Latest / What Bitcoin Did / The $1 Trillion Bitcoin Loan Market Is Coming | Mauricio Di Bartolomeo

Transcript

The $1 Trillion Bitcoin Loan Market Is Coming | Mauricio Di Bartolomeo · What Bitcoin Did

• 0:00
  We believe and we estimate that in not too long, five to 10 years, there's going to be
• 0:07
  a trillion dollars worth of Bitcoin backed loans out there.
• 0:10
  We need to know where you're going to get a trillion dollars.
• 0:12
  There's no balance sheet in the world that can cough up a trillion dollars.
• 0:16
  We were the first company to ever do this.
• 0:18
  It is the first time S&P has ever rated a Bitcoin product.
• 0:21
  And it's the first time that it's given an investment rate rating to a Bitcoin product.
• 0:25
  This is the first true, in my opinion, Bitcoin credit instrument.
• 0:32
  There is a maturity and there is a coupon and there is bankruptcy remoteness.
• 0:40
  All right, Mao.
• 0:42
  Cheers, man.
• 0:43
  Cheers, man.
• 0:43
  Good to see you.
• 0:44
  Great to see you.
• 0:44
  Thank you for coming in for this.
• 0:45
  Hey, man.
• 0:46
  My pleasure.
• 0:46
  I've got, I listened to you on Natalie's show and you said people don't wake up in the morning
• 0:54
  and think today's a good day for a loan.
• 0:56
  That's not true.
• 0:57
  About two months ago, when Bitcoin price crashed,
• 0:59
  I woke up, looked at it and went,
• 1:01
  today's a good day for a loan.
• 1:04
  That's fair.
• 1:05
  And I didn't mean that to be sort of like an absolute statement.
• 1:08
  There are times in the market where you see something you like,
• 1:11
  an asset comes by and you're like, that's the day.
• 1:14
  But it's usually driven because of an opportunity
• 1:17
  that lands on your lap.
• 1:18
  Or it's not something that you just take for the sake of having it.
• 1:22
  You take a loan to deploy it, typically.
• 1:24
  right? Like most people don't borrow to keep the money, you know, borrowed. But that's more so what
• 1:29
  I meant. But yes, to your point, like we are, and this is, I know sounds a little bit counterintuitive
• 1:35
  to some people, but we are seeing a big pickup in first-time loan, first-time borrowers right now,
• 1:41
  because a lot of people feel much more comfortable borrowing at 60 versus 120, right? Because they're
• 1:46
  sizing the potential risk of a drawdown. I've done basically both of those. I borrowed above 100k
• 1:52
  last year at some point and uh that one had to be topped up a couple of times
• 1:57
  and then and this is a good segue which is like the price at which you borrow
• 2:02
  shouldn't almost shouldn't matter because you should be planning appropriately regardless of
• 2:09
  whatever price you're in right like if you're 120 and you think we're going to 60 like you want to
• 2:14
  have enough bitcoin to withstand that if you think we're going to 40 even from 120 you should have
• 2:19
  enough bitcoin to withstand that yeah so we to me that's the biggest determinant of whether a person
• 2:26
  has a great outcome or a person gets caught off guard is how much time do you spend planning
• 2:31
  sizing up the loan how many diligence questions you ask and there's like a direct correlation
• 2:37
  between the people that are diligent and plan and ask questions and do like you know take out the
• 2:44
  loan and they keep until they want to and they never get liquidated and these are the people that
• 2:48
  you know have great experiences and then there's also there's cases at times where
• 2:52
  life also happens right like you may have had that budget but something else happened and you
• 2:57
  had to use some of that budget and then all of a sudden it caught you off guard um or it caught
• 3:02
  you traveling and you didn't set up auto top-up um right like that's happened um and so didn't
• 3:09
  that happen when we were in sydney which one did it did it not happen with you while you were
• 3:14
  traveling for me for my own loan yeah well it's happened to me it's happened to me before like
• 3:20
  you know every like not every member i want to say i don't know about every member but like
• 3:23
  definitely no no sorry i got it totally wrong it was happened to me while we were in sydney together
• 3:28
  yes um because i had i was getting the emails and i was like yes oh yeah we were having we're
• 3:33
  sitting having that drink yeah i remember now and you're like damn uh but that happens right and
• 3:39
  that that's why we built auto top up and like i said you know that saved me like things and it
• 3:43
  saved a ton of people um it's it's not a single person this year by the way and and the statistics
• 3:50
  are you know 99.9 because i as i mentioned in nico's show there's been case or one case of a
• 3:56
  guy that did leave auto top up on but he had dust and so it went to the loan but they didn't budge
• 4:01
  the the ltv much but every single person that's used auto top up this year with a bitcoin balance
• 4:06
  in their transaction account none of those people have been liquidated none of them auto top up
• 4:10
  adoption is up to like 40% of our loans right now. Damn. Which is, we love to see it. Bear market
• 4:16
  things though, right? Correct. Right. And bear markets, people start thinking more about, hey,
• 4:20
  downside protection, which makes a lot of sense, right? One thing that I can share here, which I'm
• 4:24
  really happy is very soon, Atletic will be rolling out partial liquidations. So today, if your loan
• 4:29
  hits 80% LTV, the loan gets fully closed. When we move to partial liquidations, we will only be
• 4:35
  selling enough Bitcoin to bring the LTV back to 65,
• 4:38
  and the loan remains open for whatever amount is left.
• 4:41
  That's very cool.
• 4:42
  Yeah, and again, it's more so about trying to do the bare minimum
• 4:48
  to cure the loan as opposed to and give you the options.
• 4:52
  Yeah, because you're on the same team in that.
• 4:55
  You don't want to take anyone's Bitcoin.
• 4:56
  No, we only make money when the loans are open, right?
• 5:00
  And we want people to keep their loans open if they need them, right?
• 5:04
  I'm not ever going to tell somebody,
• 5:05
  take a loan you don't need.
• 5:06
  But so long as you want you don want to have it closed we don want to have that happen to you either And so we want to do whatever That why we built AutoTopUp That why we moving to partial liquidations That why we have the planning tools in the website
• 5:20
  You can say, okay, if I take my ITV now and Bitcoin price goes to X, where do I get liquidated?
• 5:24
  How much more Bitcoin will I need?
• 5:26
  So a lot of those things you can do proactively.
• 5:29
  And you'd be surprised how well it works.
• 5:32
  I know it sounds trivial, but a lot of people just do, not a lot, but I would say some people take action impulse-driven action, and they don't really think about Bitcoin going down.
• 5:46
  So that's why I emphasize just plan, run the math, run the scenarios, keep the Bitcoin aside, and have an action plan.
• 5:56
  Also, some people wait till the very last minute to top up their loans from external addresses.
• 6:01
  And then they try to send that transfer.
• 6:03
  Network's congested.
• 6:05
  I wish it was congested.
• 6:06
  It's never congested anymore.
• 6:07
  No, but in the February drawdown, there was some congestion.
• 6:13
  There were some tickets that were taken.
• 6:15
  Because I saw some of these transfers coming in.
• 6:17
  Some were taking hours to confirm.
• 6:18
  It also depends on what fees you're putting in.
• 6:20
  Some people are putting in very low fees and they got stuck.
• 6:24
  And so, again, just don't...
• 6:25
  A block might just not be found for an hour.
• 6:27
  Who knows?
• 6:27
  you have to just plan
• 6:30
  and not ever try to take it
• 6:32
  to be proactive
• 6:33
  if you're being proactive
• 6:34
  the best thing I love
• 6:35
  is when people
• 6:36
  proactively top up their loans
• 6:38
  before they even get a notification
• 6:39
  before the top up kicks in
• 6:41
  people are on it
• 6:43
  these are the things
• 6:44
  that I think about a lot
• 6:45
  because obviously
• 6:45
  you guys sponsor the show
• 6:46
  thank you very much
• 6:47
  by the way
• 6:47
  but I think Lennon's
• 6:51
  an awesome product
• 6:51
  I use it
• 6:52
  and I think people
• 6:53
  who need to take out
• 6:55
  a loan against Bitcoin
• 6:55
  there's no better place to look
• 6:57
  the problem is i struggle when i'm trying to like advertise it to be i want to be really
• 7:03
  meaningful and cautious with my words because like if you do this wrong it can really get you
• 7:09
  in some trouble done right it can be a super useful powerful tool but done wrong it can get
• 7:13
  you in trouble and so like how do you try and suggest people like start first start thinking
• 7:18
  about this yeah so obviously in terms of like probabilistically things that can happen obviously
• 7:24
  there's a wide range of probabilities like anything's possible right but if if you look
• 7:28
  at the models because we we run models and try to assess you know historical drawdowns and what
• 7:35
  that would look like at do alone and the most aggressive drawdown we've had in in the you know
• 7:40
  in bitcoin and since let us been around was the march 14th 2020 uh crash of course that was a
• 7:47
  50 drop in a matter of 24 to 48 hours in two days or something crazy no we the bitcoin has never
• 7:53
  seen a drop like that. Even in these price, these bear markets are bear markets for ants,
• 7:58
  compared to those bear markets. And in that case, if you run the model of a loan that started January
• 8:04
  1st, 2020, and experienced the COVID crash, that person had to add 50% more Bitcoin relative to
• 8:12
  the original collateral. So about half of what you put in initially to cure that drop.
• 8:19
  And the additional problem there is it's not like you're drip feeding that over months. That had to
• 8:22
  be done in a day. Correct. So that one was like a pretty bit, I'm trying to put it into the extremes
• 8:27
  so that you can, you know, the likelihood of that happening again, well, when else are we,
• 8:31
  well, I assume will we get a global pandemic that closes the economy? I don't know,
• 8:36
  but it's happened before. And so in that most extreme case, that person needed to come up with
• 8:42
  50% of the original Bitcoin in 24 hours. Immediately. Right. And so of course I, I,
• 8:50
  I share that example more from a quantum size perspective, right?
• 8:56
  I would recommend that you should have at least an equal amount of Bitcoin
• 9:00
  than you're using for the initial loan.
• 9:02
  Yeah.
• 9:02
  Available and ready.
