was on offer. I did listen to President Trump's address. I did listen to Cynthia Lamas's address outside of those two. I listened to one that Dylan Leclair was the moderator for. And you had the CEO of of similar scientific, you had I think the CFO of MicroStrategy and I think the CFO of Metaplanet on a platform that we're talking about Bitcoin on the balance sheet. And that's when I really recommend people go and watch because I think as well as the kind of nation state side of things, I think that that's going to be the next area that's really starting to kick off. And I think a lot of the thing, the details they described about what was going on in the boardroom to get them to the point where they're willing to put Bitcoin on the balance sheet, the way they're thinking about it strategically, yeah, there was a lot of useful information people may not be aware of. But I definitely think the corporate space, corporate adoption of Bitcoin is going to be a big area going forward. Yeah, I, I agree with you, Glenn. And in fact, you know, you kind of tease one of our future guests who will be joining us and there's a gentleman named Joe Iani who leads a firm called Acropolis. And you know, their their specialty in particular is around helping small businesses or corporations incorporate Bitcoin onto their balance sheet and designing strategies in order to do that effectively. And you know, to me, I, I see that as well as, you know, one of the patterns developing with, you know, industry or, or institutions that are ultimately moving towards Bitcoin. And each of them have to approach it in the right way. And there's always a first mover and then a second mover and then things start to unfold. And we're starting to see that right now with, you know, Sailor being a first mover in many respects and in a profound way and, and continuing to be. And then there's other companies that have just that you had just mentioned that kind of followed suit. And so it's really energizing to watch how these firms are coming forward executing their strategies. But I would agree with you, very, very good content there and worthwhile for everybody to go back and find that and take a look. And we'll and we'll make a commitment to to ensuring that we'll we'll have a dialogue around what does that look like and, and what, what role do investment professionals, you know, play in serving those markets and helping facilitate that to small businesses and corporations on the balance sheet. So thank you, Glenn, appreciate it. Well, and Speaking of what you know, maybe we, we talked about a different subset of institutions that seem to really be moving and and that's in your wheelhouse area. Glen pensions have, you know, certainly in the United States have caught a lot of attention when SWIB, you know, made a commitment or an allocation to towards Bitcoin and that's a well run large pension plan in the United States. But you're over there in the UK and you're an investment consultant to a number of, you know, pension plans yourself. And, and you guys seem to be equally at the forefront on this space. And, and there's a lot of work to be the first mover, so to speak, like Cartwright has been. And SO1I applaud you and for the courage that I think that that takes but two for for the detailed work that you've made in order to design a way to enter into this space when others have not been able to do that and so. Maybe I kick it to. You to kind of talk a little bit about your journey in leading pension plans forward with Bitcoin allocations and what were the key things that you needed to kind of discover as you went through this process of designing your thesis investment policies and ways to enter into the digital asset space? I'd love to hear your thoughts. Yeah. So I mean, so in the role I had prior to this, I gained a lot of experience in the space. And when I got off at this shop, it was on the basis that I would kind of lead this area for Cartwright. I mean, so I don't think, well, at least in our client basin, they're going to be, you know, needles in a haystack to find. I don't think there are pension schemes in the UK that are kind of demanding an allocation Bitcoin. That's not, you know, where we're at, right? It's essentially us driving conversation. So where approaching pension schemes and telling them that, you know, we think a Bitcoin allocation could be right for them, right. And the certain criteria that we're using to identify those pension schemes, probably the most important one is their investment horizon. So we deal mainly with the fine benefit pension schemes and the very large majority of them, more than 95% of them are aiming to get to a point where they're well enough funded so that they can offload themselves to an insurance company, right? And the company and the scheme itself can offload all the investment risk and not an insurance companies problem, right. So if a pension scheme if if it looks like you know, based on our expectations, market expectations and things like that, that the pension scheme can get there in the year or eighteen months, then immediately backgrounds off the table, right. So we kind of made a decision that it would need to be at least a full cycle. So four years, right, would be need to be the investment horizon before we would approach a pension scheme and suggest that situation. The other thing is the pension schemes are supported by sponsoring companies. So according to the regulations that they're not well enough funded, the company has to reach into its bank account and make regular contributions to pension scheme to get it back on track, right. But you don't want to be in a