I like to say you can't eat a Bitcoin and you can't live in a Bitcoin.
So at some point, Bitcoin makes up some significant portion of your net worth.
It's great as a wealth accumulator, but it's bad as a lifestyle spender.
You need to offer him two dollars to really use it or to realize it.
And if you want to do that over the course of your entire life, most tax efficiently,
I'm very convicted that our product is the most tax efficient way to live off of Bitcoin wealth.
because you can borrow some out and sell it tax-free no matter the price in the future.
Bitcoin is a currency on the internet.
If you don't trust any other currency, this is where you go.
It's going to outperform everything.
Bitcoin could eventually be worthless.
Every day is a good day to buy Bitcoin.
Bitcoin reached its highest price to date.
Bitcoin hitting a new high.
It really has reached escape velocity.
There is no second best.
Who cares about Bitcoin?
It's the only secure database that's ever been invented.
Antisocial.
Bitcoin is the real deal.
Stupid.
Everything is bullish for Bitcoin.
Immoral.
It's going up forever, Laura.
Fix the money.
Fix the world.
Wide Work is a registered investment advisor, and the opinions expressed on the show are their own and do not reflect the opinions of the Silk LLC.
Joining us as a CPA, and the opinions expressed on the show are their own and do not reflect the opinions of trusted CPA or other affiliated firms.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.
Investments of all risk and unless otherwise stated are not guaranteed.
Information expressed is not taken into account your specific situation or objectives is not intended as a recommendation appropriate for any individual.
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Welcome to Bitcoin for Financial Services Media, the podcast where sound money meets professional services.
We explore how to build a financial services industry within the principles, values, and ethos of Bitcoin.
Today we're joined by Danny Baer, Head of Asset Management and Wealth at Meanwhile.
You won't want to miss it.
What's up, everybody?
Welcome back to Bitcoin for Financial Services.
Joined by an awesome guest here today, personal friend, Danny Baer, Director of Wealth and Asset Management at Meanwhile.
How are you doing, Danny?
Doing well, thanks for having me on.
It's a pleasure.
I was particularly excited for this episode because we talk quite a bit.
This is your thread.
You know, we try to call on something I'm specifically interested in personally for my advisor seat.
But just really, we try to give tip of the cap to entrepreneurs and builders in the space that are developing Bitcoin-denominated investment products.
You know, it just makes mine and Jordan Jobs a lot easier.
So we'll get into Meanwhile and some of the mechanics and what you guys are doing, a lot of novel stuff, which is very cool.
But why don't you start with just giving us a bit of your Bitcoin journey, how you got into the asset class, how you got into the industry?
Yeah, of course.
You mentioned we're personal friends, and that's why I've been offended that you hadn't had me on yet.
I don't think we finally made it happen.
Yeah, no, it's a good place to start.
And maybe I'll start a little bit backwards with Meanwhile, and then I'll get to like my Bitcoin journey.
Meanwhile is a financial services company that uses Bitcoin as its functional currency.
And we started with a fully licensed regular life insurance carrier where we offer institutions and individuals tax advantaged insurance products denominated in Bitcoin.
So I'm going to start there because it actually, that's the main reason I actually ever joined Meanwhile three years ago.
is the idea that it was a financial institution using Bitcoin as money,
not like bolting some fiat product into and trying to use Bitcoin as like the supercharge,
its investment returns or something like that.
So not using Bitcoin as an asset, rather we're using Bitcoin truly as a currency.
So my background, not dissimilar to yours, is worked in traditional finance out of college
as an investment advisor at a big multifamily office.
worked out of their New York office for about, I think, six years out of college.
The firm manages like $30 billion across something like 150 to 200 client families.
So talking $100 plus million per family.
I was actually recruited over to the digital asset world, the broader crypto ecosystem,
in 2022 by Digital Currents Group.
So at that time, Digital Currents Group was building out its own multifamily office, its own wealth management firm to manage crypto native individuals' wealth, who had created significant wealth from the crypto ecosystem.