• 9:04
  And when I mean available and ready,
• 9:05
  I don't mean I have to go to three vaults to get my keys
• 9:09
  and authorize the thing and it's going to take me two days.
• 9:11
  That's not available and ready
• 9:14
  because you might need to respond faster than that.
• 9:16
  So when I say available and ready,
• 9:18
  I mean, something that you can feasibly transfer or if most people do it, not most, but about 40% of people do it now, they send the Bitcoin to that in proactively.
• 9:29
  They leave it in the transaction account, which is a custody account.
• 9:32
  We don't do anything with that Bitcoin.
• 9:34
  It's just to service the loan if and when you want to use it.
• 9:38
  Turn on a top up.
• 9:39
  That Bitcoin sitting in that transaction account is not part of your collateral.
• 9:43
  You can withdraw it at any time.
• 9:44
  It's just there in case your loan needs it at 2 a.m. on a Tuesday.
• 9:49
  If Bitcoin ripped and your LTV went down to 20%
• 9:53
  and you now have release excess Bitcoin
• 9:56
  or you want to keep it at 20 just so you don't have to think about it,
• 9:59
  you can turn off, auto top up, withdraw that Bitcoin
• 10:02
  and not have to think about it anymore.
• 10:05
  But it's really, for those who want to use it,
• 10:08
  it's meant to give you the option.
• 10:10
  And it came from, we had a few clients,
• 10:13
  but in particular, there was a few guys who had these cabins
• 10:17
  up in Northern Canada and they would go for months And they were like I not going to have any cell phone I not going to have my keys need you guys to help me uh protect my loan how do i respond in this situation and we said well
• 10:30
  we built auto top up and we said okay well how about we do this we will let you um keep a balance
• 10:37
  here we'll move it if and when the loan needs it loved it you know this guy loved it another guy
• 10:41
  um had a similar situation because he went on uh boating trips a lot not the sarcastic
• 10:48
  boating trips but the real boating trips yeah yeah and so he was also uh having issues or not
• 10:53
  issues but was concerned yeah and so we built auto top up and that's really the the intent behind it
• 10:59
  and um and people are increasingly more and more using it which we love to see
• 11:04
  and we'll continue to do more things to protect people against volatility and the downside
• 11:09
  which we can segue into another point which is in these bear markets it's also a natural thing
• 11:17
  that people are thinking about the downside, right?
• 11:19
  Like what's the worst that can happen?
• 11:21
  How do I protect my loan, right?
• 11:23
  And there's no free lunch in life, okay?
• 11:29
  Like if it was easy to get rid of liquidations
• 11:32
  or margin calls or this type of setup,
• 11:35
  we would have figured it out for equities
• 11:36
  in the 200 years we've been lending against them.
• 11:39
  Absolutely.
• 11:39
  Or gold, or we would have found a way
• 11:41
  not to evict people when they default on a mortgage, right?
• 11:44
  Yeah, it doesn't exist.
• 11:45
  These things are very hard to do at scale and responsibly.
• 11:50
  If you hold Bitcoin long enough, there's going to come a time when you need some dollars.
• 11:53
  It might be a tax bill, a business expense, life getting in the way,
• 11:56
  but whatever it is, it might come at a time when you don't want to sell your Bitcoin.
• 12:00
  That's where Ledin comes in.
• 12:02
  Ledin lets you borrow against your Bitcoin instead,
• 12:04
  with tiered rates that go as low as 9.25%.
• 12:06
  So you don't have to sell your stack if you don't want to.
• 12:10
  Ledin have operated through every market cycle since 2018
• 12:12
  and have originated over $11 billion in loans.
• 12:15
  but the important part for me is the way Ledin handles these loans.
• 12:18
  Your collateral is held in custody and never lent out to generate interest.
• 12:22
  And Ledin's more than just loans.
• 12:24
  Tether Gold is now live alongside your Bitcoin
• 12:26
  with instant trading across 10 pairs
• 12:28
  and later this year you'll be able to borrow against gold
• 12:30
  in the same way that you do with Bitcoin.
• 12:33
  Ledin really is an awesome company.
• 12:34
  I've used them multiple times.
• 12:36
  The applications have taken me less than 15 minutes
• 12:38
  and you have the dollars in your account within hours.
• 12:40
  If you want to check out Ledin, go to ledn.io
• 12:43
  and use the code WBD for 0.25% off your first loan.
• 12:47
  That's leaden.io and use the code WBD.
• 12:51
  Do you want to pay less in taxes and stack more Bitcoin?
• 12:53
  Of course you do.
• 12:55
  Well, by mining Bitcoin with Blockware, you can.
• 12:57
  Under section 168k of the US tax code,
• 13:00
  Bitcoin mining servers qualify for 100% bonus depreciation.
• 13:03
  This means every dollar you spend on miners
• 13:05
  can directly offset your income in a single year.
• 13:07
  And it's true for both business owners and W2 earners.
• 13:10
  So if you have $100,000 in ordinary income,
• 13:12
  you can purchase $100,000 in miners and potentially offset your tax liability entirely.
• 13:18
  Blockware's mining as a service does all the heavy lifting.
• 13:21
  They secure the rigs, they source the low-cost power, and they handle all the day-to-day maintenance.
• 13:25
  So you get to stack Bitcoin every single day while drastically shrinking your tax bill.
• 13:29
  Get started today at blockwaresolutions.com forward slash WBD
• 13:33
  and use code WBD for $100 off your first miner.
• 13:36
  That's blockwaresolutions.com forward slash WBD.
• 13:40
  If you own a Bitcoin ETF, especially if it's GBTC, you need to listen up.
• 13:44
  Spot Bitcoin ETFs provide price exposure to Bitcoin, not direct ownership.
• 13:49
  You can't withdraw it, you can't self-custody it, and they charge you a management fee every year to hold it.
• 13:54
  Well, Swan recently announced Swan Real Bitcoin Exchange and it's ready to use right now.
• 13:59
  RBX is a structured in-kind exchange that converts your Spot Bitcoin ETF shares into real on-chain Bitcoin.
• 14:05
  It does that without selling on the open market and is designed to support a tax-efficient outcome.
• 14:09
  So for example, if you hold GBTC, you're paying 1.5% a year in management fees for Bitcoin price exposure.
• 14:16
  But by swapping GBTC for real Bitcoin with RBX, you can drop that figure as low as 0% by just holding it in self-custody.
• 14:23
  This is designed in a way that maintains your cost basis and in a manner that supports the deferral of capital gains tax.
• 14:29
  So if you own a Bitcoin ETF, especially if it's GBTC, you need to talk to Swan Private about RBX today.
• 14:35
  head over to swan.com forward slash wbd and book in a call with one of their team
• 14:40
  that's swan.com forward slash wbd but there are companies coming out saying they can do
• 14:47
  loans without this now without the the risk of liquidation what concerns me and i'm and i'm
• 14:54
  starting to see some risk creep in in the bitcoin back loan space again um bitcoin back loan space
• 14:59
  or general crypto back loan space well the the the most of the emphasis right now is in bitcoin
• 15:05
  back loans because really that's been proven to be like the best collateral out of the crypto
• 15:10
  native assets right and so everybody's trying to do bitcoin back loans now and they're always
• 15:15
  trying to compete with the established players like us and they can't completely compete on
• 15:20
  reputation many of them don't even have proof of reserve so what they try to do is they try to
• 15:24
  basically offer some of these things that are too good to be true at prices that are too good to be
• 15:30
  true right Like hedging options exist right You can even take them proactively and they more cost you buy to buy a hedge when you need the hedge it very very expensive and so you know we are we at
• 15:44
  let and we are exploring um a lot of these ways to protect and hopefully allow clients to uh extend
• 15:50
  the liquidation or protect them against the liquidation but so this is why you're doing like
• 15:54
  the partial liquidations and correct that's that's a step in that direction but at the core okay
• 15:59
  When you're doing collateralized loan, there is a risk of the collateral going under the value of the loan that was issued.
• 16:07
  And that creates a problem.
• 16:09
  That creates risk that has to be managed.
• 16:11
  Okay.
• 16:12
  In the current model, that risk sits with the borrower.
• 16:15
  Okay.
• 16:16
  And the borrower is supposed to be managing that risk.
• 16:19
  If the borrower fails to manage that risk, that's a problem for the borrower.
• 16:25
  Yeah.
• 16:25
  Okay.
• 16:25
  When you try to do these, don't worry, we won't liquidate you.
• 16:28
  mathematically you there was always the probability that you will have to liquidate the the the fact
• 16:35
  that the collateral value can drop below the loan amount doesn't change because you told me that i'm
• 16:39
  not going to liquidate you the risk is just being transferred from the borrower to the lender and
• 16:46
  the problem with that is that if the lender is not being clear about how they are offloading that risk
• 16:53
  and how they are managing that risk,
• 16:56
  if the lender gets an issue or has a problem,
• 16:59
  that's everybody's problem.
• 17:01
  That's every borrower in that platform's problem.
• 17:04
  So what I have, and I've seen...
• 17:07
  And you say that because if it puts the lender's balance sheet at risk,
• 17:11
  then everyone's in trouble.
• 17:12
  Correct. The lender's insolvent.
• 17:14
  And so the missing piece out of a lot of these offerings
• 17:19
  that have been mentioned or named out to the market is
• 17:22
  what are you doing in the back?
• 17:25
  Because the prices that you're charging,
• 17:27
  if you look at the premiums that some of these companies say,
• 17:30
  oh, you pay 1%, 2%, and we won't liquidate your loan.
• 17:34
  Go price that put option.
• 17:37
  You go price that put option.
• 17:39
  Price the hedge.
• 17:39
  Don't take it from me.
• 17:40
  Price the hedge.
• 17:41
  What would it be?
• 17:43
  If you want to do it on a 12-month term,
• 17:45
  roughly between 8% to 10%.
• 17:46
  It's like the going rate to hedge a put a year out.
• 17:49
  If you try to shorten the term,
• 17:51
  that starts dropping a little bit.
• 17:53
  But when we've priced these
• 17:55
  and we've looked at some of these structures,
• 17:57
  you end up for a full year term
• 18:00
  basically having to double the price of the loan.