situation where you put so much pressure on the company that they end up falling over because they're the support for the pension scheme. So there's a balance to be struck there, right? So we don't want to be approaching company, I mean pension schemes where the companies are strapped and that, you know, if they make investments that don't pay off, it's going to be too burdensome. So we want pension schemes with what we call strong covenants, which is the the covenant or the promise between the pension scheme and the company or from the company to the pension scheme is strong, right. Those are kind of the two main criteria. But once we get to that point, then it's reaching out to them and you know, doing it in a way that's easy for them to say yes. All right, so say, you know, obviously bitcoins been in the headlines a lot. Admittedly the coverage is both positive and negative, but when something's in the headlines as much as Bitcoin is, could be important, right? And we certainly think it is important. And what we'd like is just the opportunity free of charge for us to come in and do some education, right. And then we've got kind of like an hour, hour and a half with questions where we kind of take them through the Bitcoin thesis and make them understand exactly what Bitcoin is and how it fits into a portfolio. You know, what it does for a portfolio and what makes it unique. And you know, then we have much more in depth training if they wish. So if questions come up like how do I know they'll only ever be 21 million Bitcoin as a maximum supply? And, you know, the sort of nutshell answer is not going to cut it. Then we've got an entire presentation explaining the entire protocol in kind of a plain English way. If their objections are on on environmental grounds, right? We take them through, you know, essentially we just give them the facts and let them draw their own conclusions. But ultimately by doing that, they can see that, you know, the headlines aren't necessarily refracting reality, right? And that Bitcoin can actually play a positive role, you know, if you are a big proponent of the energy transition and you know, climate change and all that kind of thing. Well, even on those grounds, Bitcoin has a pivotal role to pay in that space. You know, prime example would obviously be the ERCOT grid in Texas with demand response and things like that. So we kind of explain all of those things to them and lay out dispel some of the myths around that area. And then we also take them through the kind of social and societal implications of of Bitcoin not only in developed markets or even they so in developed markets, but in developing markets, right. And what it's doing to fight against authoritarianism and, you know, preserve human rights and things like that around the world. And we show them various things. We mentioned CBDC's and the implications of those. So, Lynn, can I ask a question? Yeah, of course you can. When you're in there and could you piqued our interest or not just a memory of the of what a panel we had at the at the conference with Alex Gladstein of the Human Rights Foundation and about the impact of how he sees Bitcoin helping other countries. I know advisors may like that, but isn't the focus really on or pension funds on their on satisfying their investment policy? Are they, how much are they worried about the investment policy, which is a long dated liability and you know, serving those long dated liabilities versus also the risk to their career? Meaning like on that duality of serving even are they willing to do you see them sort of gulping saying it may help, but boy, I don't know if I want to, you know, die on this hill or present this thing and and what hurdle do you get? What has helped you get them over that? Is it the economic benefit or is it reducing their concerns about what you just said about it's not an energy issue, it's an energy benefit, It's not a criminal haven. It is actually transparent. You know that those two different vectors? So I'm going to even summarize and paraphrase the regulations, but essentially the latest regulations here in the UK are that trustees have to consider environmental, social and governance factors when they're making any investment, right? So unless you can clear the bar with that stuff, you ain't going anywhere, no matter what they think of the investment thesis, right? So if they've got objections on those grounds, you do need to deal with them, but that's not enough to get them to invest because like you say, particularly with so you have two different types of trustees. We're actually through, OK. So you have employer nominated trustees which are appointed by the company itself. You have member nominated trustees which are nominated and appointed by the membership of the pension scheme to represent them. And the third type of trustee you have is professional trust, OK, which is a subset of the employer nominates the trustees, but these are firms of trustees that's basically will set on 15 or 20 pension scheme trustee boards. And they do this as a professional. And with those professional trustees, there is a natural conflict here because they have a career as a professional trustee, right? And so not everything they do may be based purely on investment or governance grounds or anything like that. It may also be based on how it's going to be appeared to others, right. And so that's definitely a challenge, right, Is, you know, like I'm not a member of this pension scheme. I just and professional trustee on its trustee board. You're promising me all the subside, but I'm thinking about my own career and I'm not going to get any of that