It made sense at the time because at the time, DCG was the largest venture fund in the crypto ecosystem.
So as the venture arm made investments in the portfolio companies and those port co-founders got liquidity, none of them wanted to hire my old firm because my old firm would tell them to sell all their crypto.
So they just kind of kept it all wrapped under the same umbrella by referring those portfolio company founders to the wealth management arm within the DCG ecosystem.
I thought it was a great idea.
So I was the first wealth advisory hire there.
And the timing was terrible.
It couldn't have been worse.
I started in early 2022,
started to help build out the team there.
And then within like two months of my first day on the job,
the price of Bitcoin crashed 65% in large part
because three years capital,
the hedge fund went down with their bankruptcy filing.
They listed Genesis Lending as their single largest creditor
to the tune of like $1.1 billion.
Genesis Lending was a fellow subsidiary of DCG.
And so as Genesis Lending went bankrupt,
DCG plugged that $1.1 billion cash hole
on their balance sheet to try to save them,
but then we had to cut costs other places.
And then obviously FTX went down that fall
and there's just broader contagion
across the entire crypto space.
And we actually wound that business down
in January of 2023.
After that point,
I joined Meanwhile.
So I've been with Meanwhile
for three years.
At this point,
I'm the third most tenured person
at the company.
And I joined
because in my one year,
about one year at DCG,
I got exposure to the entire
digital asset ecosystem.
And over those 10 or 12 months,
the thesis for me
was really driven home
that there was Bitcoin
and there was crypto.
And I'm not,
such a hardcore Bitcoin maxi
where I'll spit on anything that's not Bitcoin.
But to me, it's like crypto is technology
that most of which will fail.
Some will be really revolutionary
in how we operate as a society
and especially in financial services.
But Bitcoin is money.
And there was a clear and very stark distinction
between those two things.
And so when I was winding down,
HQ Digital was the subsidiary of DCG
that I was working at.
As we wound that business down and I was looking for what was next, I really wanted to work at a company that was using Bitcoin as a currency.
And meanwhile, it's the first company in the world that truly uses Bitcoin as a currency.
So not only do I say we use Bitcoin as a currency, but literally our insurance carriers' externally audited financials are stated in Satoshi's.
There's not a single dollar on the balance sheet.
Our assets and liabilities are all in Bitcoin.
our regulatory capitals held in Bitcoin,
and our products exclusively are denominated in Bitcoin.
So the reason we do all that is because we've just vacuumed out
any relative volatility from the business.
For us, one Bitcoin equals one Bitcoin.
It doesn't matter if the price of Bitcoin is as low as $16,000,
which has been since the company was founded in 2022.
It also doesn't matter if the price of Bitcoin is $126,000,
which is our most recent peak.
Throughout all of that price volatility,
our operations, our solvency, the business itself haven't been impacted at all because,
like I said, one Bitcoin is one Bitcoin.
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Yeah, that's amazing, Danny.
Thank you so much for sharing.
A couple of very interesting things
I want to double click on there.
I do want to spend more time on BMI before you get a denominator,
because we'll save that for the end.
But when you were at this multifamily office, you're out of school,
you kind of touched on it a little bit,
but safe to assume that I had a pretty negative view on Bitcoin and the asset
class at large.
You know, I would say that, and this goes,
this informs my personal like Bitcoin journey,
because in 2017 during that bull run was really the first time that we had
clients asking about Bitcoin.
And so I always say that maybe I was a little bit hypocritical because I would regurgitate the house view when my clients would ask, which was not an investable asset class.
You know, we structured your portfolio to like weather any types of volatility.
You know, our clients were already rich.
So it wasn't a question of like, how do I accumulate more wealth?