• 18:03
  If the rate is roughly 10,
• 18:04
  you have to basically pay another 10
• 18:06
  to insure the loan or protect the loan.
• 18:09
  But importantly,
• 18:10
  you're not saying you won't liquidate the loan.
• 18:14
  If the loan is below the 80% LTV
• 18:17
  when the hedge runs out,
• 18:19
  you still have to liquidate you see what i mean yeah and so you're just deferring wait i don't i
• 18:27
  so i don't pretend to know how option markets work um so like when that contract the option
• 18:32
  closed would that not would the amount of money that you made on that not cover the rest of the
• 18:38
  collateral that was put up but then you have to but but that means that you've you're now
• 18:43
  basically saving that loan at 80% because you're hedging to 80%.
• 18:48
  So at the end of the term, you have a loan at 80%.
• 18:51
  I see.
• 18:52
  So either the loan basically gets topped up to a healthier LTV
• 18:56
  so that it allows it to renew,
• 18:57
  or you're not able to renew the loan, right?
• 19:02
  And that's if the hedge, you know, everything worked out, right?
• 19:05
  And so the challenge with that is there's still a scenario
• 19:09
  where, great, the hedge is here.
• 19:11
  the hedge makes up the difference to get to the 80% LTV, so the loan never went underwater.
• 19:16
  But it's not whole.
• 19:17
  But the hedge runs out, right?
• 19:20
  And so, yeah, fine.
• 19:21
  You get the economic benefit of the hedge and the loan sits at 80% on maturity.
• 19:24
  What then?
• 19:25
  How are you going to hedge 80% for another 12-month term?
• 19:29
  The price is going to be astronomical because the price of a hedge to 80% when you're at 50%
• 19:34
  is much cheaper than the price of a hedge to 80% when you're at 80%.
• 19:38
  Yeah.
• 19:38
  And so there is no free lunch in that sense.
• 19:43
  You're always just moving risk around, if that makes sense.
• 19:48
  And so the companies that are offering this,
• 19:50
  what do they suggest you do at the end of the 12-month end?
• 19:52
  Would you have to roll it?
• 19:53
  I don't think that there are any of these offerings
• 19:55
  that have been out for longer than the term of the loans.
• 19:58
  So we don't know.
• 20:00
  I don't really know.
• 20:02
  But more importantly, what I think is a much better question is,
• 20:06
  how are you ensuring that you the lender are going to be safe yeah and we're doing this right like
• 20:14
  i'll give you the example of block fills block fills was a bitcoin or a firm that was doing
• 20:18
  loans and they dealt in the options market and many a lot of people like to conveniently not
• 20:23
  remember this but they just blew up earlier this year see i didn't even i actually found out about
• 20:27
  that on the show i recorded before this i had never even heard of them yeah so they they were
• 20:31
  trying to do these things and of course they made some problem.
• 20:35
  They didn't hedge it properly.
• 20:36
  They made a hole and they became insolvent.
• 20:38
  Is that what blew them up?
• 20:39
  Well, I mean, you can look at the filings,
• 20:41
  but basically that is in my interpretation of the facts
• 20:46
  and the activities that I knew they did,
• 20:50
  That is my running assumption about what happened.
• 20:54
  And it was most likely it was options related.
• 20:57
  So it was either a loan that you didn't hedge
• 21:01
  or you sold an option and you didn't buy the option in the back.
• 21:04
  You didn't hedge the options, right?
• 21:05
  Like you kept the risk
• 21:07
  and you didn't have the balance sheet to absorb that loss.
• 21:10
  It's funny because I was going to say to you,
• 21:12
  it looks like the entire space has matured a lot
• 21:14
  because like last bear market we had,
• 21:17
  Celsius, FTX, BlockFi, FTX weren't lending, but all of these companies that were trying to do
• 21:23
  sort of yield on Bitcoin and lending products that didn't manage their risk properly and blew up.
• 21:27
  And I think you were one of the only lenders that actually survived that bear market.
• 21:32
  Has it got better? It has. It has in many ways. It has in many ways in that right now,
• 21:39
  rehypothecation is a dirty word, right? Like most of the programs that are out there right now,
• 21:44
  at least claim they're not rehypothecating. Which is a good thing.
• 21:46
  which is a good thing and not a lot of people are uh well not not not as many as i would like to see
• 21:51
  are doing proof of reserves but there are some more proof of reserves coming around um you know
• 21:58
  in that sense it's good there's also a big emphasis on bitcoin as collateral there's not as much of a
• 22:02
  push uh to do you know basic attention token back loans or dogecoin back loans like uh if you
• 22:10
  remember back before right before the blow-up um doge was all the rage uh companies like gemini
• 22:15
  were coming out with yield products for doge i did not know that they did deal products that's
• 22:20
  crazy yeah uh and so again what brought down many of these companies um in large part was not their
• 22:29
  collateralized lending it was their yield products yeah because they were taking in the billions of
• 22:35
  dollars in tokens and to generate the yield they had to lend those assets unsecured and they lent
• 22:41
  them two groups like three arrows and when three arrows blows up they don't have the money to pay
• 22:46
  back these guys don't have the money to pay those guys insolvency close the doors bankruptcies yeah
• 22:51
  so um the other thing is um again you know going to this staying on this topic of like risk creep
• 23:00
  right there was a statement uh that came out yesterday or yesterday this morning uh from
• 23:05
  Hester Pierce, the SEC Commissioner of Crypto Mom.
• 23:09
  And it says, stop doing handstands and somersaults
• 23:14
  or summer vaults, she said, to avoid regulation.
• 23:17
  Because what's happening right now is
• 23:19
  you're starting to see some of these DeFi offerings
• 23:23
  that are all unregulated and many of them
• 23:25
  younger than my four-year-old
• 23:27
  are getting wrapped up and put in front of
• 23:31
  regulated fintech frontends.
• 23:34
  Is this things like Morpho?
• 23:36
  An example of that, yes.
• 23:38
  Because people go into a platform of a branded exchange
• 23:44
  and they swear they're borrowing from the branded exchange.
• 23:48
  They are not.
• 23:50
  There is no liability to the branded exchange
• 23:53
  when you're taking these protocol loans.
• 23:55
  I don't know if you can't say or don't want to say,
• 23:57
  but this is like Morpho and Coinbase.
• 23:58
  Yeah, it is.
• 23:59
  It's one example, right?
• 24:01
  And so, again, the statement, and this is TBD and 2BY, wait to see how this plays out.
• 24:10
  But DeFi is this interesting thing where none of these parts of the Legos, none of these financial Legos are regulated.
• 24:22
  None of these Legos have any sort of governance restrictions.
• 24:26
  They are run by these DAOs.
• 24:28
  nobody knows who the actual people are there's a foundation over here and there's a DAO over there
• 24:34
  nobody's responsible right for for these issues for example we just had the ABBA issue
• 24:39
  there was going to be a loss so I don't even know what happened here you're gonna have to sorry I
• 24:44
  don't pay much attention to crypto world what happened the Kelp DAO hack you weren't you weren't
• 24:47
  paying attention to that I honestly my knowledge of the broader crypto space is embarrassing
• 24:51
  Well, listen, not to get into a whole DeFi thing, but I think this year so far has been the biggest year for DeFi exploits to date.
• 25:03
  And I guess the point I'm trying to make is these protocols get exploited almost on the daily, right?
• 25:09
  And many times the protocol is big enough or has a big enough treasury or the community rallies so that there's no losses.
• 25:16
  We haven't been through a DeFi insolvency event just yet.
• 25:21
  As in, an example would be with Aave, right?
• 25:24
  Like there was a bad actor that came in with fake collateral,
• 25:27
  borrowed $200 million.
• 25:28
  Oh, I did see this.
• 25:29
  One click, $200 million, whoop.
• 25:32
  And then you said, well, what about the collateral?
• 25:34
  The collateral is worthless.
• 25:35
  So the protocol is out $200 million, right?
• 25:37
  And so in that moment, you say, okay, what happened in DeFi,
• 25:43
  which is super interesting, is that the permanently online people
• 25:48
  that see the flows said,
• 25:51
  oh my God, there's something wrong.
• 25:52
  I'm pulling my money out.
• 25:54
  So everybody pulled their money.
