Trump Bets Billions on Bitcoin: Why Treasury-Scale Custody Must Be Distributed

[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 [Music] 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. Alrighty, boys. Welcome back to another episode of Final Settlement. Today is Tuesday, May 27th, 2025. Recording on a Tuesday instead of a Monday. Had a nice little break. Happy Memorial Day, boys. Uh how are we doing? No shortage of uh headlines. We were just chatting before we we hit record. Uh also, Riverside is down. So, there's lots happening in the world. They don't want us to record this pod. They don't want us to get the signal out there. So, we're recording on Zoom. Um, but yeah, headlines across the board. It's it's Bitcoin conference week. Um, I think Trump just announced a Bitcoin treasury company with billions billions billions backing it. Multiple billions. Where do we want to? Yeah. Well, definitely want to start with this almost didn't happen, but you know, we've had such good feedback with the podcast that we the show had to go on. So, we uh made a did a quick audible and got this recorded on Zoom. So, it'll still ideally be released today. And then, yeah, I mean, from the news perspective, it's just so hard like trying to live a life, uh, run a business and then just go on Twitter. You got a Bitcoin conference happening this week. And it feels like pre-announcements are happening over the weekend. There's stuff happening. Uh, I'm kind of like really looking forward to not being there because I feel like we're going to get like 80% of the way there just by watching uh on Twitter uh without having to deal with like hangovers and flights and spending the money and like losing the client time. Um, so it's going to be good to watch from a distance. Absolutely. Michael, can you give me sharing uh capabilities here in Zoom? Yes, you now can share. And then while Brian's sharing, yeah, I mean just this morning I had we've had I've been on calls for the past few hours, but uh did a quick look on Twitter and it looks like at least four different people have allocated like a couple billion dollars or in the process. Um so maybe Yeah, I'll let Brian don't want to. Yeah, so this was this is what we were just talking about. Trump Media and Tech uh Group Corp announces entered in a subscription agreement with approximately 50 institutional investors for a private placement offering totaling approximately 2.5 billion. uh 1.5 in common stock, one in 0% convertible uh senior secured notes with all proceeds intended for the creation of a Bitcoin treasury. Company will use Crypto.com and Anchorage for custody of its Bitcoin treasury expected to close on May 29th this week. What do we make of this, Liam? I mean, number one, the president is putting his name on something Bitcoin related, right? Like we we can say that this is like a a scam all we want and we'll get into it, but like the president of the United States has a company that is buying Bitcoin. Um, so I mean please just, you know, there's going to be a lot of noise out there, but like he is putting his name on this and we are going to see a lot of, you know, people in his uh circle just getting more interested and, you know, people may say Bitcoin's a scam because of this, but like you just have to realize that this is the direction that the US is going and and the Trump is moving. Uh, we're we're seeing countries all across the world like Pakistan has announced they're doing Bitcoin mining now. It's it's becoming really of strategic importance. Uh you know we're seeing long-end uh yields across every single country go up significantly. People are you know looking away from you know traditional inside money versus uh hard assets at the moment across every single place in the world. Every institutional investor is waking up to this. There will this is not going to be the last announcement. I expect, you know, we we should see at least probably like 25 uh more announcements of, you know, Bitcoin Treasury companies by the end of uh this Bitcoin conference week. Um this is kind of just the beginning of how crazy this is going to get. Yeah, I I I think um the two things to call out, there was a tweet on top of this, but I don't know if it was Plebbiter or one of the guys that are kind of cynical against the the kind of like I think that the Treasury stuff, but also just some of the stuff that Wall Street's doing. It was interesting because he says like there's no chance SPR happens because of um you know like political uh not infighting but like the notion that they have inside knowledge that an SPR is coming their behind. But this kind of goes back to what we've been talking about the past few months with Lutnik's you know sons running the company and Trump's sons running theirs. It's like I don't think any of these rules matter anymore and I don't think this like precludes this probably further indicates that an SPR is coming that these private companies and then the only other thing worth or two things worth mentioning is this is interesting because they already have an existing company. I don't know what their you know balance sheet looks like but it's also accessing debt and common stock where a lot of these other companies are just selling stock um versus being able to raise debt based on some of their existing cash flows. Um but the the other last thing and I know Brian you have a lot of thoughts on this is this kind of just further un underpins you know sure it's great downwards pressure um but this kind of underpins the full ICO notion of like these are just different tickers access to larger liquidity pools via a traditional brokerage but at the end of the day they're they're based on the vibes and memes of whoever's you know name is rec recognized. Um but it it hit me or thinking about over the weekend in the same way because I know Brian's been big proponent of um like Bitcoin dominance rising and I'm not saying it will to the extent we've talked about it before but this actually further perpetuates or like that notion that before it was Bitcoin people came into Bitcoin and they uh cycled into alts. This is that same thing when you think about it is people are becoming wealthy in Bitcoin terms and then they're naturally taking that Bitcoin and they're saying I can make more Bitcoin on my Bitcoin by coming in to these products and that's why you see the Adam Becks and all these like well-known influencers are now wealthy being able to come into this and like you know effectively fleece like retail. So anyway, this is all like kind of maps to what we've seen before, but it's kind of crazy that we didn't see it coming. I didn't see this ICO like stock ticker for treasuries uh happen. Yeah, it's it's it's it's wild. And and just for the record, this has been part of my dominance thesis is like these are the new the the new altcoins effectively how you get or you try to outperform Bitcoin. But it's this like it's this very at least for Bitcoiners and like for all the influencers who are now getting involved in this like it is this sort of um elegant shroud of like this is okay because it's Bitcoin and you know while there's still the same or similar I should say uh layers of counterparty risk uh potential leverage risk like because it's Bitcoin I think there's just this notion that like well because everything's good for Bitcoin like this is kind Okay. Um, and that's not to say like all of these companies are, you know, going to be uh unsuccessful. Like there will be companies that do this right and do this well. Um, but I think what we've talked about on in previous weeks is like there is a level of saturation. And so like if we get 25 more announcements of Bitcoin Treasury companies this week, which seems likely, um there's there's not that many ways to differentiate outside of like