upside. If this thing goes really well, I'm not going to get any credit for it. But if it goes really badly, so there's no upside and there's a lot of downside here for me personally, right in, in, in the professional thing. But I think so the way that I deal with that is I talk to them about, OK, so you're looking at the risk as one way, right? But the risk actually exists two ways, right? Because we're at a point in history where equities are about or trading at a valuation on a Cape ratio basis, which is about double its hundred year average, right? It's only been more richly valued once, which was in the.com bubble at least. You say equities race of the world is pretty cheap, but when you consider that's more than 60% of equity markets of the US, it's highly relevant. You know, I think if you look at government balance sheets, it's pretty clear that financial repression is going to be the name of the game. So there's a lot of risk in equities, there's a lot of risk in fixed income markets. And you know, that's the where most of the money lies in capital markets and what you're invested in. And if your peers start to realize something before you do, which is kind of an escape valve from this whole system. And money, as it has been for the last 15 years, starts flowing into this sort of pure monetary asset, right? This hard money, the sound money, right? And you don't have exposure to that asset in your portfolio, right? So what's happening is money's been taken out of the asset classes that are in your portfolio and being put into an asset class that isn't in your portfolio, right? And say that too loud out too, too often out loud. That's that. That's a scary right. I mean that if you had that visual. Yeah. That might be quite the turning point. Because the The thing is, why are equities overvalued? Well, it's because every month that happens in my case, right, is a certain amount of money pre tax gets taken off my salary and put into a pension scheme, right? It's an automatic buy, right? It doesn't matter whether the equities are overvalued, undervalued or anything. You multiply that by hundreds of millions of people, right? It's just a place to park money because everybody knows, right? Sam, my boss always likes to say there's only three things you can do with money. You can save money, you can spend money or you can invest money, right? But the problem is with the way the monetary system works today, you can't save money, right? You cannot take your money and put it under your mattress, right? If you do that, it's not going to be worth very much by the time you want to spend it in 20 years, right? So you first, you, you're forced to either spend it or invest it, right. But the, so that is what people are doing. They're spending and automatically investing their money. But the equity premium to its long term historic valuation is that it's not trading a double that valuation, right. And what's that's reflecting is that equities contain a monetary premium. So we're not just big buying equities anymore for the investment return, like the actual income yield or the free cash flow yield from those assets. We're using them as a form of money, right? And so they contain this massive monetary premium, which is half of their value, right? And when you've got an asset which is a pure monetary asset, right, which is where a monetary premium belongs. And more and more people every day are realizing that, right, it makes sense for them to take money from a place where they aren't getting a proper yield income yield, right, and put it into a pure monetary asset, right? And so you can be first to realize it or you can be lost to realize it, right? But the value is going to be sucked out of where it doesn't belong and put into somewhere where it does belong. And you know what, Bitcoins like less than half a percent of a global portfolio in terms of all the assets in the world, right? So you don't need a lot of explosion, right? You just need some exposure so that as people realize this, you ride that way to the top. But if you wait until, if you're the last person that's realized that, right, you're going to end up having to take 20 or 30% of your assets and put it into this thing. And you're not going to have had the benefit of, you know, being ahead of the curve, realizing things before, you know, before, before it's essentially all priced in. That is the opportunity. That is the alpha, but not easy to explain to people, that's for sure. Especially the media doesn't help. I'll tell you what that that's a great conversation and I think we can continue to just pull and pull on that thread. Thank you for those observations. I, I wonder if we can flip gears a little bit. You, you know, you at Cartwright, you guys have, have you, you've done your work and, and, and a tremendous amount of it and, and everybody has to start somewhere, right? And, and just like Cartwright did. And so maybe share a little bit you, you once told Mark and IA story about going to the Bloomberg and kind of starting the journey, right, of how do we access this? You had an opinion, you had a thesis that you wanted to pull forward, but now you got to go into motion. You got to, you got to start stepping through a process and, and it's usually a very defined one as an investment consultant would put things through rigor. So maybe, you know, walk us through what that looks like or our audience. Yeah, sure. So, yeah. So when I joined Cartwright 2 1/2 years ago, the idea was what I've already said is educate our client base, but in parallel, find a way to operationalize this. So if one of these clients turns around, goes, Glenn, you've