• 25:55
  Like the people that were there the fastest
• 25:57
  pulled their money out Of course All of a sudden withdrawals stopped because there no more liquidity liquidity to process more withdrawals and now who left inside the bag we don know because
• 26:08
  it's defy but i would bear i would suspect that it's the more vulnerable not permanently online
• 26:14
  dgens yeah that are just going to get be left holding the bag and so the funny the parallel
• 26:22
  in traditional finance is when there is an event of insolvency the operator has a legal obligation
• 26:30
  to freeze everything in the accounts like to freeze activities and then they need to see
• 26:36
  they put up what's called a preference window okay so if you are seen to have been furiously
• 26:44
  pulling out your assets immediately after the event or right before the event and this is
• 26:49
  something you had never done before you you either were tipped off or you were able to respond faster
• 26:54
  than others and you came out with your money intact and everybody else was left holding the
• 26:58
  bag and that's what you wanted because you wanted to save yourself okay in the cefi world it doesn't
• 27:04
  work that way in the cefi world if you got out with either privileged information or during the
• 27:10
  preference period that's unfair yeah to the people left holding the bag and that's where consumer
• 27:15
  protections and a lot of these things kick in where you say hold on danny like great that you
• 27:20
  were permanently online but it's not fair for you to walk away unscratched and for billy to lose 70
• 27:26
  of and we saw this happen with blockfire and all these correct and celsius is still going through
• 27:31
  it like there's some of these are still ongoing yeah um but the fact remains is that every single
• 27:36
  c5 bankruptcy has had what's called recoveries so if you were there and you lost some money
• 27:42
  a court or an estate sued everybody they had to sue collected as much as they could and here you go
• 27:47
  danny um this is your fair share of what was left yeah there are no guardrails like this in defi
• 27:53
  and this is why i think there's such a um um an emergency in the community whenever there's a
• 28:01
  potential loss in defi that has to be attributed because the second you have to attribute the loss
• 28:07
  you're going to have to answer some really tough questions which is who got out like do we know who
• 28:14
  got out we don't it's defi how do you how do you legally go after that person you can't
• 28:22
  right and then the other question is who's to blame like how much are you going to take how
• 28:28
  much am i going to take a lot of these things in court like in bankruptcy law a lot of it is
• 28:33
  stipulated but DeFi doesn't have this and so again I think that there's inherent risk and the way that
• 28:41
  historically we've had people pile on to risk is we dismiss it number one we say no that's not a
• 28:49
  risk this is all programmatic we we got our bases covered like with BlockFi asked me if you ask
• 28:53
  BlockFi what's the real risk on the deal we have the best team with the best this with the best
• 28:58
  and lo and behold you know they didn't have it and the second one is you create a too good to be
• 29:06
  true offering right so you juice up the returns if you're asking people to deposit for yield
• 29:11
  and you make the borrow rate absurdly low even today right you have some fintechs earning you
• 29:19
  through a program that pays you seven percent and that same protocol is lending on a different
• 29:25
  fintech at five and so the math doesn't math and this is what concerns me and so you're starting
• 29:33
  to see the warning not warning but i think this statement from the sec is sort of uh hey guys
• 29:39
  if you're doing financial transactions on chain that doesn't remove the fact that these are
• 29:46
  financial transactions and that somebody and some of these financial transactions must be regulated
• 29:52
  right um i think that that's starting to become more of a thing because these protocols are
• 29:58
  starting to get a little bigger um they're starting to get adopted by some of these fintechs and
• 30:02
  the regulators are starting to think it reminds me a little bit like this this statement from
• 30:07
  hester pierce reminds me a little bit and again i don't want to draw an analog nor i want to sound
• 30:11
  like i'm being a doomsday person but if you recall gary gensler our favorite uh sec chairman um
• 30:18
  basically stopped yield in cefi in the u.s if you remember um this was around 2000 and
• 30:27
  i want to say it was like 2021 okay um gary gansler came out and said no more yield on cefi
• 30:34
  for americans and those accounts stopped like blockfi stopped servicing their their interest
• 30:39
  accounts and a bunch of other companies have to you know shut it down and settle and that happened
• 30:45
  actually months not probably not a whole year before the eventual collapse of these companies
• 30:51
  that were offering these products okay and so in some ways the regulators had a sense back then of
• 30:58
  the risk that was being pumped into the market and they were starting to try to address it but it
• 31:03
  just unraveled on them before they could put a cap on it this one seems to me a little bit like same thing like very similar story kind of deja vu deja ish which is hey guys these protocols are coming out and guess what it yield again and it loans again and now
• 31:22
  it's not it's done by contracts and none of the contracts are saying that none of the contracts
• 31:28
  take responsibility right like when you're issuing a loan you you have a lender that depending on the
• 31:33
  on the that lender should be following consumer protections they should be getting uh you know
• 31:38
  complying with state lending laws if there are any and that and they have a legal agreement you
• 31:43
  know there's like things you can and cannot do uh in defy you're doing the same thing without the
• 31:50
  legal agreement without their license without the consumer protections without the disclosures
• 31:55
  and those things are there for when things go bad yeah nobody reads the agreement and if your loan
• 32:04
  goes well and you repay your loan, that agreement was irrelevant. You read it, you got comfortable,
• 32:09
  you took your loan, you paid it back, no problem. When you start really digging into the agreement
• 32:13
  and reading each clause is when something goes bad. And so that's the thing.
• 32:18
  It just shocks me that people are willing to put their Bitcoin up with companies.
• 32:22
  People aren't pricing the risk appropriately, I don't think. And with Bitcoin, obviously,
• 32:27
  this is money that does not require trust and there's no counterparty risk. But when you decide
• 32:31
  to use a product where you're, you know,
• 32:33
  doing a Bitcoin-backed loan, trust is everything.
• 32:35
  And so, like, the only companies that I would
• 32:37
  ever look at doing that with are ones where, like,
• 32:39
  I know how their operations are running.
• 32:41
  I know the people in charge. I know what's going on.
• 32:43
  I'm amazed that people aren't pricing that risk
• 32:44
  and would rather have a loan at 6%
• 32:47
  with this sketchy thing rather than 10%
• 32:49
  with someone else. Like,
• 32:50
  I take my Bitcoin very seriously. I don't want to
• 32:53
  lose my Bitcoin. Yes, but this is where you start
• 32:55
  getting into the, well,
• 32:57
  it's a protocol, but
• 32:59
  it's being offered through
• 33:00
  a brand that makes me warm and fuzzy.
• 33:03
  And most people aren't reading the terms and conditions.
• 33:07
  And I think that's where the regulators are saying.
• 33:10
  That's where I think this is coming from,
• 33:12
  this Hester Pierce statement,
• 33:14
  is that you're making this stuff look
• 33:17
  just like everything else inside that app,
• 33:20
  and it isn't.
• 33:23
  It's actually quite different.
• 33:25
  And so I think that's where that,
• 33:28
  we'll see how it plays out in the next few months.
• 33:29
  So we're not out of the Wild West when it comes to Bitcoin back loans.
• 33:33
  Well, again, I don't want to.
• 33:36
  There are good players.
• 33:37
  There's increasingly good players.
• 33:38
  And I do think that the industry is in a better place today than it was four years ago.
• 33:44
  That said, especially during bear markets and where the fierce competition,
• 33:51
  people start accepting more risk or taking more risk to survive to grow to get that incremental
• 33:59
  to hit that number for the quarter to not get no run out of runway uh and so you may start
• 34:04
  subsidizing the product to try to get some more originations you may start trying to do hey well
• 34:09
  you know let's offer these no liquidation loans and like partially buy the protection or maybe not
• 34:14
  buy the protection or let's do some modeling and see if we do need the protection and like
• 34:18
  that's when you start getting into trouble because you're not um you either you're not
• 34:24
  being honest or you're taking a lot more risk without explaining it or just closing it and i
• 34:28
  think that's where risk starts creeping into the system um one way or another right and so
• 34:34
  again i think you you if it like i think at the core it's like if it looks too good to be true
• 34:40
  if it's priced too good to be true it likely is you gotta start asking some questions yeah because
• 34:46
  listen man we've been doing this for eight years okay and this is all we do i spend my living
• 34:53
  breathing days how to make loans better and how can we innovate and we have a massive team that
• 35:00
  does this every day and only this and so and and there's listen we've looked at a lot of these
• 35:07
  things right we've looked at a lot of these options and we've always come from the view that
• 35:12
  if and when we do something,
• 35:15
  we want to explain to you
• 35:16
  exactly what it is that's happening
• 35:18
  and how we're addressing that risk.
• 35:21
  What I never want to do is tell you,
• 35:23
  look at this, this is so much better.
• 35:26
  You have these much better terms
• 35:27
  and don't worry about how I get it.
• 35:29
  I'm just that good.
• 35:34
  Again, you know,
• 35:36
  it's a free market,
• 35:38
  but just ask the questions.
• 35:41
  every bitcoiner eventually has to answer one question if something happened to me would my
• 35:45
  family know what to do could my wife or parents recover my bitcoin and would my children inherit
• 35:50
  the bitcoin i spent years stacking that's where anchor watch builds bitcoin custody models to
• 35:55
  protect you and your family against real life accidents errors kidnappings and even your own
• 36:00
  death every anchor watch custody solution includes their inheritance protocol designed so when the
• 36:06
  unthinkable happens your bitcoin reaches the people you intended it for whether you're a self-custody
• 36:10
  expert or want multi-institutional support your bitcoin estate plan shouldn't be an afterthought
• 36:15
  bitcoin is only generational wealth if it can actually be passed down through the generations
• 36:20
  so make sure they can access in the future what you built today anchor watch is your custody your way Visit anchorwatch to get started That anchorwatch You wouldn reuse a Bitcoin address so why does your phone broadcast the same identifier for life
• 36:35
  Every SIM has a static ID and carriers, ad networks,
• 36:38
  and bad actors all use it to track you.
• 36:41
  The big carriers have been caught selling that data over and over again.
• 36:44
  CAPE is America's privacy-first mobile carrier.
• 36:47
  Their identifier rotation feature changes your ID every 24 hours
• 36:51
  so you look like a different subscriber every single day.
• 36:54
  And SIM swaps are off the table.
• 36:55
  Your number can't move without a 24-word phrase that only you hold.
• 36:59
  There's also no name at sign up, no social security number,
• 37:02
  and there's no profile to build on you.
• 37:04
  If you're a Bitcoiner in America,
• 37:06
  I honestly don't know why you'd use any other network.
• 37:08
  You can head over to cape.co forward slash WBD
• 37:11
  and use the code WBD for 33% off your first six months.
• 37:15
  That's C-A-P-E dot co forward slash WBD.
• 37:19
  If you're already self-custody Bitcoin, you know the deal with hardware wallets,
• 37:23
  complex setups, clumsy interfaces, and a seed phrase that can be lost, stolen, or forgotten.
• 37:28
  BitKey fixes that.
• 37:29
  BitKey is self-custody built for real life.
• 37:32
  It gives you an intuitive, easy-to-use wallet with no seed phrase to sweat over.
• 37:35
  And it has a strong recovery system and built-in inheritance for long-term peace of mind.
• 37:40
  And BitKey's just had a massive upgrade.
• 37:41
  The new device now has a screen.
• 37:43
  So before you approve something, you can check it on the BitKey itself.
• 37:46
  The transaction, the address, or any account changes.
• 37:49
  It's a big difference. You're not just trusting what's on your phone, you're seeing it for yourself on the device.
• 37:54
  It's simple, secure self-custody without the stress.
• 37:58
  Go to bitkey.world today and use the code WBD to get 10% off the new Bitkey.
• 38:02
  That's bitkey.world and use the code WBD.
• 38:06
  So I'd want to ask you another question about reducing volatility in these loans.
• 38:11
  But I think we should set this up a little bit because you've just announced that you're doing Tether Gold now as well.
• 38:14
  Yes.
• 38:15
  Why don't you explain what that is and then I have a few questions on it.