if you actually have a strong core business. And that's what I keep coming back to is like, you know, the most successful implementations of this uh this Bitcoin treasury strategy are going to be those companies that are like already good companies cash flowing, have some core business, and this is sort of like, you know, just preparing them to be more uh, you know, built, you know, extend their moat for whatever their core business is uh by saving their their value in a better form of money. for all the zombie companies doing this or for just the spaxs getting spun up to just specifically accumulate Bitcoin, there's not a lot of ways to differentiate outside of just taking more leverage and that's where it sort of gets uh concerning in terms of its sustainability. Yeah, I mean I think I don't know if you want to pull it up. I think there's a few things to share there. One is that could be an angle where I am wrong on the Bitcoin dominance. I don't think it is simply because they came out today or this past couple days. There's like an ETH MSTR now that just bought half a billion. I don't want to like focus too heavy on here, but it is worth sharing like we talked about this a few weeks ago that I think we're going to see more and more opportunists because you're going to look at just like the higher beta play, right? If you can get like an altcoin that's super illquid and then you can put it into another illquid spack or merge and then get it, you're going to be able to sell that story to a lot of institutional investors that don't get that Bitcoin is the dominant player. But like I will say though this this specific one is like the Joe Luben I think is who's doing this like that's that's very different than the president of the United States embracing Bitcoin for a treasury store. Well but the but the think about like Bitcoin has a fiveyear plus head start meaning like trailer sailor started this in 2020. So if this is this is could potentially be a trend of a or a grow a start of a growing trend where you needed somebody to to you know with conviction I guess lo Luben because he holds the majority of the free mind or whatever has conviction but that's what but that's what Ethereum will always was it was how do you create lock in for people to like absorb a lot of that float so it doesn't move i.e. versus Bitcoin that's super liquid. But either way, forget about like the altcoins. Like that's I think the two things because I know this all sounds cynical or at least personally feel cynical because I always bring it up and I feel like even internally it's like you know like it might be good for Bitcoin. It's like two things to recognize. One is it's a trade. So Bitcoin there's a whole show. It's really good. You should check it out. It's called the last trade. It's meant you know where you buy Bitcoin. You don't have to worry about it. You get to go back to your life. So there's that. If you're buying any of this stuff, you're ultimately trading it. But there's a more philosophical perspective that is important and nobody can refute this and I happily happily debate or talk about it is at the end of the day all these products are taking advantage of the naive of the individual whether it's the institution that they'll sell can get exposure all the way to the individual. And what I mean by that is because anybody that's listening to this has had to got has had to have gone down the rabbit hole and is educated. And as they get educated, they ultimately want spot bitcoin, more than likely in a segregated wallet offline so it's protected. So if you're an institution coming in that is theoretically uneducated and this is how you get proxy exposure or you're an individual ultimately you're going to wake up and realize, oh my god, how are they custodying it? Why am I don't have deliver? I have counterparty risk. I have execution risk. I have all these things under the sun and then you're not going to want it and then whatever goes up has to come down. So, it's just like that's just fundamental all the way from a sovereign buying micro strategy shares. Eventually, they're going to get to a certain point. It's like this isn't good for me. Um, and I don't think anybody talks about that enough. That's just like first principles thinking on the underlying and then who's actually managing it all. Yeah, great points. And I I would also add like I think the there's an undercurrent here of if you are assuming that every single one of these specs call it an ICO call whatever you want that they're all going to be successful the underlying assumption there is that like there's no cycles anymore and like we're just going up forever and there's always going to be a bid and there's not going to be some material correction where if a lot of these companies are overlevered or you know o over their skis in some manner that there would be a massive deleveraging for a lot of these folks. Um, and so I think that's sort of an underlying uh assumption that some are making that like maybe there's just no cycles and there's a forever bid for Bitcoin going forward. And you know what I well real quick, sorry. What I love about that is there's still a huge pothole in that logic because two things are going to happen. One is it is it is uh in um it is not I got it very early. We had some calls with the central banks in other other parts of the world. So, my brain's not fully there, but it it'll get here. Is it is not um you're not being truthful with yourself if you don't count what I'm about to say as a likely u thing that will happen is somebody's going to lose the private keys to corporate treasury. Like, just full stop. Whether it's whoever their custodian is or the one that nobody's talking about, these are some lovely jurisdictions that are launching these treasury strategies, is the government comes and seizes it for whatever reason. And when that happens, everyone's going to look at these assets and they're gonna like, "Oh [ __ ] can that happen to me?" It's the same thing that happened in 21 and 22, specifically 22 and the market delever, and it's like correlation of one, everyone freaks out and removes the assets. So what happened in that point when you get that reflexivity in the market when people are moving or selling those shares and then they can't make their obligations there's still like even if it were up and to the right I think we're in a you know a secular bull trend because this is only goes up into the right it's just at what time horizon but I think that's something that people aren't accounting for is the execution risk around the underlying custodian and it's not even that your custodian goes down because everyone doesn't believe theirs it's that when one goes down and then what happens to the outflow those and then what happens to that downward pressure and then everyone's going to wake up and be like, "How did we not see this coming?" And we'll just be able to look back at these um podcasts. Yeah. Yeah. The the jurisdictional piece is important and and not being talked about at all. But like, yeah, the the idea that every country should have a Bitcoin treasury strategy. It's like, okay, well, every country in the world doesn't have the same rule of law or respect for um you know, a public company operating that the United States does. And like, yeah, we're in this kind of crazy spot where like the president of the United States is is implementing the exact strategy that we're talking about with his own public company, but that's just not the case everywhere else. And so, yeah, I I I totally agree, Michael. that sort of knock-on effect if something like that were to happen would be severe because then everyone looks in the mirror and says, "Well, what's who are my counterparties and what's the risk there and and what's the the likelihood that