It's how do I preserve wealth across generations?
but to be able to like have those conversations with my clients I had to myself go down the
rabbit hole so that really started in 2017 obviously my conviction grew high enough
that in 2022 I left traditional finance for a role within the broader digital asset ecosystem
but yeah so at that point throughout my time there the house view was uninvestable
the view I think evolved to if we ever were to get exposure it'd be on the private market side
through like investing in picks and shovels types of businesses but but no like liquid
directional exposure to to bitcoin or any other individual token yeah I'm gonna say if you kind
into the follow-up there but so then when you left for DCG this is something you personally have
more conviction in and you consciously wanted to work in this part of the industry or was it more
of like this opportunity came along and I didn't want to say no? Well, I think a combination of
both. The first is the reason that I felt convicted to really pivot my career into the
digital asset ecosystem is at my prior firm, like I said, we managed generational wealth. So
I didn't have just relationships with like the patriarch and matriarch or the Gen 1 wealth creators.
In many cases, I had clients at Gen 1, at Gen 2, at Gen 3.
So I actually got to see like the types of questions, the types of interests that each of those generations had.
And I've sometimes joked where when we'd have portfolio review meetings,
you know gen one which was like the octogenarian couple who's like asking about their muni bond
portfolio and then uh gen two is like the 50 year old who's asking about like their hedge fund
portfolio and then gen three was like the 20 to 30 year old who wanted to know about crypto and
cannabis and that was like the like spread of the conversations that we were having and in the you
know it as well as anyone, but in the wealth management space, there's just been this hot
topic of like the great wealth transfer of the many, many trillions of dollars moving
hands from Gen 1 to Gen 2 to Gen 3.
And from my perspective, it was a way of getting out in front of kind of where those interests
lied or laid and getting there before the money actually hit the hands of the key decision
makers that would want to allocate there.
So I figured if we can help build like this defining financial firm in the crypto space just ahead of you know these generations that care about crypto exposure
get like the decision-making power over their wealth.
It'd be a good place to be.
I'm still not convinced it was the wrong idea, but in a certain way, clearly.
Yeah. Well, I think it's very sound and logical thinking.
Quick side change.
Something I'm curious in your opinion on that.
I've just been asking folks about and talking more about,
I can't remember if it was TFT Theater
or Bitcoin for Millennials,
but they were talking about their audience demographic breakdown.
And it's really kind of stuck with me
because it actually skewed like much older
than I was anticipating.
I think it was like 40 to 50
was actually like their largest audience demographic.
But then your boots on the ground personal experience,
which is a little more intuitive.
It was like the younger folks
of the younger generations that were asking about, you know, the new technologies.
Have you seen similar experiences with meanwhile?
You know, you go to a lot of conferences, talk to a lot of people.
Have you seen kind of an older age skew or is it still more of the younger folks?
No, I think it's a good point.
And I've been on Bram's show on Bitcoin for Millennials.
And we actually talked a little bit about this.
I've been surprised by how, you know, again, like relative to traditional insurance,
We do life insurance or long-term insurance.
The average policyholder in the United States for traditional whole life insurance is like 60-something years old.
Ours is like 40.
So it's still older than maybe I or we would have expected.
But it is 20 years younger than the industry average, which from our perspective on an actuarial basis is amazing.
Because we're insuring younger, healthier people who will hopefully live a lot longer.
And there's just like this very happy, coincidental kind of overlap of passions between a lot of Bitcoiners and longevity where we're like, OK, great.
Let's cheer that on as much as possible.
Live as long as you can because we'll make a lot more money off of them the longer they live.
So we're all in favor of longevity here as well.
But I would say it's something between 40, 42 years old is our average.
That's really interesting.
I think that makes sense.
I think I have a similar age distribution for my clients,
which is your average wealth management firm, a little older.
Yeah, and if I can just interrupt and close the loop on this,
what I think we, well, what we talk about fairly frequently internally at Meanwhile
is this great opportunity that we have to really grow up with our clients.
So those 40-year-olds who are buying our product now probably bought Bitcoin 10 years ago as like a single 30-year-old.
And now they're 40 with a family.
Their lives look significantly different.
And we get like the distinct privilege of kind of like growing up with it.
We're like the next step they take when they look at their life and say, oh, my life, my responsibilities have materially changed.
and now I need to like go from this like YOLO,
throw some money at this thing
and it worked out and made me much money
to like how do I become a responsible steward
of significant wealth
and how do I protect my loved ones over time?