convinced me we need an allocation to be going in our portfolio, what am I going to do? Is it going to be on a traisal held by the Chairman of trustees? Where are we going to put this thing right? And so that story that I was telling you about Bloomberg was going into Bloomberg and going into, you know, the fun research kind of section of Bloomberg there and typing in the word Bitcoin and looking at what are the options around the world, right? And at the time that I did that, which was probably 18 months ago, there were more than seventy options, 70, right? So it's like, OK, how do I decide which of those seventy options is the way that I'm going to recommend to our clients that they should be accessing this asset, right? But from all perspectives, right from security to fees, you know in terms of in kind subscription and redemptions, bankruptcy or counterparty risks, control of the asset, a whole bunch of criteria. We came up I think with I think it was 12 criteria and we basically got those seventy options and then as new ones came to market, we added them to the long list and we evaluated in across 12 criteria. Nice. And what I kind of found out was that's pretty hard to get our deal right. Did that the the there's a green techniques to every single one of our 12 criteria, right. I had plenty that I had seven or eight. I had maybe one that had 11 out of 12, but I didn't have one that was 12 out of 12, right? And so that mean I needed to keep looking, right? Because until we've made absolutely sure that we can't get things ideal, I didn't want to give up and compromise, right? Because if I've taken a board of trustees and on a journey to understand Bitcoin and they have gotten them over the line to say, OK, we're interested in making an allocation. I need to make damn sure that the way that I show them to access the asset is the optimal way in all you know across a range of different criteria. At On Ramp, we believe that Bitcoin is the most important asset of the 21st century. The hard part is securing it right. There are shortcomings with keeping your coins on an exchange, but also with setting up your own self custody arrangement. On Ramp solves for these concerns. Our multi institution custody solution maximizes security and minimizes counterparty risk, ensuring that your Bitcoin remains securely in your possession and provides built in inheritance planning to ensure your family is protected as well. On Ramp provides Peace of Mind for your Bitcoin journey, whether for your whole stack or for part of it as a compliment to your existing self custody setup. For more information, check us out at on rampbitcoin.com. Glenn, when you say that, as you can tell, I'm like choking on my own words. Access to the asset just for everyone here. I grew up in the world where the favorite 3 letters for anybody involved in markets was DTC in the US because then, you know, there was safekeeping, it was liquid. It was if, if your certificate got lost, just print another one. All good. So why is what you just said? I mean, I know why, but can you kind of go into how this is a bearer asset and this is critical that part? And I guess the last question is, is that lost or appreciated by the folks you're talking to, not just by Bitcoin, but you need to do it the right way? Yeah. So, OK, So what is a bearer asset? So a bearer assets is something that if you hold it, it belongs to you. So a bar of gold or a gold coin would be a good example, right? If it's in my possession, it means it belongs to me. But if I leave that gold coin lying around and Richard picks it up and takes it home within, it's no longer mine, right? There's no register anywhere that's saying, you know, this gold coin belongs to Glenn. So if Richard's got to give it back to Glenn, right? And it also means that if I give that gold coin to somebody, right? That's all that's required to transfer the asset, right? I just physically hand it to someone, right? And that's very different from an equity, a bond, because they're all held by custodians. It's in fact very difficult to actually get the physical share certificate for an equity ownership. You have to get kind of special permission. It's a whole kind of process to be able to actually custody your own shares, right? Normally when you access them, there's a custodian holding. And you mentioned the DTCC and it's a common myth that oh, you know, if the DTCC has got it, it's fine. But if you actually look at the notional exposure of the assets that the DTCC is custody versus the actual collateral backing it, right, and you take into account the collateral buffers that the DTTC, the DTCC has, right? The notional exposure is in the multiple trillions, right? The collateral backing it is 1/10 of that right And the capital buffers that the DTCC has in case you know, major counterparties default is nowhere near enough to cover all of that. And the, if you actually delve down into the nitty gritty of the legislation and the contracts and all of that kind of thing, what you realize is that in a systemic event where you know, like a GFC type of event, if you know like a clearing house went down because a major counterparty defaulted or something like that, you would end up as an unsecured creditor even as a major equity fund manager or whatever, right? So how? Many people understand that that you're talking to you think because obviously. Yeah, you got to, you got to, you really got to go down the rabbit hole and the stuff and you got to read a lot. And there are people who've kind of laid it out neatly. But yeah, people just do all of these, set up all these, you know, they'll invest enough equity, fine. They