they one have the coins and two that they're not going to be confiscated or lost in some manner, sorry, that's exactly right. I was just going to say to to some of their credit I'm uh some of the debt is unsecured so they can't necessarily um default on it but to Brian's point earlier people don't necessarily see that if you're not Micro Strategy or you know top one five holders you have to differentiate somehow you're going to take out uh debt that is you know you have to pay it back it's not going to be convertible there's just going to be different ways that you have to differentiate yourself if you don't necessarily aren't run by a Trump or brand uh Bitcoin influencer and so it will get more nefarious uh across these different companies as well. And how about this because I'm not going to say it about the US but how about this is how it turns out is if you speculative attack your local currency using the debt markets and your debt is unsustainable. Let's call Japan as an example. What is the likelihood scenario as that reflexivity grows up until the rate for the government to say, "Hey, you actually access these markets. You arbitrage them. That's our Bitcoin. We'll give you dollars." No, I'm serious. Like that's a plausible like the government has to do it or they're going to uh the government has to take their debt and buy Bitcoin themselves. Otherwise, they're going to sec uh take the companies that do either through really nefarious taxes or just, you know, seize it themselves and, you know, say this is, hey, this is you just seated our, you know, uh, sovereign wealth fund. Yeah. And that and that actually again, let's isolate the US and our capital and legal structure because everyone will say that that's crazy. But if you look at like Japan is the easiest example to your point. If you speculative attack their currency, which is what this is, which is what everyone knows it is, and they have an unsustainable structure and their currency is going to hyperinflate unless they're able to back it um with a harder asset, that is a logical way that they would be able to explain it and then give everyone at par their dollars or whatever it looks like. And honestly, like I think that's where this all goes. And and and you know what's funny is when you talk to sophisticated people that are buying these MSTR shares and other things, they're all like, "Yeah, that's probably going to happen, but I'm going to get out before then." Or like get made whole. Everyone thinks they're going to they're going to complete the trade as we mentioned uh before anything goes wrong, which is just never the case. Um someone gets left holding the bag. Um, okay. I want to transition slightly to uh this clip of of Chimath from the all-in pod uh a few days ago and he's talking about the this the big beautiful spending bill that is currently going through Congress. Um, and effectively I think I'm going to play the longer clip because it's let me know if you guys can hear this. Unfortunately, for President Trump's agenda and for a MAGA movement, this is the worst of all conditions. The financial markets will punish this. The political calculus will be for the president to decide how much credit he actually wants to take for this bill. Because even though it has his name on it, the contents of the bill are different in actual facts than what I think he intended. And what I mean by that is when you look inside of what happened in the 11th hour last night, it's disappointing. This thing is like anti-D Doge. If Doge was meant to be a reflection of the American voting population's desire for meaningful reform in government, cost controls, some form of austerity, and to get this debt spiral in check. This is the opposite of that. What happened was in the 11th hour, you had a handful of people abstain. You had one person that passed away in the last few days. You had one person that fell asleep on the floor of the house. So, he wasn't even woken up for the vote. And in the middle of all of that chaos, what happened was all kinds of things were added and attached and cancelled at the last minute. Because what happens is you have to have these puts and takes as Freeberg described. If you want to spend over here, you have to find a cut over there. But I think what happened was there was really not a lot of financial literacy used to decide what to actually put in and what to cut. And that lack of discipline is going to create I think a negative set of consequences. So what are those consequences? Today the tenure is around 4.5%. At the rate in which it's escalating since liberation day by the end of this year we're going to be past 5%. The 30 year is on a rate now to get past 6 and a quarter maybe even reach 6 and a half%. Those are way beyond what most people thought was a reasonable place to be for the United States economy. And so what will the implications be as rates go to those levels? You'll delever from the United States. You'll sell US debt. You'll own things like gold and Bitcoin. If you're curious about what's happening to gold and Bitcoin, they started to spike in the last few days, you'll have ratings organizations that add to this cascade by downgrading the United States. That happened on Friday. You'll have very smart people starting to signal that this is a much harder problem than they initially thought. That's how I personally Thanks, Brian. Uh, I had to put you on mute because it was echoing. Um, but thanks Brian for having audience listen to All Podcast via Final Settlement. That was the longest audio clip ever. You're on mute. I had to put you on mute because there was an echo. Sorry, that was a lot of Chimath. I agree. Uh but there was a lot of good things to pull out of that and and I think the the things that stood out to me um are one like Chimath and others have been massive cheerleaders of everything that Trump has done over the past 6 to 12 months. This is a slight departure from that where he's saying he's kind of giving him an out and being like, "Oh, I don't think he knew that this was going to happen to the bill." And he maybe ends up not taking credit for it because it's pretty much in the opposite of everything that he ran on in terms of actually um cutting into spending and and you know uh attempting to reduce the deficit with programs like Doge, which um at this point seem like they've sort of been abandoned. Um and so lots of things got added to this bill in sort of the 11th hour last week. Um and I think I've seen a few different numbers, but basically it sounds like this would add 2 to three trillion to the deficit over the next decade. Um and so it's it's a long way of saying like we've kind of known this nothing stops this train. they have to print, they have to spend. Um, and he mentions in there, this is why you're seeing people want to to own hard hard assets, gold and Bitcoin. And so, I think this was just worth calling out. Sorry for the long clip, Michael. I know I know you're uh it's it's all good. I think this kind of further supports, we've talked about this for a few years on the last trade and there's been a debate on how smart these guys are. At the end of the day, I think like, you know, maybe not Calcanis and even Freeberg, but some of these other guys are insanely smart and they have to speak the language to their LPs and their investor base. And so, Chimath has called this since 12, I think 2012, 13, Bitcoin schmuck insurance. He's understood where this all goes. He didn't talk about the government debt problem. Now he's in a position where Bitcoin and gold are a trade. That makes sense. He's talking about rolling up some other fun to fund stuff like I think this plays into the to the more of the narrative that is palatable for him and it's similar to the conversation we just had about um you know there's this