• 38:18
  Definitely.
• 38:19
  So Tether Gold, the asset itself, is basically, think of it as almost a stable coin for gold.
• 38:26
  Are Tether now the largest private holder of gold?
• 38:29
  I have to double check, but I believe they're up there.
• 38:31
  Yes.
• 38:32
  Crazy.
• 38:32
  In terms of private, privately, I believe they are.
• 38:35
  In terms of like sovereigns, I think they're actually up there, like north of some bunch of sovereigns.
• 38:40
  But if you look at Tether's model for their stable coins is you give them a dollar,
• 38:45
  they store that dollar into a treasury and they mint a token a dollar token and you go and use
• 38:52
  that token and you can redeem that token eventually one day for for the dollar in gold it works pretty
• 38:58
  similar you bring a bar of gold to their vaults in switzerland you give them the vault you put it
• 39:04
  in the in the in the safe or the cage and you get a gold token and you move it around and so one
• 39:10
  token one bar one token one dollar it's the very it's a very similar model to the stable coin but
• 39:17
  now applied to a sovereign precious metal right and so what that does is if you um you know most
• 39:25
  people that own gold today in size they hold it at a vault somewhere um or at multiple vaults and
• 39:31
  like with everything physical you try to send that gold somewhere you try to move that gold
• 39:36
  the buyers have the buyer pool has to be in that vicinity if you want to transfer that goal
• 39:40
  or move it to a different country is a nightmare.
• 39:43
  And so gold has a lot of physical constraints
• 39:46
  just by the nature of it.
• 39:47
  And holding it already has built-in counter-party risk
• 39:50
  because beyond the few things you own,
• 39:53
  you don't want to store vaults or gold bars in your house.
• 39:55
  And so you already have some of that.
• 39:59
  And the asset itself, I think it's a fascinating proposition
• 40:02
  because I think it can do to gold
• 40:06
  what the stablecoin did to the dollar.
• 40:08
  You put it on a digital rail
• 40:10
  and all of a sudden the physical constraints go away.
• 40:13
  You can get financing with anybody.
• 40:14
  You can send it at any time on a blockchain.
• 40:18
  And we think that, and again, a lot of-
• 40:20
  You obviously add a ton of counterparty risk, but-
• 40:22
  Yeah, I mean, but again,
• 40:23
  it's not dissimilar to the counterparty risk
• 40:25
  that a stablecoin has.
• 40:26
  No, yeah, 100%.
• 40:27
  And a stablecoin is wildly popular.
• 40:29
  I meant compared to gold though.
• 40:31
  Well, compared to physical gold and compared to Bitcoin.
• 40:33
  No question.
• 40:34
  There is no question.
• 40:36
  However, it's been proven
• 40:39
  that when you create a better format of the same product,
• 40:43
  a US dollar versus a stable coin,
• 40:46
  and you put it on digital rails,
• 40:48
  all of a sudden, a lot more people can use it,
• 40:51
  a lot more people can access it,
• 40:52
  and you can start doing things with it
• 40:53
  that were previously you didn't even consider.
• 40:57
  Yeah.
• 40:57
  Right?
• 40:57
  So I think the same thing is going to happen to gold.
• 41:00
  And again, it might not be for everybody.
• 41:01
  Some people might prefer still to hold their gold physically,
• 41:04
  and I understand that, and that's totally fine.
• 41:06
  But to many, they will like this idea that,
• 41:09
  hey, I can get my gold exposure through this token
• 41:12
  that allows me to, you know,
• 41:15
  in the future, get a loan from Lettend.
• 41:16
  I can sell it really quick.
• 41:17
  I can move it really quick.
• 41:19
  I can settle with a counterparty really quickly.
• 41:21
  It's much more versatile than my physical gold.
• 41:24
  And I think that's going to resonate with a lot of people.
• 41:27
  A lot of Bitcoiners, believe it or not,
• 41:29
  especially some of our clients,
• 41:30
  a few in particular took loans
• 41:32
  in the middle of last year with Bitcoin
• 41:34
  to get into the Precious Metals rally.
• 41:36
  And they did fantastic.
• 41:38
  many of them start
• 41:39
  They said, Mao, I want to bring, I did really well with my leaden loan because I got into precious metals.
• 41:44
  I love leaden. I can never do what I do at leaden with my gold, with my physical gold.
• 41:51
  And I want to do the same.
• 41:53
  At the time, we obviously didn't have a solution for it.
• 41:56
  But midway through last year, that was actually just happened to be the time where we were getting together
• 41:59
  or starting to talk more with the Tether team about them.
• 42:02
  They eventually made an investment into leaden in November of last year.
• 42:05
  And through getting to know them and through visiting and learning about XUT,
• 42:09
  we said, well, this could be potentially an answer
• 42:12
  for some of the things our clients were looking for.
• 42:16
  So I've got no problem with gold.
• 42:18
  I think it's a cool product.
• 42:19
  I totally understand why you're doing it.
• 42:21
  But I'm sure there's people that have been like,
• 42:22
  why are you adding this shit coin?
• 42:24
  You know what?
• 42:25
  Surprisingly, the feedback has been overwhelmingly positive.
• 42:29
  We haven't had...
• 42:30
  It feels like gold is the only thing you could have got away with.
• 42:32
  You know, it's funny because...
• 42:34
  And again, when you think about...
• 42:37
  We already support stable coins.
• 42:38
  okay so you could you could argue that hey we already support tether we already support usdc
• 42:44
  like we support i'd rather have a stable going back by gold than the dollar well and you know
• 42:48
  tether actually i think they tether had one but they just discontinued it um and well that's a
• 42:53
  really good idea and i think that in a previous life or maybe five years ago i would have taken
• 42:57
  off what's happening right now with genius act is it's driving most of the stable coins at scale to
• 43:04
  hold the paper like the treasuries yeah because of the incentive the government has right i think
• 43:10
  the free market will be the free market and you're going to get some of that too um but um
• 43:16
  in my opinion you know if you can get comfortable with the way a stable coin works and if you look
• 43:22
  at who is the issuer okay the issuer is the group that we are already trusting with 100 plus billion
• 43:27
  dollars worth of dollars in treasuries yeah right you know if anybody is going to do this and then
• 43:34
  if anybody has an incentive to do this right and the know-how to do this right it's them right and
• 43:41
  so we can we got comfortable with the asset itself um we listed it right now you can buy it and sell
• 43:47
  it um we you can't borrow against it just yet but you will be able to soon and the interesting part
• 43:52
  about it is like you still get again if you go beyond the custodial risk and the fact that you
• 43:59
  know there is third-party risk because it's sitting in a vault somewhere in the same way
• 44:03
  your u.s treasuries are going to be sitting at you know some of their um accounts um if you get
• 44:09
  past that it's a fantastic asset in that it gives you a lot of the same hard money benefits that
• 44:15
  bitcoin gives you it has a lot less volatility um and because of those because of the lesser
• 44:21
  volatility um i anticipate and again i can't confirm these yet but i anticipate that the
• 44:27
  terms on goldback loans like in terms of ltvs and rates um you're going to get actually an
• 44:32
  incremental benefit um on those terms relative to bitcoin because you have again a lot less
• 44:37
  volatility much bigger market uh in a much bigger bidder base right um so i think it's going to be
• 44:46
  the more we can
• 44:49
  once we roll out the loans
• 44:51
  I think people are going to start seeing
• 44:52
  this could be an interesting compliment
• 44:55
  it will never replace Bitcoin
• 44:57
  I want to be clear about that
• 44:58
  the thing that I think is really potentially interesting
• 45:01
  I know you've said that you're going to do gold backed loans
• 45:02
  I like the idea of a sort of cross collateral
• 45:05
  backed loan because that would be a way
• 45:07
  of reducing volatility like say you did 80% Bitcoin
• 45:09
  20% gold
• 45:10
  don't get ahead of us Danny
• 45:11
  but no we're thinking about
• 45:15
  about a lot of these potential things too like how how do we keep how do we help our clients
• 45:20
  reduce the risk of a liquidation because no we don't want it you don't want it keep keep giving
• 45:26
  you some of that hard money attribute the anti-debasement of the collateral um it can you
• 45:31
  start thinking about you know like hybrid hybrid ways of potentially doing these things like um so
• 45:37
  again you have to a letter we like to say you you crawl you walk and you run right you can't just
• 45:44
  start running out of the gate because you know you want to be making sure that every step you're
• 45:49
  taking especially in this in the business of lending like super careful you have to be incredibly
• 45:53
  deliberate you have to be incredibly thoughtful you have to dot your i's cross your t's and then
• 46:00
  you uh you can announce it uh or you can you can you know bring it to market i can get ahead of
• 46:05
  myself though like i like the idea of almost like a slider where you can completely set your own
• 46:10
  amount of Bitcoin or amount of gold in the loan,
• 46:13
  adjust it to your volatility preference.
• 46:15
  I think that's really interesting.
• 46:17
  I'll settle the meeting with our product team.
• 46:20
  It's very cool.
• 46:22
  We should get on to the other thing.
• 46:24
  You've had so many announcements since we last spoke.
• 46:26
  Tell me about the bond.
• 46:27
  The bond, man.
