The Bitcoin Floodgates Are Open: Institutions, Governments, and the Next Wave

[Music] It all comes down to computers communicating. The information superighway 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 okay, 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 roll of gun. The one thing that's missing but that will soon be developed is a reliable ecash. All righty, boys. Welcome back to another episode of Final Settlement. 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. Uh maybe a little housekeeping before we get into the list, though. Uh Liam and I were uh recording with Pierre Rashard on Friday. We put out the episode uh over the weekend. Really great conversation with him. And I know Michael, you had a conflict, so we were we were sad to miss you on that call, but uh really great convo. Um talking about his new company, the uh the Bitcoin bond company. Um and really talked about sort of everything going on in the space from sort of the the general dynamic of a a speculative attack, uh and the corporate adoption that seems to be accelerating at the moment. Um so good conversation with Pierre. Definitely check that out if you haven't already. Uh but Liam, any other any other takeaways from from the combo? Yeah, no, it was uh 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 um Bitcoin vehicles in order to get, you know, there are just so many different cohorts of the market that want Bitcoin exposure in in different ways and being able to serve them all thoughtfully is um is really great. I mean he I would also just show the reorg too uh and and what he's doing at the Nakamoto Institute is just great in terms of really good evergreen content um 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, a lot on education. Go ahead, Michael. I was going to say this is bull market cadence because I think that was supposed to uh come out this week and we were you know gonna you know have that as the the formal final settlement pod for the week but given all the news and things happening uh that the guys wanted to we we agreed we do another rip this morning. So uh 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 um noteworthy just on the uh the announcement last week from uh 21 Capital um Mer's at the helm of that with Tether and Soft Bank involved. You know, part of their business plan is being an education a 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 uh sort of percolate as well. um 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 this asset is what the network is how you can um sort of uh rationally adopt it in various ways. Uh 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. Um shall we go to the list? Yeah. Um where do you want to start, Liam? Let's uh on the topic of of education, this is something that we focus on a lot because there are other different products out there that uh or different companies in the space that you know position their brand uh similar to Bitcoin but also offer more risky products as well that may or may not return to Bitcoin over time. Um, so with that, Coinbase Asset Management launches the Coinbase Bitcoin Yield Fund. Um, so this is for international investors. Um, so it's pretty much Coinbase is not necessarily Bitcoin first. They have a lot of different uh products that offer yield on their other assets like Ethereum, etc. um 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 4 to 8% net return in Bitcoin per year over a market cycle with investors subscribing and redeeming in Bitcoin. Um so the the product doesn't necessarily share a lot of um what the product's actually doing. It's for international investors only. Um, but I would imagine because it's for international investors, it's probably something to do with the derivatives of uh, Bitcoin and and perpetual um, buying and selling of the asset uh, because they don't necessarily offer that in the US. Um, but we've we've kind of seen this a little bit before uh, 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 no matter the wallet financial service um lending product you generally want things to be battle tested and ideally like open source it's why we love you know multi institution and multisig in general it's extended public keys and derivation paths um anybody can spin up a wallet there's no proprietary technology there which is always helpful when it comes to um understanding the risk in the same way uh when you think collateralized loans and being pretty open source in the sense if it's onchain verifiable the loan to value very ultraconservative. I bring that up because we've seen this for the past 15 years in in digital assets in Bitcoin every cycle every couple years there's new strategies that provide yield. Um, 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, uh, some of the perks or like playing the basis trade. Um, but ultimately, you just want to like hang back and see the return profile and the, um, longevity uh, the 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. uh 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 conser you know in all likelihood safeguard it so it's not stolen. Um, so these products will continue to happen and then the worst part is once somebody gets the asset, that'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 uh Gemini and Gen Genesis Earn because Gemini didn't lose the asset, but what they did was they're ultimately the counterparty of the custodial um situation and the client got emails and said, "Hey, do you want to get an additional two 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% keer is on Bitcoin." Um so this is just an overarching sentiment. This really comes back to the education and buying holding spot bitcoin custody um over the long enough time horizon's outperformed it no matter what they say in their their perspective 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 Coinbase 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. Um, the other takeaway 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 uh 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 uh additional layers of not only counterparty risk but execution risk in terms of whatever the underlying yield generation strategy is. And so is that 4 to 8% worth those additional risks? Like in