understanding that in the Bitcoin space as the Bitcoin price rises they'll like blame the people that were Bitcoin investors for whatever you know hyperinflation. I don't know if that's the case but it's very similar to what we'll see in the debt structure. If everyone's at accessing the debt to buy Bitcoin and there's all this stuff, they're not going to remember the 50 years of, you know, fiscal responsibility, they're going to remember the past five years or three years of all these people arbitrageing the debt markets to buy Bitcoin. And so I think this just ties into like narratives versus reality because the last thing I'll share is like Luke Gman was explaining this the whole time that Yep. they weren't going to be able to cut as deep as he explained. It was more of a vibe shift more than anything that Doge was because from a tax receipt perspective, you wouldn't be able to actually meet the obligations and it was going to cut until either they were incompetent or the market pushed back and then they would naturally have to step in and reduce it. So I think this all plays into like what are you what people are saying versus like what's happening behind the scenes. It was all just like a campaign strategy really of just like saying we're to cut the debt and deficit and at the end of the day it's really up to Congress what the debt and deficit end up looking like. None of them really have any big desire to cut the deficit because you know that significantly hurts their reelection chances and so they're not going to do that at all. Um I think it was kind of just a narrative thing and you know at the end of the day Trump has always run massive deficits as well. Um Elon has been very very quiet about all the politics stuff over the past like two or three months. Uh probably since like tariffs kind of first started off. That's likely due to Dodge not having as much of an impact as expected. He I think kind of came out over the past week and said, "Hey, like I'm going to focus a lot less on campaign donations in the future. Uh we need to grow our way out of this debt." there was not really any spending cuts in there. Um Scott Besson was uh originally came out and said we're going to get like deficit to GDP down to like 3%. Uh he's pushed that back. And like the whole narrative from everybody inside the administration is just we need to grow faster than uh our debt in order to get this out of this situation. which just means that inflation will need to be you know kind of what it is now mildly hot for a sustained period of time as or um there would need to be massive uh appreciation in assets so they can get significantly higher uh tax receipts from um capital gains taxes. I don't see any massive tax shifts and it's just going to be more of what we continue to see which is just you know people that have hard assets being able to uh significantly outperform those who who do not unfortunately. Yep. That's well said. I think it's um yeah, the Bessant Bessant had an interview last week which um sort of you know tacically admitted all of this as well of like yeah we're kind of uh we're kind of giving up on on the initial goals here and we're just going to have to nominally grow our way out of this which means they're going to continue to debase the currency effectively. So, um, you know, it it ties into everything like you mentioned, Michael, that that Groman has been saying for for months to a year, um, around they kind of they kind of understand this and they know that they need to embrace hard assets on one hand while also embracing things like stable coins to continue to sort of kick the can down the road of of filling the hole for uh, long-term government debt via these stable coin issuers. So, I think it's it's, you know, that plan that we've kind of been talking about for months is kind of coming more into the picture now as uh people grapple with the reality of the situation on the ground. Um, okay. Do we want to go to uh the sailor clip? I won't play the whole thing, Michael, because I know you Well, I mean, we can because I haven't heard it, but maybe we'll for that. Uh I wanted to pull this up because um I don't even think I'll get most of them, but we'll do five and they'll be uh they'll be pretty big. So, for anybody listening, I'm just going to pull up a few clips that have come up in the past. call it 48 to 72 hours because I think this ties into the the some of the rest of the conversation and the thing that nobody's really talking about. We all know, you know, custody risk when it comes to third parties exchanges, but then thinking about um just the notion of, you know, self-custody and ultimately what has been deemed as okay, you know, for a Bitcoin price of a hundred bucks, $1,000, 10,000 is starting to very much not be okay at 100,000 and beyond. So the first clip, this is CNBC Bitcoin Rico. Feds say 260 million $65 million crypto theft ring blue 13 million on exotic cars, nightclubs. Um, so this is prosecutors have charged 13 men stealing about 265 million. This next one is uh crypto investor allegedly tortured captive Italian businessman with a chainsaw for Greeks and Lux NYC pad and sadistic scheme to gain password. Again, these are all within the past uh two days. US uh this is on Cointelegraph. US tourist drugged by fake Uber driver and robbed of 123,000 dollars in Bitcoin. Uh this last one is less on the physical. This is more fishing. Minnesota man clicks fishing email opens Coinbase and watch Bitcoin vanish in real time. And then the most this one is a little bit longer about seven days. Uh it's a whole Wall Street Journal oped uh severed or I don't even know if it's oped. I guess this is done by their columnist. Um, but the title severed fingers and wrench attacks rattle the crypto elite. And then it breaks down at least five to seven um, you know, examples of things that have been outside of the ones we just called. And the main reason for calling all this out is um, all the data is out there. We've talked about it before. We made a joke yesterday in a group chat that, you know, folks were updating images on uh, Twitter of like groups in the family office or high net worth, whatever's happening in Vegas yesterday. And it's kind of like crazy because I'm pretty sure this exists today and if it doesn't, it'll exist very shortly. Is you can upload that picture and then effectively be able to search and index images, names, addresses, and people think this is crazy, but between chain analysis and then all the data that's been leaked by all these exchanges, you can pretty much discern directionally the amount of crypto holdings somebody has. And this is just a recipe for a lot of like pain and misery over the course of the next three to five years because there really isn't a solution or hadn't been a solution for a digital bearer asset. And how do you protect an individual from third party uh exposure via an exchange but also not having to have this asset in your house or next to your house uh in self custody. So just worth calling out because this is something that's just going to increase. We've been talking about it a lot. Um, and it's something for folks to be aware of because if even if you're an individual, which generally, you know, Bitcoin adoptions via males in the age of 35 to 55, it's not even about that individual anymore. It's about their friends and family and they're where they're exposed. I had a call with a significant um client that was on Coinbase for 9 years. Knew he needed to get it off the exchange, but reference like I thought it was always better there than if it in self custody had a higher likelihood. And I brought up uh you know, did you see this article about the severed fingers? And he's like, "God, I did see that. That's why we're having this conversation. I hope to God my wife doesn't see it