And it's like, it's a real,
it's a pleasure to get to talk to those people
because they're solving for like a long-term need and problem.
And it's not dissimilar from traditional wealth management.
my past career and your current career,
we're like, it's a great privilege
to be able to sit at that intersection
of like helping people think through
how to take care of the people they love the most
for the long term.
So that's been great.
Well, it really is.
I'm so happy you brought that up
because I absolutely love how you are thinking about that,
how you framed it.
That's something we talk to our clients a lot about
and shout out Rob Warren.
I got this framing from him,
but whether we like it or not,
we're the first generation of Bitcoiners.
So it's like our responsibility
to make sure we're good stewards of this asset,
you know, this finite asset.
You know, there's obviously a lot of risk of loss
if you, you know, poorly handle your custody solutions.
And so we spent a lot of time focusing on that
and just getting like mentally prepared
to step into those shoes.
Obviously, you know, meanwhile,
is a phenomenal product to help with that.
And even more on the meat and potatoes,
I want to circle back to, you know,
or meanwhile, be fully denominated in Bitcoin.
I was on your guys' website.
doing some research for this.
And I thought I had heard this,
so it was good to actually verify
before I started spewing misinformation on the pod.
But as of 2024,
you guys were the only financial services firm
that was fully audited
and denominated all their books in Bitcoin.
Is that correct?
Yeah, yeah.
So to our knowledge,
and my lawyers have to say that I have to caveat
with to our knowledge,
but we are the only,
I like to say we are the only truly,
denominated or only company truly denominated in Bitcoin in the world because we are the only one
that publicly states externally audited financials in Bitcoin. So, and again, the reason we do that
is because we sell insurance products, which people buy because they have these amazing tax
advantages because they are literally just life insurance products. But they buy them in Bitcoin,
we pay out in Bitcoin, we reserve for that because we're licensed to regular life insurance carrier,
We have to hold a bunch of regulatory capital to offset any risks that we're taking and to pay out claims.
And it's all in Bitcoin.
So we don't take on any relative volatility or currency risk.
If you give us 10 Bitcoin, we promise you 20 Bitcoin when you die.
It doesn't matter if Bitcoin is $16,000 or $16 million.
That 10 becomes 20.
And because it's whole life insurance, the payout and the policy loans and the growth, it's all tax free.
and hey well um again tip of the cap for you guys are taking that on and it's this funny
justification for me because at one side it seems so obvious but then on the other clearly this is
so novel and you guys are the first ones doing it and i think by doing it you actually create like a
true investment product for bitcoiners i think you personally passes the bitcoin smell test you
know i get really scrupled with other different service providers or you know products i'd recommend
to clients you know as maxless myself you know it's like is this really like the bitcoin way i
think you guys are clearly doing that by denying the whole thing in bitcoin but there aren't really
a lot of folks clearly that are willing to do that and then you end up with all these possibilities
for shenanigans you know duration mismatch currency mismatch and then you introduce like
all this unnecessary risk as opposed to just offering a bitcoin product and did not be in
Bitcoin. Like, as you said, it's just money at the end of the day. Like, why are we overthinking this?
Yeah, the beauty of it is, so the reason that we started with whole life insurance,
kind of to your point just now, is that for us, it rhymed the most with like the
hodl mantra of Bitquitters. I get asked fairly frequently when or if we will offer a term life
insurance policy. And at some point we will. You know, we're a fully licensed regular life
insurance carrier, we aspire to bring to market every life insurance product that you can imagine
from whole life to term life, to annuities, to key man, to et cetera, et cetera, et cetera.
Long list. But we started with whole life because people, we didn't want to ask people to send us
Bitcoin for no guarantee of anything in return. Best case scenario for both you, the customer,
and us, the insurance carriers, if you buy term, you outlive your term and you pay us for nothing
except for peace of mind, I suppose. Whereas whole life insurance, doesn't matter if you
get hit by a bus the next day or if you live for 100 more years, you will receive the payout,
which is great. But people in the United States don't typically buy whole life insurance.