my mind it's probably not. Um but you do make a good point like you want to you want to see these things exist for a little bit. um establish some sort of track record um so that you can sort of assess how they are integrating those various risks on top of just long Bitcoin. Um 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 uh you know whatever else you're thinking. Yeah, we'll we'll cover this at some point in on the topic list, but I think the basic after just thinking deeply about what the hell's going on in the space the past week, it's I've come to the 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 uh or diversified exposure when they're all back to the underlying. And so that's that's ultimately like once somebody gets comfortable with getting a 20 to 80% bulletproof allocation to the underlying then you just like sit back and chill and then it does its thing and 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. uh and we'll probably set some of the themes with you don't want to jump ahead but these uh 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 would even go as far as to say like it's pro like I think you're right like it's it probably has to do with someone's um 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. Um, all right. What's next? What's next? Where do you want to go? Yeah, let's uh Galaxy put out a report on the state of the crypto lending market. Um 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 um at least based on the report by one Q of 2022. Obviously, a lot blew up uh from here and then and now it's just over $10 billion in terms of total crypto lending. Uh especially in the the centralized lending market, there have been more growth of different uh off-chain or onchain products too. Um but um wanted to to get your guys feedback. Is the market starved of capital? Is this a healthy amount? Um, is this actually what's going on with uh the Bitcoin lending market? Um, 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 off the have off the top of your head what the where we're at in like C5 versus um 202's 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, two/3 from its peak. 2/3. Yeah. I mean, I think there's a few components there. Uh, I think Alex Dorne did a really good podcast if anybody wants to go deep on this specific side of the market um on his on Galaxy Brains. But I think ultimately there's a few factors. one, higher interest rates, lower demand with the market being suppressed. Um, and then ultimately everyone getting blown up and not really being in the space um, you know, over the past 2 years. And while Bitcoin lending or digital asset lending isn't hard, it does take some reps um because of the volatility profile and really the 247 nature. And that's when it gets really difficult for Trafi to step in and then not only understand how to manage the volatility, the custody, but then also how to be on 247 um and mitigate risk. So, I think it's interesting like the DeFi stuff. The thing that's interesting about DeFi is I don't know if like these charts show it, but I've always looked at it as like a play thing. Like it's a fun thing for somebody that's interested in the asset class. Like when you remember people used to be interested in Ethereum and they get interested in like DeFi 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 arving out and you know creating more tokens out of thin air but there's no like real money that sits in between that um at least serious money. The way I've always thought about DeFi and lending in the space is very similar to like the mental models of um AI and humans or technology and humans. You want some component of governance built in the protocol i.e. like what we talk about multi-institution that's in my opinion like decentralized finance because no single counterparty holds the underlying but you still have covenants and governance built into like centralized entities that have legal frameworks and um 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 uh drastically and then a lot of people get again. Yeah, I would I would agree with all that. And I think um 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, you're spot on, Michael. I think like the real DeFi 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 um, 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 uh upwards. Particularly, I think what could make this uh 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 uh Tether and some smaller players here. Um 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. Um 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 IBIT 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 uh lending market. Yeah, it's a great call out. Yeah, I think the one thing to call out here that I don't know if you guys have feedback is um 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 um that some of the larger digital asset firms were like, you know, applying for licenses so they could hold deposits. But I think like one angle that we've seen blow up, but at least 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 where they get in gener 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 uh 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 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. Um so that's just something to keep you know uh be aware of and I think we keep re reverting back to this multi-institution aspect but the reason why is because that's is effectively what not only on is built around but uh one of the core tenants 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 uh there's a 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 the rest of the market is and what are the different like properties that make it different. It's 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, um, then there's going to be no shortage of opportunities across things that we can see today, whether it's lending, trading, uh, underlying custody, IRA products, insurance, but then second and third order derivatives, uh, of that. You know, example setting like oil trade. how you actually send a billion dollars of uh oil, you know, with a BTC transaction, you're probably going to want some additional governance and escrow built into the underlying. Um, so 