because his wife's going to kill him if he put you know, their children, their family in that position." And so, yeah, just a long-winded way of explaining to be aware of the risks because they're coming if they're at 100K right now happening. Just imagine what 200k or $150,000 Bitcoin looks like. Yeah, unfortunately, it's only going to ramp up as the price and, you know, bad people see those articles as well and just kind of see a honeypot there and understand and are getting significantly more sophisticated over time. uh would caution anybody in Las Vegas to you know keep their wits about them, not get too drunk uh at any of the events. I think that's good practice uh regardless, but especially if you have uh you know a significant amount of your money in Bitcoin uh you know probably don't talk about your custody setup uh if it's unsecure and and just really think about uh you know how you want to mitigate the risk for not only yourself but it's going to be ultimately if if you have any loved ones they're really the biggest single point of failure. Yeah and we we have talked about this a lot. it's going to accelerate. And um you know, one aspect of this that we've we've also mentioned is like this this kind of stuff is what keeps people out. This is what creates the friction to adopt Bitcoin in general because you know when a lot of these headlines were breaking over the weekend, you know, I was with a group of quote unquote normies and they were bringing it up to me like did you see these headlines? I was like yeah like this is a bare asset. this is why this is actually you know kind of you know relates to the company I work for and in in trying to mitigate these things from from being uh possible and uh so this is this is permeating into the mainstream and that's I think historically you know why people have struggled to get comfortable in adopting the asset because they either think they're going to get wrench attacked or it ends up in a landfill is this sort of the two uh the two tropes that they hear the most. And so, you know, it it makes it much more difficult. You know, learning about Bitcoin and going down the rabbit hole is hard enough. And then when you see these things, it just it puts up a natural blocker to say like, I I don't want to even go down that road or deal with that because it seems really dangerous and risky. And so, we unfortunately, it's going to keep happening, but we need to keep talking about it and keep talking about solutions that mitigate these things. uh because that's the only way that we're going to sort of, you know, allow adoption to proliferate in a in a safer, more resilient way. Yeah. Yeah. I think we'll cover a little bit more in the MIC stuff, but um I think it's just something Yeah. to be aware of. I think the only thing maybe to add is historically we talked about this internally but it weren't as loud about it because it it sounded selferving or that we were talking our book but the but we knew that these things were happening because for everyone that that you know is public there's anywhere between 10 to 100 that happened that somebody doesn't report either because they're embarrassed they don't want to be a future attack um u you know known that they have crypto and that they'll give it up if they're kidnapped and so but it's becoming so prevalent and most people aren't sharing this with them. Like that's one of the core things that I think we anchor towards as far as a lot of folks will ask what's different about On-Ramp versus other firms. And there's a lot of things, but I don't some things can be commoditized. The thing you can't commoditize is forward-looking nature and philosophical understanding of this space. And the thing I joke about is like we understand this space so deeply, we never put you in harm's way for this to happen. And so that's something just to be aware of. If you're exposed to these things, you should question who your counterparty or who who's not telling you about this because everyone talks their book. If they have a hardware device manufacturer, they'll explain why hardware device is the best. If you're collaborative custody, they'll explain that. Multi-institution will explain why that is a has a great part in the market. But the reality is you have to start to look at the uh objective truths and where you fit in your risk profile and what could potentially happen and and and think critically of like what is best suited for the individual. at 100K, 200K and a million dollars and beyond and really think about that and that's when the inheritance and all the stuff um you know comes into play. Absolutely. All right, we want to go to the go to the sailor clip for a minute. Let's do it. All right, let me pull that up. Before you pull it up, share how big your MSDR bags are. If you're fish, if you're showing sailor, he must My personal bags are non-existent. Um, okay. You might go want to go on mute. Let me follow point. A lot of people learn stuff from FTF and mouth gods, but I'm not sure they learned the things that the institutional community needs to learn going forward. Um the way the current conventional way to publish proof of reserves is an insecure proof of reserves. It actually it actually dilutes the security of the issuer, the custodians, the exchanges, and the investors. It's not a good idea. It's a bad idea. It's like publishing the address and and the bank accounts of all your kids and your phone numbers of all your kids and then thinking somehow that makes your family better. It doesn't make your family better. So no institutional grade or enterprise security analyst would think it's a good idea to publish all of the wallet addresses such that you can be traced back and forth and every future transaction can be traced. I was like go to AI put it in deep think mode and then ask it what are the security problems of publishing your wallet addresses and how might they undermine the security of the company over time. It'll write you a book. it'll be 50 pages of security problems. So, so the problem with uh proof of reserves the way that people do it right now is it's it's first of all it's a proof of assets that is insecure and it is not a proof of liabilities. And so if you're if you really want crypto security and you're a maxi about this, my suggestion is buy Bitcoin, self-custody your Bitcoin. It's pretty freaking obvious, right? You should own the Bitcoin yourself if that's what you want. If you're going to be a securities investor, okay? If you if you invest in securities, what you want is an institutional grade proof of assets and proof of liabilities with them netted out. Okay? And the best practice of that is not to publish the wallet. The best practice of that would be have a big four auditor that does an audit that checks to make sure that you actually have uh the bitcoin. And then you also have to check to make sure the company hasn't rehypothecated or pledged the bitcoin or or entered into any debt or credit obligations where the bitcoin is pledged. And you have to net those out and you have to publish those and you have to sign them as the big four firm. Then you have to wash it through a public company where the CFO signs then the CEO signs then the chairman and all the outside directors are civily and criminally liable for it. And so if you really want the best practice for securities attestation, it would be a public company with a big four auditor with an audit subject to Sarbain Oxley in the United States. That's what my company is. It's much better than simply a proof of reserves uh wallet. At some point, I would say I I can see implementing some kind of proof of reserves if you can come. Stop it there. It's a long clip. Won't play the whole thing. But the gist of it, the original question that was prompted from the audience was, you