Well, certainly fewer people own whole life insurance than term life insurance in the United
States. But the primary drivers of whole life insurance in the United States isn't even
necessarily the death benefit because the death benefit is on a multiples basis, lower than term
life insurance. But folks buy it for tax reasons and managing money for ultra high net worth family
offices. I saw a good share of this, but whole life insurance is really utilized by either like
real estate investors or ultra high net worth individuals or family offices because it has
amazing tax benefits baked in.
And those tax benefits include the payout,
which is guaranteed,
goes to the beneficiaries,
income and capital gains tax-free.
The growth of the policy itself
compounds tax-free.
And I think the big one
for most of our policyholders
is that you can use whole life,
the value of your whole life insurance policy
during your life as collateral
to borrow against tax-free.
Because everything that we do is in Bitcoin,
That means that if my policy at some point is worth 10 Bitcoin, we'll offer a 90% loan-to-value ratio against that.
So a policyholder could pull 9 Bitcoin out, not dollars, but 10 Bitcoin collateral, they pull 9 Bitcoin out.
But because it's a tax-free policy loan, those 9 Bitcoin that they receive get assigned a cost basis set at the price of Bitcoin at the time of the loan.
that means that if the price bitcoin goes to a million dollars they could borrow in this example
nine bitcoin out sell those nine bitcoin for nine million dollars total and they'd owe zero capital
gains tax on that sale because they're selling those nine bitcoin at their assigned cost basis
they also aren't taking any margin call risk because again their loan is nine bitcoin against
ten bitcoins of collateral it's not nine million dollars against ten million dollars worth of
Bitcoin a collateral. So no matter what the price of Bitcoin does, their loan remains nine Bitcoin
against 10 Bitcoin collateral, no margin call risk ever. In fact, if the price of Bitcoin drops,
it's actually better for them because they can take their cash proceeds, those $9 million,
and they can buy cheaper Bitcoin, repay their nine Bitcoin loan cheaper Bitcoin.
But if the price of Bitcoin goes up forever, then they also are protected because they never have to
pay the policy loan back because as is the case with normal life insurance as well if you never
repay your life insurance policy loan whenever you die the payout of the life insurance policy
just covers any outstanding loan balance so our perspective and this is what we talked to many of
our policyholders about is uh i like to say you can't eat a bitcoin and you can't live in a bitcoin
so at some point bitcoin makes up some significant portion of your net worth it's a great as a wealth
accumulator but it's bad as a like lifestyle spender you need to offer empty dollars um to
really use it or to realize it and if you want to do that over the course of your entire life
most tax efficiently i'm very convicted that our product is the most tax efficient way to live off
bitcoin wealth because you can borrow some out and sell it tax-free no matter the price in the future
totally it really is amazing and awesome product and you have a lot of hot takes out there about
you know insurance you know i got into this industry is one of the things that kind of
you gave me a i think you know my industry in particular gets a little bit of a bad rap for
trying to force you know life insurance sums people's throat you know i remember when i was
trying to get licensed like there was a shop so like yeah you know we'll let you sit for your
your series seven if you sell like 10 life insurance policies first i was like okay i see
how this works like i get it yeah i'm technically you know licensed to do so i just like donor
outsource a lot of times if my clients need it just because it's like i don't want to like go
down this road then i learned about meanwhile i was like shoot like i'm gonna have to swallow my
pride a little bit like look into this and i think yeah the fact that he was fully dominant
Bitcoin really changes the dynamics.
And, you know, this is, I think, a great example of something I've talked to a lot about.
So Bitcoin is a lot of times just get jaded anytime, like finance or
different financial products are brought up and it's like, oh, it's fiat, it's fiat.