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. Um, 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 outsized returns. uh as we're seeing it all. Well said. What's next, Liam? This one is a little bit older now, but uh Binance is acting as crypto advisor to governments on uh on regulations as well as creating strategic reserves. I know um Coinbase uh the head of institutional trading also just said that there's uh additional demand for um 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, uh 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 uh someone wants to give me an overview of what it said, I think I mean I think um I don't know if this is the same one, but I think it came out that uh CZ was an adviser 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 um 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 you could go deep down NYDFS um 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 and third effects of bringing in you know capital from offshore not not only bring it into the equities markets, but then also you can think part of like what they describe is getting lower cost BTC um 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 Binance uh and then also um Pakistan and 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 the you know the the global monetary order effectively then I would go and try to get close to Binance if Tether's you know a competitor. Yeah, it kind of makes sense from that perspective of like if you're sitting XUS 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 longstanding entity which is Binance. So, so I think it's kind of um makes sense from that perspective of like how else would you go about this if you're um some government XUS 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. Um because like you said, Michael, like most people just don't understand this thing. Um, and so yeah, I think it's kind of like where else would they go is is 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 uh 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 uh every time like the leader of the largest country in the world and most powerful uh says something that's different than the past, you're going to pay attention. And so um I think that that others are definitely trying to pay attention and and get more sophisticated on the asset. Um and and with that uh Russia's finance ministry and central bank to launch crypto exchange for super qualified investors. Um, so my understanding is that that this is only available to those people who have essentially roughly $1 million. It's uh given the exchange rate and will essentially I think this is just a buy sell exchange. Um, but it's just getting exposure for those people who are fairly high net worth individuals in Russia. um they're launching it in uh with the central bank and um they're going to be legalized. This is a pretty stark move relative to their stance for retail exposure uh of Bitcoin um and essentially pretty much banning it for retail investors. Um what are the initial thoughts here? So it's still banned for retail. Is that is that correct? Like this is just 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. 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 okay and permissible for your populace at least, you know, in this specific respect, the the high net worth of your populace to uh 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 uh, 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 okay for you, Mr. Investor, living in Russia to uh buy the asset." basically. Yeah, it's interesting because um when we spent our time last year in the UAE, there was a lot of discussions around post u the sanctions with the treasuries and how much capital fleet out of Russia into that market and was mined like these huge properties uh alongside the ocean just like straight in Bitcoin. So, a lot of the big uh uh 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. uh with understanding of Bitcoin. I think it's rumored they've been mining for years now. But I do think this is interesting because I I haven't followed their digital asset framework. But if this is big news, it it would tell me that they've been somewhat antagonistic from retail coming in in the same way that uh India and Pakistan I think have been somewhat antagonistic from retail coming in. And so there seems to be like this mosaic forming around u east versus west. When I think about like Binance and the East, not that Binance is involved here, but that there's like a block functioning, you think about Russia, China, India, Pakistan, um, and potentially like Binance involvement specifically even the UAE and the GCC. And then you think about Tether in the Western, um, 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 it's an interesting dynamic. Um, and it it tells me like the thing that I wonder if uh Binance is going to have their stable start to like think about how does it proliferate and get more involved in like uh Brics Nations um you know pegging to like whether it's BTC or some kind of uh G like gold deal because that's the interesting part about Tether. I think they have one of the largest um uh like highest liquid um tokens attached to gold. Yeah. Yeah. I mean, and Binance, I'm pretty sure it was in Tether, too, but that whole $2 billion investment from uh MGX um which was for spun out of the UAE sovereign investment fund, that was paid in stables, too. And so there's got to be more interest in I don't know if they're piloting settling trade in Bitcoin with uh different countries, but they're they're definitely piloting trade uh between uh different countries and stable coins too just because it's going to be faster and more liquid than uh or not not necessarily more liquid but cheaper than you know using the banking systems to do it too. Um but but on that similar thread, the next one is is very uh similar too, which is RUYa, which is a UAE digital uh the UAE's 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. Um this is made possible through Fuse. Um but it's pretty much just going on the same thread that we've uh been talking about earlier. Um I mean the the which is there is just increasing demand and availability all across the world um to get access and exposure to