don't even know who the custodian is most of the time, right? But they certainly not the difference between a bearer asset and a non bearer asset is the with a bearer asset, if it's in your physical position, there's no counterparty risk because somebody else isn't holding it on my behalf. So, but with all of these assets in the traditional finance system, there's counterparty risk everywhere because somebody's holding the assets on behalf of the, you know, the beneficial owner of the assets, right? But with Bitcoin, like so in my personal capacity, I own Bitcoin, right? I can, I can buy Bitcoin and I can custody it myself, right? I can do that on a collaborative basis or I can do it on an individual basis. But I can't go and buy shares in NVIDIA and have them in my personal custody, right? With gold, I suppose I can buy gold coins and stuff like that. But then the problem is that, you know, the transaction costs, they are really high. Like if I buy a gold coin and then I immediately turn around and sell it, it's going to cost me 5 to 10% of the value of what I've invested to do the round trip. With Bitcoin, I can buy it, casting myself and sell it. And you know, the transaction costs are going to be negligible, almost 0. So in my opinion, it's the only asset that you can actually hold with 0 counterparty risk, right? Like in a meaningful way. Like if you want to hold a billion dollars worth of Bitcoin, right? Unless you know, unless you're going to actually dig your own fault in your ground and hire security guards and stuff like that, you're going to hold it through some sort of fun vehicle, right? And, you know, being somebody else is holding it for you. Do they have the the goal that they're holding for you? Are they lending it out? You know, they're all these types of kinds of things that you need to take into account. And so that's one of the huge benefits of Bitcoin. But if you then are lazy, right? And you just go, oh, I'll just invest in Bitcoin in the way the 1st way that I come across, right? You essentially get rid of that attribute plus a whole lot of other attributes that are really valuable about Bitcoin because of the way you've decided to access the assets. Yeah. So kind of. Going back to the ways to access, right. And, and I think I, I've been on the record multiple times, like I'm, I'm glad the ETFs are here because it raises the, the consciousness in the, in the public and, and it creates access points. And, and secondarily, the one thing that I also know it in my heart hearts around Bitcoin is once people understand the unique nature of it. And, and, and, and that might be that they are, are resonating on the price go up, number of go up type of, you know, dynamic. It's fine if that's what they want, you know, they triggers them to say, Oh gosh, I need to go down the, the rabbit hole just a little bit more. What is this? Why is it so outperforming in My Portfolio? And, and I think end clients will ultimately start, you know, raising the bar towards education, meaning they're going to go back to their advisor and say, what is this? Wow, why, why, why do we have it in our portfolio? You know, how does it operate? You know, how did you come to this conclusion? Or conversely, why don't we have it in the portfolio? How are we missing out on this? And so I think that there's a dynamic there that will lead. End clients to actually do their own research and and become even more educated around Bitcoin as it you know, regardless of the way that they arrive to it. And so my, my hope is that once that happens, right, people start looking at the ETF structure a little bit differently and saying, OK, well, is this the right way for me to own Bitcoin? Because, or maybe the better question is, do I really own Bitcoin or do I simply have a proxy? And that might lead to another interesting conversation along the way. And then ultimately capital gains implications. You know, I own the ETF now I need to get out of it in order to go over to Bitcoin itself and and have ownership of it. But why did you at Cartwright not go down maybe that easy button path with ETFs? What, what, why did you, why did you go down a different path with ownership assurances and things on that nature for clients? I guess maybe it's my question. Yeah. So, yeah, it's a good question because oh, BlackRock have got an ETF, you know. Well, it's BlackRock. It surely must be, you know, yeah, the base play, base way to invest in Bitcoin. Surely, You know, if you can invest in Bitcoin through BlackRock, isn't it the base way to do it? Or Fidelity or Franklin Templeton or Invesco, right. But so I was working back in 2008, right? And I know that if I had had a crystal ball and could see what was coming, I didn't see what was coming. But the things that happened on certain days there with, you know, major global banks down 6070% in a single day, right? Just absolutely. I mean, it was just carnage, right? And institutions the size of Lehman's AIG, you know, here in the UK, Northern Trust, right? Governments having having to print billions and billions, hundreds of billions of dollars to try and keep the system afloat, right? So what is going to be happening if that ever happens again? What does the world look like, right? And in that world, it's all about counterparty risk, who owes me what, right? And can they pay, right? So the first thing I want to know is if the people holding the Bitcoin go bankrupt, what happens to my Bitcoin, right? And so that's what I immediately do when I look at, when I looked at all 78 of the funds we ultimately looked at including the ETFs. The first thing I do is I go to the risk disclosures in the