know, will Micro Strategy ever publish a proof of reserves uh at the station like we've seen some of the ETF ETF issuers do to date? I think there's a few interesting things to pull out of here. I would say he's totally right on the component of, you know, uh proof of reserves is an incomplete picture. uh if you don't have proof of liabilities then it's kind of uh you know worthless in some sense and so on that point I would totally agree with his stance. I think the other component of what he's saying is for a securitized version of Bitcoin exposure within a public company like what you actually want is just you know a big four auditing firm to do the at station themselves and say this is how much Bitcoin they have this is how much liabilities they have net it out and that's sort of your financial picture and you just trust that they're doing enough due diligence on the actual underlying custody and saying it's it's you know secure I think where his you know I think the the interesting part that people are talking about are you know pulling out of this are saying you know effectively why wouldn't you know what is the security risk of just publishing the addresses because we've seen Bitwise ETF do this a few others of you know publishing the address where the Bitcoin sits now he seems to be saying that that is a security risk because it you know I guess then becomes a larger target. But, you know, if if if the if the wallet address is known, that in and of itself isn't necessarily the where the breach occurs. It's like, okay, if it's within a specific custodian, that's where you begin to have a single point of failure, right? So, if like if something goes wrong at that entity, then something could go wrong with the Bitcoin. But I guess what he's trying to say is like his fear stems from highlighting where that single point of failure lies. Is that is that kind of your understanding of this? Michael, I'm curious your thoughts because I I know you hadn't seen the clip, but like I think that's where what he's getting at is like why would I highlight where a potential single point of failure is? Yeah. I mean, I think it's it's coherently incoherent. Uh like Michael Sailor is really sharp. There's a lot that he said that he helps conflate together to mask like a few things. One is ultimately I think it just comes down to optionality. if he doesn't have to provide proof of reserves, he he just has future optionality to do other things with the asset. Um the I think it's obviously untrue from a security perspective from the blockchain protocol if the wallet's doxed. Obviously, you can get some like spam. We saw this with the proof reserve a bit wise where people are depositing tokens but uh bitcoin um but from a there's only so many custodians in the world and I think it's pretty much understood it's either fidelity or coinbased or some mixture of that um that sailor uses. Now, I think what he went in that long rant on the audit is anybody listening to that would look at that and be like, "Sure, maybe you can pull that off, but that sounds insanely um uh convoluted and how you would net out, manage, get audited, and still have to trust a big four auditor." And then there's no there's a laundry list of um fraud and and and I think the one that came was like 2019. There was a big one I think out of either Asia Pacific or US Credit Wire or something. What he was alluding to was that's what you would want in a securitized version of Bitcoin because an ETF is fundamentally different which should have inherent proof of reserves because that's what you're buying. So you want to know those assets and there should be no liabilities or that outside of the management structure and fees. So that kind of further supports why it's like in a long tale make zero sense why you would want securitized exposure because all that convoluted like what's the angle in accretiveness you're you're that's risk embedded into that cost structure versus just buying it. So I'll pause there. Does that make sense? Because then like we can go into the ETF. Um but anything you want to add on that side? Go ahead. I I think um you you hit the nail on the head. They have said that they want to be, you know, the Bitcoin bank of the future and that means lending out their Bitcoin. And so if they do that, they ultimately don't necessarily want everybody to understand how much Bitcoin they have versus how much they don't because there could be a quote unquote bank run on um you know, strategy. Um, I also think it has a lot to do with how their end custodian, if let's just say it's Coinbase, it's uh understood kind of from the outside that they have a number of different wallets that are algorithmically, you know, done in order to put uh a you know, specific number of Bitcoin across like different wallets. Uh that would dox how their custodians are managing their uh own, you know, wallet. Um but ultimately, yeah, it's just it doesn't necessarily I think that the investors are fine with it. And so until they're not, um then you can kind of just get away with having to do as little as possible in terms of their proof of reserves. Yeah. And this is ultimately that's those are great points and this ultimately goes to why we've been doing these podcasts banging the drums for multiple years around multi-institution and will continue to as the market slowly wakes up because at the end of the day just like Bitcoin is the best product and nobody cares if you can pitch Bitcoin correctly or not because the market will adopt it. It's it's because it's about self-preservation is the same way everyone from an individual to sovereigns and micro strategy in the middle will eventually adopt multi-institution because their shareholders won't allow it. That's the thing he didn't account for is if you're running a security that means that you have beholden to shareholders. it's not really your Bitcoin and you have to manage it as a fiduciary and it's actually um it's not going to be deemed as credible if you do not leverage something that has inherent proof of reserve. So like let's take a step back. I think there's two really important themes that again you don't hear this publicly because nobody's incentivized to explain it but one you're not getting rid of KYC. It makes zero sense because you need to establish and this goes back to the the um more self side of things when it came to all the different uh factors around risk and um uh injury and and personal harm is you'll hear people conflate KYC as the problem but you can't get rid of KYC because of whether it's titling inheritance and all the other issues when it comes to we're not getting rid of bank secrecy if we are bank secrecy act if we are it still requires some understanding of who the owner is. So you need better market structure. You need better. You don't get rid of KYC for your Amazon shares. You want to know who owns them. You just have a better controls in place. That's what multi- institution provides. The other side of that is proof of reserves is like a fallacy built into what people are trying to achieve in that. Oh, so I can prove it on the blockchain. Well, yes, there's the liability aspect. Um, but I I'm pretty confident you can gleam a company's understanding and you can probably get some other accounting uh audits to support and tell a whole picture. But the other thing that nobody talks about is you can have proven reserves of a single custodian one day and be fully compliant and be everything on the books correct, but the next day if they're hacked or somebody goes rogue at the firm, you lose all the assets. And then what was the point in providing the proof of reserves? And that's the whole notion of multi-institution. Whether it's two of three, three of five, five of seven, it scales proportionally to the amount of assets. But