Bitcoin. I mean, I think the ETFs here in the US as well as just um more positive feedback from uh 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 high net worth around the world. Yeah, we should get Mo uh if he's willing to join who's the CEO of Fuse. Um 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 joked with them on this, but it was meant to be a positive, not a negative, like prime trust. They're building like B2B TOC solutions or products. So, they're ultimately like that middleware for banks and other fintexs to get exposure on and off ramps, liquidity, custody. Um but yeah, I mean from the time we spent out there and the stuff Ralph and on Mean is doing there's um an insane amount of interest and appetite to just leaprog the rest of the world when it comes to this stuff and not be um 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. Um 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, um, it was apparent that, you know, there was much more of a focus on sort of the broader crypto digital asset space relative to Bitcoin at the time. I think that's shifted a little bit over the past year or so um as it has sort of globally. But I think if you know what they're going after here is really positioning this as a uh 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, US dollar stable coins are credit based. Um, and most other altcoins are, uh, you know, nefarious in nature, have an issuer, are not, uh, credibly neutral. And so, I think it doesn't align as much with sort of the ethical Islamic banking u 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 uh people using these offering offerings and these services whether you know Bitcoin dominance uh 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 us and what they deem as reeba. Uh 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. Um, so point being is I wouldn't be too bullish on uh the it's still a long ways away and similar to the west when it comes to Bitcoin versus um 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 bright region for that and especially because they have the energy um which directly ties back to commodity money that they're they're perfectly suited to get this stuff. It just need you just need the right um count. 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 on-ramp. Outside of our core multi-institution product, we also offer a whole suite of financial services from the ability to buy sell IRA via your tax advantage account. Um, Lloyds of London insurance up to hund00 million per incident. If you're interested in learning more about that or anything else on provides, you can reach out to us at hello@onrimpbitcoin.com and we'd love to speak with you. Um, now on to the rest of the show. I'm already there to help. Absolutely. What's next? Well, uh, next I thought we could talk about both the Bitcoin dominance as well as the new 21 Capital. Um, so Bitcoin dominance fell slightly uh just below 64% now. Um, but we're increasingly seeing more micro strategy type competitors. the list of companies who especially public ones um who are launching just grows increasingly long by the day. Um Bitcoin's thesis and fundamentals are completely unchanged. The rest of the digital asset space is um shaky at best. But you know, I think most of the demand for alternative cryptocurrencies to Bitcoin is just the the fact that people want to gamble faster. Uh and you know, these different liquid assets uh like Micro Strategy, 21 Capital, they're going to offer different MNABs. They're going to uh 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. Um, and we'll only see this grow. um especially if if they can uh deliver what what Micro Strategy has done thus far and and the new Bitcoin dominance may be um you know the percentage that is held in spot versus the percentage that is held in Bitcoin securities. Um but uh back to 21 Capital, they are expected to launch with over 42,000 uh Bitcoin. Um right now they are in a spa. Um the spa 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. uh a lot of people that are are interested and want and feel like they missed the boat on both Bitcoin and then Micro Strategy at first and then want to get exposure to this new asset. Um it's really interesting that you know Tether and Caner Fitzgerald are both involved Soft Bank as well. Um can I Caner being involved is most notable to me. I think it just sends a big message to the rest of Wall Street that um 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 uh convertible note for Micro Strategy. Um, 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 the lending and and custodial side of things. It may be maybe different. Um, 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 um 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 the this current US administration wants to push forward is this idea of saving in Bitcoin and spending in dollars and proliferating US dollar stable coins all around the world. And so, you know, what better uh sort of amalgamation of partners would you want to to influence that sort of direction or that vision than the largest stable coin issuer in Tether? um you know a sort of legacy Wall Street firm in Caner and then uh 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 of 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 um going to be, you know, 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 UST 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 Micro Strategy do this and maybe they just got leaprogged in terms of 21 being able to offer this faster than them. Yeah. I mean there's a lot of there's a lot of things to talk about here. I think one is um I I guess one is like the reflexive nature of what a little bit of what you just referenced Brian and Liam mentioned on Caner. like kind of makes sense. Caner's been, you know, the treasury issuer or custodian for Tether for a while. If um there's a notion I I don't follow MSTR or understand the mechanics, but there's an understand at least the the what I've seen is they have like this immaculate conception that you can never repeat what they've done. Uh it's like before a spack a spack and that there's no catching up to them. And I'm almost don't think like it's meant for um Tether or whatever this