You know it like okay well what if we just applied life insurance or life insurance in this case to Bitcoin on Bitcoin standard And it like okay well now we can reap the rewards of this tried and true instrument that been around for a long time
and it really can you know benefit you but let's get into mechanically how this works you know
there's always kind of like the boogeyman of the room um when it comes to you know earning more
Bitcoin, I've found like very few legitimate ways to earn a Bitcoin denominated yield. So
I'm a customer. Meanwhile, I put Bitcoin in, I have a certain death benefit. Like how is,
you know, my Bitcoin growing within that policy? Yeah, great question. So before I get into like
the asset management side of our business, I think it's important to know the simplicity of
our product. So we like to say that we basically took a whole life insurance policy from like the
1830s and changed the word dollars to Bitcoin. So I think that part of the reason that you mentioned
that like life insurance as an industry can kind of get frowned upon or looked down on by
individuals or feel a little bit like salesy and slimy is because I think many insurance carriers
out there have made their products needlessly complicated so that they can charge higher
spreads and earn more money.
Really, the reason is if I'm an agent and I'm approached by two different carriers who
fundamentally sell the same thing, those carriers are incentivized to make their product more
expensive so they can pay the agent more money to sell their product as opposed to their
competitors.
Because we're the only people doing this, we've stripped it all back down to its very
basic, most basic bones. So it really is about as simple of a product, if you just remove the
currency consideration, it's as simple a product in the world as you'll find from LifeInsurer.
Now, in terms of mechanically, how it works is our policy structure is what's called a 10-pay,
meaning our policyholders pay their premiums 10 times over 10 years. Then after 10 years,
they're done paying. They never have to pay another premium. They can send us their Bitcoin
or their premiums ahead of schedule. But the policy is actually funded. The Bitcoin goes
into the contract over 10 years. So you would come to us and you would tell us, I want to buy
a policy and I'm willing to pay however many Bitcoin total. And then you just pay always one
tenth of that per year for 10 years. So you could say, I want to pay one Bitcoin total,
in which case you'd pay 0.1 bitcoin per year for 10 years you could say i want to pay 10 bitcoins
total you know it's one bitcoin per year for 10 years you could say i want to pay 30 bitcoins total
you know it's three bitcoins per year for for 10 years um we reverse engineer where in traditional
insurance you say i want a million dollars of coverage and then the insurance carrier does
your underwriting tells you how much you own premium we reverse engineer it just because
most bitcoiners like have a number of bitcoin and they have an idea of how much they're willing to
spend on something so we say how much are you willing to spend we then we do the same underwriting
and then we just it's the same equation just backwards so we we then say for 10 bitcoins of
premium you'll get 15 or 20 bitcoins of death benefit and that ratio of premiums you pay to
the death benefit that we pay out is dependent on how old you are how healthy you are whether or not
you smoke um same same underrating basic underrating that any other carrier does uh ours is
all done online so you don't have to go to a doctor or get blood work done or urine or anything
like that it's all done online um after that it's just you you sign the contract and then as soon as
we receive your first premium the first of the 10 premiums as soon as we receive your first premium
the policy is in force so um you'll owe in the example of you owe one bitcoin per year for 10
years you could send us one bitcoin on day one um we might tell you that your death benefits 15 to 20
Bitcoin. And if you walked out your house the next day, you got hit by a bus.
You paid as one of the 10, but your beneficiaries would receive all 15 or 20.
It's the death benefit is guaranteed.
You don't receive some pro rata portion based on how much you've paid of what you owe as in total.
The payout is a fixed guarantee.
The policy, this might be a little bit more technical, but for the insurance folks listening.
Yeah, the policy. So because it's structured as a 10 pay, it qualifies as what's called a non-MEC or non-modified domic contract, which under the Internal Revenue Code is required to be able to take those tax free policy loans. So that's really the important piece. It's why we structured it as a 10 pay. We don't allow people just to pay one premium and be done paying. We want them to be able to take those policy loans because that for us is like really the primary benefit of the policy.
and the policy itself endows at age 100 which means that the growth of the value of the policy
reaches the death benefit in the insured individuals age 100 so i bought a policy
for every one bitcoin that i put in i got two bitcoins out
the my policy itself grows over my lifetime and that compounded growth uh or that growth
compounds tax-free, but the value of my policy will equal my death benefit when I'm age 100.