• 46:29
  The bond was super interesting because
• 46:30
  to me, it's the biggest news
• 46:33
  in the financing or
• 46:35
  credit market, even
• 46:37
  the Bitcoin credit markets. I know
• 46:39
  everybody's
• 46:39
  focused on
• 46:40
  that and
• 46:41
  treasuries
• 46:42
  but like the
• 46:42
  biggest news
• 46:43
  in Bitcoin
• 46:44
  credit
• 46:45
  I'm obviously
• 46:47
  biased because it our baby but Ledin did the first Bitcoin loan securitization ever this year with smp uh smp was the ratings agency that rated the the um the vehicle but what
• 47:01
  that does is basically we took a chunk of our loan book okay 200 million dollars worth of loans
• 47:06
  uh made up of 5 000 plus individual loans from people in 30 plus countries okay and we packaged
• 47:13
  them into a 200 million dollar offering and we got that rated by S&P and we reached investment
• 47:21
  grade on that bond what is investment grade a great question so investment grade is a qualification
• 47:28
  or a rating that is issued by two approved ratings agencies which is the two of them are S&Ps and
• 47:36
  Moody's so we chose S&P and we worked with S&P what is an investment grade rating an investment
• 47:42
  grade rating you can think of it or a rating on a bond you can think of it as the report card on
• 47:48
  the bond right so the the ratings agency will go will sit down with the issuer and they will work
• 47:55
  with the issuer for you know as long as it's needed with us it was like over a year over a
• 48:00
  year long process it's very grueling because we were the first people to ever do this
• 48:03
  and and you need a lot of things to even be considered for this so we can we can talk about
• 48:09
  that in a second but a rating is basically a grade on your report card and so the better the grade
• 48:15
  the less risk your bond has right and what the agency does is they they take your loan book
• 48:22
  and they basically look at all of your operations your processes your legal agreements and then they
• 48:27
  start playing out these scenarios like what happens if bitcoin crashes to this what happens
• 48:31
  if what happens if what happens if and they run a god knows how many models and you can read the
• 48:35
  report i can i can send you the link if you want to put in the show notes the report smp did on us
• 48:38
  and so based on all those models they they they get what they call an expected loss like what what
• 48:46
  is the expected loss if all these things happen and the smaller the loss the better the grade
• 48:51
  why is investment grade so important investment grade is an a okay like there's different so you
• 48:58
  have like triple a double a a correct but but the real cutoff is there's like all the ways like
• 49:04
  triple b minus is where investment grade starts and everything below that is considered junk okay
• 49:08
  in the finance world in the bond space it's not so much about the actual letter it's about it's a
• 49:16
  pass fail on investment grade or non-investment grade okay right so if you're investment grade
• 49:19
  you're in the bucket if you're not investment grade you never get to see what's behind the
• 49:24
  curtain okay why is that important in the abs market the asset-backed securitization market
• 49:30
  the buyers the the 90 to 95 percent of all bonds issued in the abs market are investment grade
• 49:38
  why because the buyers of these bonds the biggest buyers the pension funds the insurance companies
• 49:44
  the reinsurance companies they have a mandate that they can only buy bonds that have been great
• 49:51
  rated investment grade by either s&p or moody's so when you hit the bar you unlock 90 of the demand
• 49:58
  when you don't hit the bar you you're stuck selling to like hedge funds and more risk
• 50:02
  more risky people and it's just it's obviously the rate is higher and so you don't really
• 50:08
  we didn't want to go to market with a sub investment grade offering we wanted to we
• 50:13
  believe we have what it takes and we did uh to reach that we were the first company to ever do
• 50:18
  this um it is the first time smp has ever rated a bitcoin product and it's the first time that
• 50:24
  it's given an investment grade rating to a bitcoin product and we are a first time issuer
• 50:29
  that has received an investment grade rating so that's awesome this is honestly like the other
• 50:36
  thing i mean i can talk about this thing for hours but the other thing that's super fascinating to me
• 50:43
  is most abs bonds in the past were securitizations of american loans american mortgages american
• 50:53
  car leases, American credit cards. And there's like a handful of previous issuances where they've
• 51:01
  taken 80% American loans and 20% Canadian loans. And the second they do that, the risk shoots.
• 51:09
  And so, and it's based, but they did it because, you know, they wanted to test a few things. But
• 51:12
  before Lennon, the most countries in the most borrower countries to be in a bond were two.
• 51:18
  Oh, wow. And you did 30.
• 51:20
  at lennon we did yeah it's 30 or 28 i have to double check but it's basically the most
• 51:25
  country why why because of bitcoin because the collateral is not bound by a geographical
• 51:32
  constraint if i want to if i want to exercise my right to repossess a car in the u.s it's very
• 51:39
  different than my right to repossess a car in canada it's very different than my right to
• 51:42
  repossess a car in mexico yeah bitcoin in our bond was the first time that in the eyes of the
• 51:49
  the countries don't matter.
• 51:51
  That's cool.
• 51:52
  That to me is one of the most incredible things about this offering.
• 51:57
  Beyond that this is more related to lead in specific right But if you want to get into the nitty gritty of what it takes to a even be considered by one of these ratings agencies let alone get an investment rating you need to have well first of all you need to have a team that willing to open the
• 52:16
  kimono and share things with the regulator or the ratings agency and you have to have your eyes
• 52:21
  dotted your t's crossed everything's going to go through an x-ray and so that willingness and that
• 52:28
  and having all the documentation that they're going to need
• 52:31
  and the ability to answer all their questions,
• 52:33
  the right data, the right tape.
• 52:35
  We have eight years of tape.
• 52:37
  They need to see at least one full business cycle,
• 52:39
  including a period of stress,
• 52:40
  meaning we're the only lender that qualifies for that.
• 52:44
  And so we believe that we had an opportunity
• 52:48
  to open up the market.
• 52:51
  And the way the bond market works is the longer you're in it
• 52:54
  and the more issuances you have,
• 52:56
  the farther ahead you get and there's no real way to catch up other than time
• 53:00
  and so by starting ahead and being the first ones to ever do it our goal is to drive that market not
• 53:08
  from 200 which we did a 180 million dollar offering we believe and we estimate that in the
• 53:14
  in not too long five to ten years there's going to be a trillion dollars worth of bitcoin back
• 53:19
  loans out there we need to know where you're going to get a trillion dollars there's no balance sheet
• 53:24
  in the world that can cough up a trillion dollars.
• 53:26
  So what's the benefit to the company of issuing this bond?
• 53:29
  Oh, many.
• 53:30
  So for one, it proves that we can securitize our debt
• 53:36
  beyond our bilateral partners.
• 53:38
  Is it basically like a mortgage-backed security?
• 53:40
  Yes, that's what it is.
• 53:41
  It's the equivalent of that in Bitcoin, right?
• 53:44
  If you look at how most Bitcoin-backed lending companies
• 53:46
  today are funded, they are taking, say,
• 53:49
  a large loan from an institution,
• 53:51
  from an institutional lender.
• 53:52
  say they're taking, you know, $50 million loan and they're doing like $1 million, $2 million,
• 53:57
  $500,000. And then they're just redistributing capital. Right. What we have done is we've now
• 54:05
  taken our loans that we've originated and gone to the public markets and said, Hey, public markets,
• 54:11
  buy a part of our loan book. Right. So that kind of reduces your reliance on the tethers of the
• 54:17
  world and people like that on any bilaterals yeah and the other thing is bond investors are
• 54:23
  incredibly uh risk adverse so by virtue of us having a bond the bond facility itself is bankruptcy
• 54:31
  remote from laden so laden could get hit by a bus and light up on fire and every loan in that
• 54:37
  facility and every bond every note holder is going to get paid to maturity because there is a a backup
• 54:42
  servicer there's like all of the pieces are in place so that the loan arriving to maturity does
• 54:49
  not depend on that and if anything happens to let it that's a benefit not just to the to the person
• 54:55
  buying the bond but for the borrower yeah right and the more of our book we can put in that the
• 55:02
  the other thing is if your loan is when you when your loan gets vended into the letter bond you
• 55:07
  get an email saying hey danny your loan's been vended into the land bond when you get that email
• 55:12
  you know your Bitcoins have Fidelity
• 55:14
  because Fidelity is the custodian
• 55:16
  for all of the Bitcoin collateralizing
• 55:18
  all the loans in the bond.
• 55:19
  So you will know with certainty
• 55:22
  where your collateral is.
• 55:24
  You can see the facility.
• 55:25
  It's public.
• 55:26
  I can give you the ticker.
• 55:27
  Anybody can see it.
• 55:28
  And so it's much more transparent.
• 55:31
  It's much more resilient.
• 55:33
  It's much more scalable.
• 55:36
  So is this just a win-win for customers,
• 55:38
  the business, everyone?
• 55:39
  Yes.
• 55:40
  and this is i've been trying to make this case in every opportunity that i've gotten but i know
• 55:45
  it's a bit of a dense topic it's a complex thing some people i've had people come to me being like
• 55:52
  hey i saw you guys got into the institutional loans you who did you give the bond to and i'm
• 55:57
  like no no it doesn't work that way you know and so a lot of people don't uh necessarily have the
• 56:03
  the trad fi people like the guys that work in banking and the people that understand they get
• 56:08
  this we people were reaching out to us and saying wow i i can't believe you guys did this like
• 56:16
  how is this not bigger news because also it came out in the middle of the bear market yeah in the
• 56:22
  middle of the february so people were just looking at different things but this is a massive news
• 56:27
  in in the this is the first true in my opinion bitcoin credit instrument not preferred equity
• 56:36
  There is a maturity and there is a coupon and there is bankruptcy remoteness.
• 56:42
  What is the coupon?
• 56:43
  $6.84 on the senior tranche, $9.99 on the junior.
• 56:48
  And there's a small piece of lead and equity as well in the bond.
• 56:53
  So it's our first time.
• 56:56
  I expect these rates to get much better over time.
• 56:59
  But again...
• 57:00
  So again, the other place that this is a win is it will potentially drop people's rates over time.
• 57:04
  Over time.
• 57:05
  But more importantly, now you can see as a borrower,
• 57:10
  you can see that we have a million facility You can see how much that facility costs If we showing you that that facility costs 6 and 9 and you we not offering you a loan at five you should be asking questions you know what i trying to say like we are all about being transparent like we want to show you
• 57:27
  and tell you to the best we can where the money comes from what's the cost of the money where's
• 57:31
  the custody we believe our borrowers are smart enough to piece it together yeah right and if
• 57:38
  you're a person that doesn't really care about the math not mathing you're not a letting client
• 57:43
  necessarily right like if you're the kind of guy that's going to be cool with them borrowing a 10
• 57:48
  and you somehow getting a loan at five good luck you know what i mean like i i totally it's um and
• 57:56
  so you did you did 200 million on the first one i imagine you want to do a few more of these yes
• 58:01
  are you close or can you not talk about where you are with it we so we we i don't want to get into
• 58:07
  the sort of timing or promising uh but it is something that um like the market was incredibly
• 58:13
  excited about it it was two times over subscribed on the senior three times on the junior so the
• 58:17
  market oh wow the market wants more um and we're growing um so it's definitely something we're
• 58:23
  looking at but i don't we don't really have like a timeline for the next one you can't be promising
• 58:27
  um it's you're gonna see another one i just don't you know i don't want to say oh tomorrow i don't
• 58:32
  like over promising and under delivering uh but you're gonna see more of these for sure very cool
• 58:36
  led to the good spot man yeah man i i'm very happy i mean this is the um um the most uh
• 58:45
  i'm trying to find the right word but it's like i feel like this is the most zen i've ever been in
• 58:49
  the bear market yeah uh like it is a bear market don't get me wrong like you know prices are down
• 58:55
  but in terms of like how well everything is running on our side like the the the the the
• 59:01
  the solid foundation that we're on, like the bond,
• 59:04
  the support of our investors, the support of our clients,
• 59:09
  the book being as resilient as it has been during this downturn,
• 59:13
  that's another thing.