is to catch up to them in that direct sense, but more of his way to what Brian 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 um around it. So I I think I think at the at the core like it makes complete sense um that Wall Street wants to create products. That's what they do. They can generate fees. Uh so there's that. I don't think that side is like that interesting. I think what's interesting from the macro the more market sentiment which you described about the dominance um and in general the idea and I don't know how much legs this has but I wanted to bring it up was um this notion of like Salana uh spack or not even spack it was just like the $500 million raise but it's it's like the idea of the price of um what is it C uh rose and like a part of it in my mind comes to like the memeification of of equities or even tokens. Like people just like tickers and they like momentum. And so what happens when the top 10 plus cryptocurrencies, you know, take their if they have their own foundation uh treasuries and then they go reverse and goes like spa 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. Um, and it goes back to this like thing of uh, you know, it's just all coining on uh, public equity markets. And so I think this is just like where this all ends because it's just those 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 into Coinbase. 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 Salana raise. Um, 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 be behind you know altcoins historically and now these Bitcoin treasury companies effectively greed 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 MNAVs uh different leverage ratios etc Will those replace the effectively like uh greed seeeking gambling cohort of people that want higher returns? Will that replace the altcoin space? Yeah, but the k 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 um return profile. So like that's that's the the other side of it. Yeah. 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. Um, yeah, people are just gonna feel like, oh, I missed Bitcoin, I miss Micro Strategy, I'm going to get this Salana vehicle exposure, and next it's going to be this Ripple vehicle exposure and and whatever it is next. But um I mean we all kind of understand that Bitcoin has sound fundamentals, fixed supply, 21 million that makes it a great store of value over time, which these other assets just don't necessarily have too. And so I 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 the currency when there's the next bare market, who knows when that is. um for not just Bitcoin, but everything else that's going to dump significantly harder. And whether it's this bare market or 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, echo that. And I think I don't know. I think like we're going to talk more about this and figure out how do we like u 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 um ultimately everyone understands the problem that has stemmed from loose money. The the the um the products and services have ultimately not benefited the end user uh or endperson 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 makes 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 uh smoke and that ultimately as Liam said will have some kind of not 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? Um, 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 where the market is going because ultimately that's what's going to reap the outsiz 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 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 unquote value in terms of different financial products again like cohorts of capital that have specific mandates to whether it's equity or debt. um you know if all of 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 um I think at the margins yes but the reality is direct exposure via whether it's a fun style product uh along with underlying custody and education is whatever argument that would be made that well they they can't get exposure. It's like they they can. We talked about this internally with you know folks that work that have worked at the highest levels of you know trades 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 derisk 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 they opt for these other products which are embedded with a bunch of risk. is very similar to when we used to lend against compete with BlockFi and our loans would be maybe a little bit more expensive. Um, 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 zero BTC versus why wouldn't they just hold Bitcoin that has performed that way? And it 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 there 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 uh 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. Does that make sense? Like that's kind of where I'm getting at. That makes sense. But I always revert it back to the micro like the individual. Um 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 in the BTC exposure. 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 then 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 um there's something that doesn't track uh 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 why are these things traded a premium to the underlying and uh if you go through the financial mechanism of just you know sound asset that is has a finite supply versus uh you know infinite asset with you know cost of capital that isn't necessarily tied to anything. um it makes sense to continue to print more of the the asset with limited cost and continue to buy the fixed cost just like uh kind of Pierre walked through in 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 um 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 um 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 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 them a stake and then you're throwing poison you're sprinkling it on top because you have to sell them on the underlying and then you're telling them well then we're going to put this 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's volatility for investors. It's like and they'll take the different, you know, trend lines and sell and then buy. It's like, well, why don't you just as an individual investor not invest there and take the all the fees and the decay and just buy the spot Bitcoin at a much lower reduced uh 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 of the 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 there's a way to solve for this without having to like pepper it in with like four layers of uh Masa Sun and uh 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 a 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 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 and either produce a report 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 get their firm comfortable with. And think about what we know about Bitcoin. Once you get comfortable with it, you're like, why the [ __ ] don't we just own the underlying? 