it's for the first time you have a wallet that has provenence not only tied to one entity saying this is who the title holder is. There's three independent institutions that are all saying this title wallet is yours. Um, but then also it's inherent to the underlying proof of reserves because those assets are all on the blockchain and they're provable. And so this is again something that will become a standard just because again when we talk about this deleveraging that will happen naturally in the in the Bitcoin treasury aspect when somebody loses the assets or somebody's hacked or somebody's insolvent then the market will start to naturally ask for this because why would you just it's just logical why would you you know give somebody your hard-earned capital if you have no idea where the Bitcoin store and he he goes into later to say uh there were lessons learned from FTX Mount Gosh, but you know the people learned the wrong lessons and the lesson should be don't work with offshore exchanges run by like childish tweakers. Um and he conveniently left out that BlockFi and Celsius and all those other ones prime trust prime trust and and fortress were regulated qualified custodians. there were US uh custodians that went under as well and he's saying you know you he's essentially implying that you can have some level of trust in US regulated custodians but you know ultimately this whole thing is about you don't necessarily need to trust any single institution because you can have three or five you can see the Bitcoin address segregated in your own wallet and so uh that's ultimately where you know every custodian who ultimately doesn't work in an MIC quorum is is going to go out of business and every um Bitcoin treasury company that doesn't show this or or they don't even necessarily need to share their addresses with their investors. But if they don't necessarily show that they have MIC, it will ultimately um you know the the shareholders will move to those uh other Bitcoin treasury companies that do as they become more informed about the risks of you know working with a single custodian. Yeah. Yeah. and and it seems wild but you know that there isn't this recognition of of the risks of a single custodian given you know the past 16 years but it does seem like Michael to your point like it's going to take another something breaking somebody losing keys a jurisdiction seizing assets that it will remind the entire market that there's there's real risk in trusting a single entity with custody of this asset and there is now a way to distribute distribute that counterpart party risk so that you actually have fault tolerance in your setup and real resilience. Um, so that's a nice little transition to uh we wanted to talk about some research that Early Writers put out. This is a multi-part series on multi-institution custody and why we believe it is sort of winner take all. Um Leah, maybe if you want to give like an intro, I'll pull up part one right now. This is a multi-part series that we're going to be putting out from Early Riders. Yeah. uh kind of just taking a step back over the past h 100red years c custody hasn't been important because it's been an asset that essentially you don't need to take uh custody of you can always print more digital dollars and if you lose them there is insurance on them up to a certain amount uh they showed with SBB that they will essentially cover any too big to fail custodians or uh of assets and that's fundamentally different than you know where we were for the past 100 years prior to that as well as where we are now with both gold and physical uh digital bearer assets. You know anybody could take custody of gold but there was always somebody bigger and stronger who can come to your house and take it from you. Uh the same thing is true with Bitcoin except for that it's actually even more valuable because it can be distributed across multiple parties with multisig. Um and so that means you know one we've been able to sidestep some of the challenges of gold within the first let's say uh 16 or so years with you know people holding uh Bitcoin in with their private keys either in self custody multi-IG or uh collaborative custody across different jurisdictions and um you know some people have that's still not without the inherent risk of you know somebody bigger and stronger are coming to your house and taking it from you. But ultimately that's what's going to happen whether it's a government or these bad people who come and and uh you know cut people's fingers off. Just you know we we brought up the five other slides earlier on. Um and ultimately this this whole thing is going towards uh every company that doesn't in uh work with multi-institution custody that is financial service provider whether it's a buy sell on-ramp um you know a custodian who you want to work with for the next 100 plus years uh lender any kind of party that you want to work with you you you really need to be able to have your Bitcoin for the long term if we keep on talking about how uh this asset is going to be worth you know maybe even 50% of all assets in the future and in order to get there there's going to need to be or you're if you're a financial service firm you're going to need to either work with MIC or um you know you will ultimately lose the customers as they become more aware of all of these risks. Yeah, it's a great recap. I think um this is the second part we'll cover and if I forget how many parts they ultimately got split up into but the reality is we were initially going to put it out as one piece and then thought to do it justice we'll piece it out and then talk about it certain portion on the podcast um to to make it a little bit more concrete like at the end of the day Bitcoin is a new asset Liam Keon on it's different than gold. Um so the self-custody component while valuable was uh predominant when the price was lower because there wasn't as much knowledge in the market. People steal from people's houses for much less than a Rolex watch. And so to think that hundreds of thousands if not millions of dollars are going to be on our person, we're going to be open to risk. Um, and so now like just breaking down three key components because what Liam's sharing is that multi institutions win or take all from the individual all the way to the institution from the individual the three that are very easy to walk through and we can walk through a lot of them over the course of the next you know couple weeks but custody inheritance and IAS because you can say those are all objectively true it's not to say multi-institution should take over the 100% of everyone's uh custody holdings or bill um it's to say that for a large percentage you do not want to have that on your person and have you yourself at the single point of failure in the same way you can have a third party uh individual you know custody is the bedrock for all financial services. So now when you start thinking about some of the most you know uh obvious examples is inheritance is a very critical one people preserve their wealth so they can pass it on. Well if you leave it on a third party exchange we all know that those probably don't outlive you but then also if you leave it on a hardware device not only will the hardware device definitely not outlive you because of they just suffer from bit rot. They're pieces of technology but ultimately you're left at best creating a treasure map for your family. These are all objectively true. They're not like, you know, theoretical examples. The other one is IAS. IAS is a great one because that's meant to live into the future, whether it's 10 to 30 years. Historically, exchanges and custodians haven't lived that long and then definitely devices don't. And that brings up that issue. On the other side of it, just to further support, you