filings, right? And I look at bankruptcy, what happens, right? And it's very interesting when you do it, right, because all of it a sudden you realize that for example, in the case of the iShares Bitcoin Trust, right, that actually what you're exposed to is the custodian, not BlackRock, right? So who's the custodian? Coinbase. OK, So what is Coinbase's credit rating? Is it an invest? Do they have an investment grade credit rating? No. Would I invest in the Coinbase bonds? No. So am I just kidding myself that I've got my Bitcoin allocation through BlackRock? But that's not what's going to count in that world if it ever happens again, where everything's going through the floor and everybody owes each other money and there's not enough to go around and it's like a game of musical chairs and who's going to end up with, you know, And what's important to realize about these filings, I'll show you on the screen now, is that they don't put stuff in there that they don't need to put in there. They are kind of covering their backsides because they know the risks. They're legal and compliance. People have told them what the risks are. And they've said you have to have this immediate filing, right? So I'll show you if I share my screen here, right? Let me just OK, so let's do this. Is it working? OK, let's see. All righty. So this is the I shares, but coin trust filing the security Exchange Commission. So what I'll do is I'll just search for the word bankruptcy, the first couple of references and I'll blow this up when we get to the relevant part. But these first references are just FTX and various crypto scams blowing up. But if you kind of keep going through it, you eventually get to the part that really kind of counts. Let's have a look. I think it was one up. OK, so let's blow this up and look. So I think this is interesting for people to actually see in black and white. OK, so let's read here. Moreover, in the event of an insolvency or bankruptcy of the prime Boca or the Bitcoin custodian, so in this case, that's Coinbase. In the future, given that the contractual protections and legal rights of customers with respect to digital assets, in other words Bitcoin held on their behalf by third parties, counterparty risk are relatively untested in a bankruptcy of an entity such as the Bitcoin custodian or prime broker in the virtual currency, there's a risk the customer's assets, including the trust's assets. So this is the I shares Bitcoin trust may be considered the property of the bankruptcy estate of the prime broker or the Bitcoin custodian. And customers, including the trust may be at risk of being treated as general unsecured creditors of such entities and subject to the risk of total loss. OK, so the language couldn't be that much clearer, right? So what if there's a way of holding Bitcoin where you get rid of that risk? Because what I say will be worse, way worse for hard, right, for professional trustees, for anybody who decides to invest in Bitcoin. It's not what everybody's afraid about. What everybody's delusional, but afraid about is that they're going to invest in this thing and it's going to become apparent that it's all in the illusion and Bitcoin's going to go to zero, OK? That's what people are afraid about. But what they should really be a bit afraid about is you invest in this thing and we're right, and it goes up 20X50X, right? And it's now, you know, worth a hell of a lot. And Coinbase goes bankrupt and your Bitcoin ends up in the bankruptcy estate and you're an unsecured creditor. All the secured creditors just get paid out and there's nothing left, right? That's a way worse outcome, and one that's preventable. If you know how to hold the Bitcoin property such that it doesn't matter who goes bankrupt, you ain't losing your Bitcoin. Glenn, your point about it doesn't matter if you know who goes bankrupt, you're not getting your your Bitcoin in that in that event back to when you said Lehman's and and at that time in O eight, you know, Rich you you were there Schwab watching it happen. You guys, as in, you know, a non levered entity were and for other reasons due to, you know, your diligence as as a firm weren't impacted like the other firms, but the Fed decided Bear Stearns for saving Lehman were not. More recently, the the Swiss government said we're going to let Chris Swiss go and we're going to save certain parts of the capital structure. They decided which investor bases. So to your point about the DTCC, you know, being levered, everyone's like, come on, is it really going to happen? And the point is DTCC doesn't have to necessarily go under. There could be an event where all of a sudden an entity funded by the government, just like it was in March of 23, decides who and how assets are allocated. And the main fallout is more money printing, which means whatever you have as a as an investment will lose buying power. You know, we just crossed 35 trillion in debt this morning right before the call started. We're growing debt at 10% a year or more. Is your portfolio growing 10% a year? So those are the the dynamics. I think sometimes people push back. It's like you guys are all doom and gloomers like, no, we're the Fed is not going to let things default. They're simply going to print more money and decide which assets or liabilities they save, which they let go. And it's going to be Bob's your uncle. That's for the UK crowd. They're there, Glenn, for you. And I know, I know it's not home based for you. So I'm going to be a little careful. I know being, being over there in Scotland. And, and so it, it will be just a stealthy decline. So that's more like you're talking about the right