So at some point during my life, I'll be able to borrow out more than I ever paid in,
because I'm amortizing to twice as much Bitcoin that I paid in. So I can borrow more than I paid
in during my life. And if I never repay that loan, then when I die, it'll just net out against the
pay out of my policy but um if i do repay it then then my my uh my policy the death benefit fully
pays out to my beneficiaries and the last thing that i would say on the mechanics is um an
unintended benefit really for us is it solves a problem that every bitcoiner has in that it helps
with inheritance planning if i got hit by a bus tomorrow i've no doubt in my mind that my loved
ones would not be able to access my cold storage bitcoin no doubt they just wouldn't be able to do
it um and it doesn't matter how pretty of a treasure map i draw with my crayon on the kitchen
table you're probably not going to be able to do it so for me i actually and i'm in a unique
situation because i work at the company and like i know how highly regulated we are and and the
financial strength and we're not going to like run away with anyone's bitcoin so i trust the company
more than the average person should or does.
But I put all of my Bitcoin in
because I just said, great.
I'm getting the tax advantages
of all the growth and the loans in the future.
That's good.
I'm doubling the number of Bitcoin
that ultimately I could pass on.
But the greatest peace of mind
that it provided me is that my wife,
when I die,
simply has to submit a claim
to a life insurance carrier.
And then she can create,
she can open a brand new account on an exchange
or set up in her own wallet or whatever.
and receive the death benefit paid out for her.
She doesn't need to understand my self-custodial setup or structure
to be able to get the Bitcoin if I got hit by a bus.
Now, I'm not recommending anyone put all their Bitcoin in.
Like I said, I am in a unique situation
where I can probably trust the company more than anyone else.
But for some people, it's a good way to diversify
some of their Bitcoin custody
to ensure that at least some portion of their stack passes on.
certainly well i'm happy you brought that up and you must have talked to
one of my clients because we do recommend cranes for our treasure maps
perfect just gotta stay with some fires yeah you don't want it to melt
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Yeah, Visible 8, the whole nine yards.
But it is.
That's one of my many conversations with clients is,
like how do we make sure this Bitcoin gets to, you know,
its intended benefactories.
And it's obviously going to be a unique asset class
when it comes to that.
It's not as simple as, you know, your stock and bond portfolio.
So I think that is a great concern or, you know,
factor you guys are solving for there.
And then, you know, one of the things I encounter quite a bit,
you know, we focus a lot on self-custody at my practice,
like understanding the trade-offs,
different custody solutions.
If we want to take advantage
of new and emerging financial services products,
whether that's a standard Bitcoin collateralized loan,
whether it's a whole life insurance policy.
Meanwhile, how are you guys facilitating
the custody of the Bitcoin?
So we use Anchorage Digital today
as our primary custody provider.
So we have an institutional relationship with them.
every time we sell a life insurance policy,
we actually open a new vault at Anchorage
and those premium payments get sent
that policy's vault.
Segregated vault.
Segregated vault, yeah.
So to be clear,
the payments go into a segregated vault.
But after that,
for the product to qualify as whole life insurance
under the internal revenue code,
it has to be what's called
the general ledger product.
So it does have to like enter
into our corporate account
for our policyholders to get those tax benefits.
So I don't want to mislead anyone by saying,
like, you're going to pay it into a segregated vault
and then it's going to sit there segregated.
That's not the case.
We have to move it over.
We also have to hold a lot of regulatory capital
that we also obviously hold with Bitcoin.
That's held in our corporate accounts.
And then anytime we do anything
where that puts Bitcoin at risk,
so even just selling a life insurance policy,
because if we if why buys a life insurance policy and then gets hit by a bus the next day
we put bitcoin at risk because we have to pay out more than what you paid us
so every time we sell a life insurance policy we actually have to hold more of our own bitcoin as
reserve it's the main reason we've raised so much money is not to like buy a private jet
although that would have been nice uh it's to capitalize the insurance carrier so that we have
enough regulatory capital to continue to go out and sell more and more life insurance policies
So there's, for our regulator, there's like required solvency ratios and economic substance requirements.