• 59:15
  In previous bear markets, a lot more people would have historically
• 59:20
  gotten impacted with the liquidation.
• 59:23
  Because the product also hasn't, yes, we've been doing it for years,
• 59:27
  but not everybody on the book has been through a cycle
• 59:31
  of course yeah but now the more people like this isn't the first road people learning about position
• 59:35
  sizing correct yeah and so that makes me very uh that encourages me quite a bit as we look at
• 59:41
  potentially the next bull run because all those guys that kept those loans open are about to see
• 59:46
  their wealth hopefully double in the next one to two years yeah and listen they may or may not lead
• 59:53
  to more loans historically what we see is people say oh my god this loan works financially for me
• 59:58
  you know you you you now you have more wealth and you think to yourself well should i sell
• 1:00:04
  some bitcoin to pay back the loan probably just keep it like i'll just keep it rolling or i'll
• 1:00:08
  invest in somewhere else um but as the wealth effect kicks in um in on the good side of the
• 1:00:14
  loan experience where the collateral does rise um we want to be there we want to be there returning
• 1:00:19
  your excess bitcoin we want to be there helping you to get that incremental loan to fix your
• 1:00:22
  kitchen if you want like that's that's what we're here for it's awesome congratulations thank you
• 1:00:27
  That's very cool. I do want to talk to you about something totally different. So last time we did a show in DC, wasn't it? We did a lot on Venezuela. You told your story. If anyone wants to listen to that, you should go back and listen to that show. We won't do the whole story of your family escaping the Maduro regime. But I remember we were talking about Maduro and you wanting basically America to come in and help. And America came in and helped.
• 1:00:50
  dreams come true man so tell me like tell me everything that's happened since that so like
• 1:00:55
  when did you find out that it happened i imagine the next morning no during the night so uh it was
• 1:01:01
  i can't remember why but it was it happened at like 3 a.m on a saturday and i woke up i can't
• 1:01:07
  remember why because i was sleeping and that night that night i woke up for i think my phone was just
• 1:01:13
  going crazy and i usually keep it on silent i never wake up at night but i woke up and i and i
• 1:01:19
  woke up and i didn't hear my phone so i'm like oh maybe i just i went to the bathroom i came out my
• 1:01:22
  phone's buzzing again i pick up my phone and my group chat with my high school friends from from
• 1:01:28
  venezuela is blowing up with all these images of these apache helicopters and at this point there's
• 1:01:33
  no word about maduro there's just like a bunch of helicopters and bombs and explosions and caracas
• 1:01:38
  and everybody's like everybody's like what's happening what's happening um so the the chat
• 1:01:43
  continued to be lit on fire i was it was 4 a.m for me i was like out of it my kids were like daddy
• 1:01:47
  come back and so i basically you know went to help my daughter fall back asleep and i just
• 1:01:51
  kind of forgot until 8 a.m i woke up 8 a.m i looked at it again mauto's gone and they've
• 1:01:57
  extracted moto and it was like a little bit of my initial reaction was like a little bit of a
• 1:02:03
  of a shock right like i just i was in disbelief uh that they did it um that they did it so surgically
• 1:02:10
  like that not a single casualty on the u.s side it was just like i played out like a movie yeah
• 1:02:16
  Like if you look at the footage, like that thing looks like a movie.
• 1:02:20
  And then came the sort of realization that Maduro's gone.
• 1:02:25
  So now what?
• 1:02:26
  Of course, the sad part is Venezuelans couldn't go out and celebrate
• 1:02:29
  in Venezuela because they would have gotten shot by the regime.
• 1:02:34
  All they took was Maduro.
• 1:02:36
  Everyone else, his henchmen are still there.
• 1:02:38
  They're still trying to figure out what to do as well.
• 1:02:40
  Well, and slowly, so they took out Maduro.
• 1:02:43
  So then the question became, okay, what next?
• 1:02:46
  Well, America wants to take the Venezuelan oil.
• 1:02:50
  No shit.
• 1:02:52
  You think we don't know?
• 1:02:54
  Of course they want to take the oil, and so did the Chinese,
• 1:02:57
  and so did the Russians, and so did the Iranians.
• 1:02:58
  We never saw the oil.
• 1:03:01
  Nobody's complaining about not seeing the oil money anymore
• 1:03:05
  because we never saw it, right?
• 1:03:06
  And so, yeah, okay, America,
• 1:03:08
  at least they're going to put hopefully some new infrastructure to extract it
• 1:03:11
  because these last guys were so incompetent, they didn't even fix it.
• 1:03:14
  They just stopped yanking it out of the ground, okay?
• 1:03:16
  So we're now down to like 800,000 barrels a day.
• 1:03:18
  America's doubled it in like three months.
• 1:03:20
  Wow.
• 1:03:21
  We're not seeing any of it.
• 1:03:22
  I mean, at least to my knowledge,
• 1:03:24
  the Venezuelan people haven't really been on the receiving end of that money,
• 1:03:27
  but at least it's producing twice the output that it used to and there is some investment happening
• 1:03:33
  now the the challenge uh previous before the earthquake okay because i think we can get into
• 1:03:41
  the earthquake in a second but what happened after maduro got taken away was the people that remained
• 1:03:47
  delci and all of maduro's you know buddies and crew they understood very quickly that their only
• 1:03:55
  way to not have the same outcome as maduro was to play ball with america like if they play ball
• 1:04:01
  with america and they give america what they want maybe america won't care about a transition in
• 1:04:07
  government right and that was their play and i would argue that up until the earthquake
• 1:04:12
  that plan was working for them so the regime wouldn't actually change that much no it just
• 1:04:18
  said whatever it just did whatever america wanted it's like oh you want a safe zone for your
• 1:04:22
  executives to go into the oil extraction sites no problem oh you want us to um you know change the
• 1:04:28
  uh um um uh resource extraction law so that you guys can build faster no problem we'll we'll get
• 1:04:34
  that done for you so before the earthquake um had life changed much for the people in venezuela
• 1:04:39
  the expectation like the the illusion is there like day to day doesn't really change right like
• 1:04:51
  then and there like it's not like new goods come into the shelves and prices go down like
• 1:04:55
  two things happened um number one inflation uh stopped the debasement stopped falling off a
• 1:05:02
  cliff like it just reached a room temperature a hundred percent year over year which is
• 1:05:06
  normal yeah for us uh from the 500 to 300 it tamed so the the rate of the basement of the
• 1:05:15
  Bolívar dropped significantly after the Americans took Maduro.
• 1:05:19
  And the other thing is assets started getting repriced.
• 1:05:23
  Like there wasn't a lot of people buying and selling,
• 1:05:25
  but, you know, I'll give you the example.
• 1:05:27
  Like I had some people, some family members that were like looking to sell a warehouse,
• 1:05:31
  like some warehouse out in the middle of the country.
• 1:05:34
  And before the Maduro extraction, they were saying, you know, I'll take anything.
• 1:05:39
  You know, I'll take $20, like an arepa, you know, I'll let it go.
• 1:05:43
  Right.
• 1:05:43
  And now when Malura got taken away,
• 1:05:46
  they're like, take off the listing.
• 1:05:48
  Take off the listing.
• 1:05:49
  It's like, well, no, but I have somebody interested.
• 1:05:51
  $100,000.
• 1:05:53
  People went from like, this is worthless
• 1:05:56
  to everyone in America is now going to want to buy
• 1:05:58
  whatever asset I have It essentially they just got hope back Correct And that to me was the most important thing is to get back the hope that things can get better in the future
• 1:06:12
  That was starting to create some frustration
• 1:06:14
  because, yeah, all this hope,
• 1:06:15
  but eventually you want things to turn into real progress.
• 1:06:19
  And that wasn't happening.
• 1:06:21
  Maria Corina Machao hasn't returned.
• 1:06:24
  She won the Nobel Peace Prize.
• 1:06:25
  And after that, she's kind of fallen out of favor
• 1:06:28
  or not fallen out of favor,
• 1:06:29
  which is like not in the media.
• 1:06:32
  Has she not returned
• 1:06:32
  because it's still too dangerous
• 1:06:33
  for her to return?
• 1:06:35
  I don't know the answer to that,
• 1:06:37
  but I think in my opinion
• 1:06:40
  is that it has to do
• 1:06:42
  with whatever the US wants.
• 1:06:43
  Okay.
• 1:06:44
  Right now,
• 1:06:45
  the US is calling the shots.
• 1:06:47
  Anything else is pretend, right?
• 1:06:50
  So I think that when the US wants
• 1:06:54
  or when they believe,
• 1:06:55
  and now let's get into the earthquake
• 1:06:57
  because the earthquake
• 1:06:58
  changed the political landscape.
• 1:06:59
  in Venezuela. La Guaira, the area of Venezuela that was most impacted by this, was Caracas's
• 1:07:06
  biggest suburb, the capital. In Venezuela, every time, the few times that a government has been
• 1:07:12
  overthrown, it happens in Caracas, because Caracas is where the presidential palace is, Miraflores.
• 1:07:17
  So historically, previous revolutions, you had the people take the streets, they come down from
• 1:07:21
  the favelas or the hoods, and they go to Miraflores and they pitchfork this guy out, basically,
• 1:07:27
  and they stay there until the military coups them.