way to buy it, which is why you're here. And you know, we're rich and I are just sort of, I'm not going to speak for you Rich, but I, I saw the problem in Tratfi and I'll, I don't want to end it, but I want to reiterate the reason why Bitcoin is getting the attention of treasurer's like you mentioned, who are now putting on balance sheet. I don't put any credence in politicians, but investors and asset managers know to save the house. They got to have some so. Yeah, yeah. And I definitely think that the people who've got Bitcoin at some point in the future are going to be glad to have it. That actually kind of is linked to another point, which is if you invest in those ETFs, it's dollars in, dollars out. You ain't getting any Bitcoin out of those things, right? And it's kind of a nonsensical way to invest in Bitcoin in my mind, because you're investing in an ETF structure. And so I always go to the limit, to the extreme with things. What would happen to Bitcoin if 100% of people access the Bitcoin through the ETF? Would Bitcoin have any chance of becoming what it promises to be? No, of course not. So why invest in a way that's kind of against the investment thesis of Bitcoin, right? You want to be able to actually use the asset operationally like a corporate treasurer would, like a big charity that's trying to get money into an authoritarian regime or a place where there's been a natural disaster. They need to get money to, you know, where it needs to be quickly. But the traditional financial system won't let them send money into that country or whatever. But now you've got an ETF, right? You can't see units of an ETF into an authoritarian country, right. And it's. Yeah, I mean, I'm. I'm not saying that it's not a good thing that the ETFs exist and you know, and whatever, but ultimately, when you're dealing with pension schemes and stuff like that, you're not looking for, OK, you want everything to be the Rolls Royce version of how to do it right. And for me, the ETF's don't cut it right for a whole bunch of reasons. Yeah, we haven't got into yet, but there are others. Well, I'll tell you for, for our audiences, stick, stick around with us for a little bit longer than what we might normally go. What Glenn is, is, has been talking about. It's just fascinating. I think we could sit here for another hour, two hours and just, you know, talk to you about your due diligence and your perspectives around risk. What really is the risk? And, and, and I think you're hitting on, you know, a number of things that hopefully will, you know, allow our, our audience to think a little bit differently and go down that that path a little bit further. But we have been working on at on ramp, a case study that kind of helps, you know, showcase, you know, a way that that Cartwright might have gone through a process and some of them evaluation criteria and why most importantly, I think it's the why it's important element. You know, when you're defining all of the criteria that that makes it a decision to actually make an investment on behalf of whomever your clients are, You want to make certain that you understand why it's really important. And I think Cartwright, I want to applaud your firm. I think that they've done a fantastic job of, of creating these definitions and, and, and, and sussing them out to say, okay, what is the right way? What is the best way to minimize single party failure or counterparty risks? And you know what, what, in the event of worst case outcome, right? I mean, you're, what you're trying to do is build a bulletproof institutional grade solution from end to end, right, That allows your, your clients to to benefit from Bitcoin, not just as as a price proxy, but for the future potential of its application and, and ownership of the fundamental asset. And so kudos to you on the on the custodial journey, everything that you've done. This white paper is going to be, I believe, Mark, correct me if I'm wrong, released later this week by On Ramp, and it will detail the full due diligence process that Cartwright has gone through. It's a way for you to think about how it fits into your firm. And, you know, maybe you come up with different, you know, criteria and we'd always be interested in hearing, you know, what those criteria were. But that being said, we encourage you to go ahead and sign up this week, if you can for our weekly On Ramp research and insights newsletter. And if you do go into the on rampbitcoin.com and sign up for that newsletter, we will make sure that you are the 1st to get this paper. And so we encourage you to do that. But in the meantime, I just want to say, Glenn, thank you for coming on and sharing a little bit of your insights. You know, it's clear to me and I and I, I, I, I, I bet Mark too, that you are a deeply researched individual in the space and, and have done your homework. So we appreciate you helping point out ways that others might be able to follow. Mark any any closing thoughts? Nope, echo what you say Rich Glenn, you and Cartwright have done the work. We it's demonstrated in what you've shared and that we will re share out in that let docs and if people hit us up on the website, it's there. Don't listen to us do the work and then just be curious because things are changing a bit here. Thanks a lot guys. Thank you. Thanks. Thanks. Bye bye. Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that Onramp Media is for informational and entertainment purposes only, and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit onrampbitcoin.com contact to schedule a consultation with one of our private client advisors.
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