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, it'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 bond segregated and then you get the best of both worlds and you get the upside um without having a share in the the other side of Yeah, it's just the market's 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. Uh 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 Salana too. But now this is just going to like be buy the best performing momentum asset and then like understand the underlying after. Exactly. I caveat 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 uh execution of it and whatever else that we can't see. And then ultimately we will see like well [ __ ] why didn't I just buy the underlying 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. All right, we got a few minutes left. Liam, anything else on the list? Let's do uh last one. Uh Schwab plans to launch spot Bitcoin trading uh after 400% surge in visits to crypto site. Uh you know, this is something that they didn't launch initially, um but they're seeing massive amounts of demand for it. they uh are seeing it derisked from their site uh and and their consumers. Um 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 uh you know, it's it's pretty much just every financial institution has a green light. Uh Federal Reserve and and every financial in um regulator is coming out as incrementally more bit uh pro Bitcoin every day. Um, what do you think? Will this continue to be a trend? Um, is this kind of noise? Any initial thoughts here? Mike, I'll let you start. I personally um I think these guys are going to fumble the bag hard and the reason why is u 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 wanted to do something in the 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. Um, that's why they're 15 bips or 20 bips and they they so they can't figure that out. And so the closest they've come to is the trading aspect. Um, I believe it's public that they're doing something with uh ED, is it EDX? Who they invested in? Uh the problem with that is they're going to, you know, offer again once you start going down the altcoin to like where do you stop? And um it always kills me when I see notable brands that do things the right way, which I think Schwab has um put their brand next to, you know, the Ripples and Salanas and Ethereums of the world because they're ultimately, you know, we all know that they're they u destroy capital. So I think it makes sense that they're stepping in. I guess it's a better uh 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. Um so I think it's positive again everything is 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 um it's better than what they were doing which was like pretty much absolutely nothing. Um but they they were obviously seeing traction and demand from their clients um who are asking like why haven't you guys done anything basically um 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 um and realizing they needed to to do something. I agree with you, Michael. They're probably not the the something that they're doing is probably not uh the best angle to take. It's going to be a uh a buffet of cryptocurrencies, 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 uh DJT the truth social company to do part of this I guess which I don't know why you would want their expertise in lo in launching a you know uh you know crypto exchange or crypto trading platform. So interesting. You know what this You know what this reminds me of like to to summarize like all of these concepts is um two years ago when faint came out we would joke and like go back um 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 u u 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, ETFs or tokenized formats and then um just traditional equities being tokenized. And those are all going to be swamped around with also stables. And so that 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 we know about like Bitcoin's properties and where it's going. So, they'll ultimately try to trade around it versus just hold the underlying. Yep. Well said. Just keep it simple. Um, anything else? Any other uh anything we're looking forward to this week? Is EER post coming out today or to Yeah, today because this will re this will be coming out tomorrow. Nice. Yeah. Uh there's been a lot of questions or comments around like what is early writers, what do we do, what's uh you know its involvement with on-ramp. Um so there's a quick piece that the team put together that'll come out that'll be exciting and then 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. Um that's on my side. I don't know anything on your guys side that you're excited for this week. No, we're going to hit 100K. I wouldn't be surprised by weekend. That feels It feels doable. We're 95 right now. A lot of momentum. Never never underestimate it. That's for sure. Never bearish. All right, boys. We can wrap it for there. Thanks for uh thanks for joining us on this on this Monday morning and uh talk to you guys later. There he 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. Um, send us a note, let us know what you think and on for a word from On-Ramp. Um, we've had a lot of conversations recently about individuals really liking our product. Uh, 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 uh 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. 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