• 1:07:30
  And when Caracas lights on fire,
• 1:07:34
  politicians listen and politicians get scared.
• 1:07:37
  And so La Guayra in Caracas as a whole
• 1:07:40
  was a stronghold for Chavismo.
• 1:07:42
  There was a lot of support because it was a very poor area.
• 1:07:46
  The area that fell, La Guayra,
• 1:07:48
  was where their most fervent followers,
• 1:07:50
  a lot of them, lived.
• 1:07:52
  They, obviously, their lives were nuked, destroyed.
• 1:07:57
  and the regime did absolutely nothing.
• 1:08:02
  Like a month in, the regime's done nothing.
• 1:08:07
  And the people in La Guayra got fed up of,
• 1:08:11
  and not only nothing, when they did go down,
• 1:08:13
  they started obstructing the locals
• 1:08:16
  from helping dig their own families out of the buildings.
• 1:08:19
  And so people were losing it with the Maduro regime
• 1:08:23
  or with the Delci regime.
• 1:08:24
  So La Guaira is fed up.
• 1:08:28
  Like Venezuela at this point is fed up with Delcy.
• 1:08:31
  It's fed up with Chavismo.
• 1:08:33
  It's fed up with any remnant of the Maduro legacy or Chavez legacy that's there.
• 1:08:40
  It needs change.
• 1:08:42
  Before the earthquake, there wasn't that much pressure or hostility.
• 1:08:50
  The earthquake racked that up by 10x.
• 1:08:54
  and last week
• 1:08:56
  Jorge Rodriguez
• 1:08:57
  which is Delcy Rodriguez's brother
• 1:08:58
  who's the president
• 1:08:59
  of the National Assembly
• 1:09:00
  came out
• 1:09:02
  you know
• 1:09:03
  unprompted
• 1:09:04
  to say
• 1:09:05
  we need to change the
• 1:09:07
  we need to basically
• 1:09:08
  do radical change
• 1:09:09
  we need to redo
• 1:09:10
  all of our electorate
• 1:09:12
  council
• 1:09:13
  we need to get new directors
• 1:09:15
  we need to get new machinery
• 1:09:15
  we need to get new processes
• 1:09:17
  we need to audit
• 1:09:17
  this whole thing
• 1:09:18
  and they're starting
• 1:09:19
  to lay the pipes
• 1:09:20
  for the eventual election
• 1:09:22
  and
• 1:09:23
  And you think it would be an actual free and fair election?
• 1:09:25
  Yes.
• 1:09:26
  I mean, I don't know if no such things exist, but I think it would be as close to it as
• 1:09:33
  we probably would get in Venezuela.
• 1:09:35
  And my opinion one man opinion it so lopsided that it would take an immense amount of cheating fraud and deceit for us not to return to democracy
• 1:09:50
  So as horrendous as that earthquake was,
• 1:09:52
  it might actually be sort of a turning point.
• 1:09:54
  I think there's going to be a before and after
• 1:09:56
  because it's almost like capitulation.
• 1:10:00
  It's like a full capitulation of the regime itself.
• 1:10:03
  That was their last sort of icing on the cake.
• 1:10:05
  Like you had a chance to help the people you said you would help for 20 years.
• 1:10:09
  You now had a tangible opportunity to make their lives better.
• 1:10:12
  And not only did you not do that, you actually made it worse by participating.
• 1:10:18
  And also, the previous regime had built up an image that,
• 1:10:25
  oh, Trump is an American imperialist and all this stuff.
• 1:10:32
  Bukele, oh, cheat, imperialist, this and that.
• 1:10:37
  And just talking crap about everybody that wasn't affiliated with them politically.
• 1:10:42
  Who sent the most rescue people?
• 1:10:46
  Do you know?
• 1:10:47
  No, no idea.
• 1:10:48
  The US and El Salvador.
• 1:10:50
  And so what people saw in La Guayra was like the people helping them were American,
• 1:10:57
  not the Venezuelan regime.
• 1:10:59
  The people digging up the people out of the collapsed buildings were Salvadorian, American, Mexican, anywhere but Venezuelan.
• 1:11:10
  And so all these guys that you were talking about being the boogeyman were the guys that showed up unprompted and started digging your people out when all these other dudes were sitting around saying.
• 1:11:21
  And so culturally, it's been a huge change.
• 1:11:26
  It's interesting to hear you so sort of optimistic, because I remember speaking to you after I'd done the interview with Leo Lopez.
• 1:11:32
  Yes.
• 1:11:33
  And I think I was making the point that he sounds really sort of positive and enthusiastic and like there could be change.
• 1:11:39
  And you were slightly more skeptical.
• 1:11:42
  Because Leo's a politician. He has to be.
• 1:11:44
  Correct. But if you remember, and I've said this to Peter, look back at the episode I recorded with Peter in 2019 with Ale Machao, myself, and I can't remember the last person.
• 1:11:55
  he asked us at the end of the show how do you think this resolves and i said the only way this
• 1:12:00
  resolves is through military intervention yeah i said i believe that eight years ago i believe that
• 1:12:04
  seven years ago and that's how it actually eventually played out and i'm not saying i have
• 1:12:08
  a crystal ball i just know the power dynamics in the country yeah and so that's how it played out
• 1:12:13
  now that the head of the snake has been chopped off to me i'm now optimistic because there is now
• 1:12:22
  a bigger gun that went down and said you cannot hit your wife you know what i'm saying like you
• 1:12:28
  cannot hit your children you cannot that's not good we won't allow that and we didn't have that
• 1:12:34
  there was no i i was so shocked when it happened because and again it's one of those things like
• 1:12:40
  there's decades where nothing happened and then there's weeks where decades happened like when
• 1:12:44
  was the last time the u.s has struck anyone in latam i don't know no but within a few months we
• 1:12:50
  now have latam you know iran like again i'm not saying it's all good but it was something that
• 1:12:55
  was unlikely and statistically i think the odds were very low if you had asked anybody yeah and
• 1:13:01
  now that it happened i'm like this is the piece that was missing so if you do get free and fair
• 1:13:08
  elections you get a new government in charge like it still a massive rebuilding process right it been destroyed correct um it been destroyed there massive culture like there also like infrastructure is collapsed like the the infrastructure in la huayda is destroyed
• 1:13:23
  that la huayda has our biggest airport our biggest port like it's you know it's it's a
• 1:13:29
  it's an important part of the country that has to get rebuilt um but that said
• 1:13:34
  rebuilding is a lot more exciting than waiting for the end absolutely and so when you think
• 1:13:42
  about rebuilding, you can start
• 1:13:44
  dreaming. You can start looking up. You can start
• 1:13:46
  saying it will get better.
• 1:13:48
  Previously, we were just
• 1:13:49
  trying to find the bottom.
• 1:13:51
  When are we going to hit bottom? And I think we've hit it.
• 1:13:54
  The earthquake is the bottom.
• 1:13:56
  And from here, hopefully,
• 1:13:57
  we can
• 1:13:58
  rebuild.
• 1:14:01
  I think no one deserves
• 1:14:04
  it more than the people of Venezuela.
• 1:14:05
  I've been through a lot.
• 1:14:07
  I'm excited. I don't want to get ahead of myself.
• 1:14:10
  but I am optimistic
• 1:14:12
  that's awesome, so when are you buying the holiday home
• 1:14:14
  in Venezuela?
• 1:14:15
  I already have
• 1:14:16
  I mean I have assets that I thought were worth
• 1:14:19
  zero, among them
• 1:14:21
  a place in Margarita
• 1:14:22
  and now they're not zero
• 1:14:25
  I don't think they're zero, I think I might actually
• 1:14:27
  be able to go back one day
• 1:14:28
  Would you go back and live there?
• 1:14:31
  Or would you go back, spend some of your time there?
• 1:14:34
  You know
• 1:14:34
  the thing is for me
• 1:14:37
  there's so much still has to change
• 1:14:39
  like for example as much as i would love to um i haven't been there in a long time and i want to
• 1:14:43
  know wait i mean for example like if i was just if i was a single guy and i wasn't married with
• 1:14:47
  two kids like i would tell you yeah danny i'll go because it's not on to me anymore like i'll
• 1:14:51
  figure it out yeah but i want to see like how are the kids that i would potentially be sending my
• 1:14:56
  how are the schools i would be potentially sending my kids to yeah like are they good
• 1:15:00
  right like the power still runs out every so often you still get these rolling blackouts every so
• 1:15:05
  often um and so it's not like every problem is fixed um but i think over time we will get there
• 1:15:14
  eventually i would like to you know spend more time there potentially even move back like
• 1:15:18
  um you know i i'm i've always a dreamer man and like i never you know i dreamt about one day
• 1:15:26
  being a part of the bitcoin industry and and you know being on these shows and going to these
• 1:15:31
  conference like that was a dream to me that i i thought it was a long shot right like where i'm
• 1:15:36
  come from like i'm i'm an immigrant i've worked hard my whole life but like nothing's guaranteed
• 1:15:41
  and at the beginning i was like in the past i was like i've always been a dreamer and like you know
• 1:15:46
  this one now i'm here right now i'm talking to you now we have let it now we we do one in three
• 1:15:51
  bitcoin back loans globally like i'm now at a point where dreams come true like you can make
• 1:15:57
  your dreams come true. You can will things into existing. And so I'm not stopping myself short to
• 1:16:03
  say, if I ever get a chance to play a role in rebuilding the country economically or politically,
• 1:16:09
  I would be open to it. I don't know if that's going to happen.
• 1:16:13
  The future president of Venezuela.
• 1:16:14
  No, man. I let Leo. But I'm happy, man. I want to be part of the team that brings joy back. And
• 1:16:21
  yeah, it'll be great.
• 1:16:22
  Awesome. I mean, things are going good for you, man.
• 1:16:24
  Yeah, man. I'm happy.
• 1:16:25
  that's awesome um thank you so much for doing this now we've got a fun night ahead of us now
• 1:16:29
  yeah let's go i want to see hodl i actually want to see hodl more beers let's do it thank you mal