know, on the business side, it's a thing that we fundamentally look at when we're investing in companies, whether it's, you know, on-ramp as well as other companies building a multi-institution, is at the end of the day, it's just a better business model. Not only does it allow you to have a more robust offering to offer services to a majority or a larger part of the market, specifically high net worths, because when they buy larger amounts, they're not going to want to take delivery of all that. But it also from a pure investment perspective gives the exchange or the financial service firm better unit economics because now they're not trying to fight for every net new client. They're able to have reoccurring um a re reoccurring predictable revenue. So they can build not only other financial services, reduce the cost that would traditionally be on like the brokerage and the buy sell side, but then also just have uh closeness and stickiness with the client to build other financial products. This is something you just don't see in the market today. You generally see it fragmented and somebody's offering collaborative custody, which is practically like free, which is a not necessarily the best long-term model if you're hoping they're going to be around. or you have the alternative where you have a Bitcoin brokerage, but they're constantly having to fight for net new clients. And that's worked because the Bitcoin total addressable market has been relatively small. But as the market gets further and further penetrated, you're going to naturally need to uh differentiate. And so that's the idea behind the winner take all is uh and that's not even accounting for the ETFs and treasury where the market's just naturally going to gravitate to the most um robust offering that protects their investment. Yeah. Yeah. And um one thing worth calling out too is that if people are just told, hey, take this off the exchange, not your keys, not your coins, you're inherently going to limit how much business you can do. Because people get uncomfortable when they hear stories about, you know, people's fingers being chopped off and don't want to keep on buying this Bitcoin and storing it in their house because they're already uncomfortable. Um and yeah, as Michael mentioned, this is going to go across all different um you know, financial service providers and uh should be some uh going to pre-announce a pre-announcement of you know, some interesting uh announcements that should come out of the early rider side about, you know, other ways to uh use MIC moving forward and um you know would encourage any other founders interested in this to reach out as well. Yep. Very well said, Michael. Maybe you want to walk through like um just like a practical example of the financial services that get built on this more resilient foundation. So maybe if you just want to like touch on lending markets for example and how mic is ultimately winner or take all for that type of financial service built on Bitcoin as well. Yeah, lending's the the prime example because um we've seen it done in a different iteration where the keys are segregated at my previous firm and we're the only retail lender left standing kind of without ever suffering a loan loss. If you go to the market, even some of the players that are still existing that uh were around during BlockFi and FTX and Celsius, they took significant hits and almost went under. And um if if I joke internally or when we're on calls, if you ever want to know like hell on earth is having a margin uh like a loan out and getting margin called um as you know naturally the market's volatile and you not knowing if your counterparty if you do a Bitcoin back loan with a single entity not knowing if your counterparty is going to be solvent. So you're depositing BTC because you need to or you're going to get uh liquidated. So your precious Bitcoin potentially is going to be sold off, but you also are sending more precious Bitcoin into that custodial solution, not knowing if there are still solvent and you're ever going to see it. And so multi institution is a great example of this because now you have three independent different key holders managing that collateral um needing to work on behalf of the client not only to manage the collateral but make sure that the um Bitcoin is safely guarded and distributions are made. But you can see how over time as more volatility, you know, loan to values compress because people get more uh competitive, there's going to be, you know, just a higher risk appetite which will incur more losses that the market starts to really coales around a a more bulletproof resilient uh foundation for for lending. And then what indirectly this happens is very similar. We'll sh save it for a different conversation, but on round insurance and how we're able to get our $100 million Lloyds of London policy is because they're isolated segregated wallets and not omnibus, you're able to start credibly now bringing more and more dollars into the ecosystem at lower rates because if you think about it from a lender perspective, it gets a lot of slack. But the reason why lending rates are so high in Bitcoin is because it's private capital. uh institutional capital has generally not been here. And it's simple because if institutional capital deemed Bitcoin back loans as known risky, even though everyone listening here knows they're not and Bitcoin's pristine collateral, think about it. The the asset price would be much higher because institutions would have just bought the Bitcoin because if they understand Bitcoin's keer versus the loan loans. So you have to force dollars out of private capital's hands and uh reward them for that risk. But over time as that starts to you know proliferate more people know about Bitcoin and especially institutional capital comes in well now they're going to look at well what's the riskiness of the underlying where is a custody and so you can see how that naturally drives down prices as well. Um and so it's like a marketplace structure right you need more people demanding better loans and more credible uh lending constructs but then institutional capital will feel more confident in there. So we have some exciting announcements on that space and like Liam said um also just global on-ramps that will be leveraging multi-institution to it's I don't even know if it's out compete but I guess it is I just don't think multi institution competes with single custodial exchanges because once the market's educated they naturally don't go back to those entities unless it's for like you know friendly money to just buy a little bit of Bitcoin and then move it off into multi-institution because there's no reason to trust a single institution after multi-institution uh custody exists. Very well said. And as mentioned, this is a multi-part series. So, we'll have um the next iterations, the next uh parts of the series coming out over the next few weeks. And uh we'll continue to touch on touch on them here on the show, and we'll link to these first two parts in the show notes. Uh anything else before we wrap, boys? A great rip. Uh well, if anybody's listening to this before last trade, we'll probably pick up on last trade on everything happening uh this week during the conference and talking about it in real time. So, um yeah, we'll try to get this one out for people traveling to the conference and then if you're around, we'll we'll be talking about it. If you're not at the conference, this will be your recap uh to hear in real time while everyone's having fun. All righty. Sounds good. Thanks, boys. Thanks. Later. 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 Onra Media is forformational 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/cont to schedule a consultation with one of our private client adviserss.