And we have to, we comply with the exact same requirements as any other insurance carrier based in Bermuda.
And I should say Bermuda is not the Bahamas.
Bermuda is like, if anyone works in insurance, it's like the risk capital of the world.
Chubb International, AIG, Swiss Reinsurance, Munich Reinsurance, big global insurance carriers.
based in Bermuda and happy coincidence,
Coinbase International is in Bermuda.
Jack Dorsey's the block,
which has been in the news a lot
over the last couple of weeks there in Bermuda.
So for us, it's like the world leader
in insurance regulation,
but then also this growing practice
for digital asset regulation as well
makes them kind of like the perfect jurisdiction
for us to operate in.
Yeah, that's amazing.
I do want to experience that.
just on the mechanic side of things yeah i think thank you for that detailed layout i think that's
super important for you know not only advisors to fully understand like the flow of funds and how
you know people's bitcoin will be treated but you know for policy holders to you know understand that
as well and so it's my understanding then when you know bitcoin gets deposited in your guys's
corporate account, like you're able to use that pooled capital to generate a yield on Bitcoin.
Is that correct? Yeah, exactly. So the exact same way that any other insurance carrier operates,
we receive premiums in the door. We have long dated promises. So we have the benefit of duration
or like long-term assets. And so we deploy the premiums that get paid in to grow that number of
Bitcoin or traditional insurance would be dollars to be able to cover our long promise And so implicitly in our policy just to get into the numbers implicitly in our policy we guarantee about a 2 growth year over year
in Bitcoin terms.
So again, dollars don't matter.
It doesn't matter what the price of Bitcoin is.
We turn 100 Bitcoin into 102 Bitcoin
over the course of a year.
That's our guarantee to our policyholders.
We as a business try to get about 3% returns
because it's a spread-based business.
We promise you 2%.
We get 3%.
We pass two of those on to you
and that 1% spread is how we make money.
Same way that Northwestern Mutual
guarantees you 5%.
I always pick on Northwestern
because they're one of our biggest investors.
But they guarantee you 5%.
They themselves go out and get 7% returns
over a long period of time,
annualized.
And so they keep 2% spread for themselves.
It's like the most basic elementary explanation of how a life insurance company selling whole life insurance makes money.
It's a spread-based business.
So how do we get 3%?
Because I will be the first person to tell you that the risk-free rate of return in Bitcoin is 0%.
And I actually think that there are a lot of businesses out there, corporates out there,
who mislead people by talking about Bitcoin yield that isn't actually Bitcoin yield.
I would argue that what strategy does is not Bitcoin yield.
It is getting yield on your Bitcoin or using your Bitcoin to get dollar yields to maybe buy more Bitcoin with.
But it is not turning Bitcoin into more Bitcoin.
It is turning Bitcoin into dollars and then using those dollars to buy more Bitcoin.
So we get Bitcoin yield.
The primary way that we do that today is through a product that we created that is simply a tax arbitrage.
So there are businesses, a Bitcoin miner is the easiest example here, but it's really any individual or institution in the world who wants to sell Bitcoin in order to create more Bitcoin.
So a miner is a good example because they cash flow in Bitcoin, but all their expenses are in dollars.
So they have to pay for their power in dollars.
They have to pay for their machines in dollars.
They have to pay their payroll in dollars.
Their auditors and their lawyers and whatever.
All their expenses are in dollars.
So they mine Bitcoin, they sell it to pay for those expenses in order to be able to mine more Bitcoin in the future.
Well, if they're sitting on a big stack of Bitcoin that they mined over the last 10 years,
they don't want to sell their lowest cost basis or their oldest Bitcoin to pay those dollar expenses
because then they're triggering, in the example of a corporate,
they're triggering 21% corporate capital gains tax
on the sale of those low-cost basis of Bitcoin.
As an individual, your taxes will be higher depending on your tax bracket,
but you could trigger 25% long-term capital gains,
24% long-term capital gains tax on a sale of Bitcoin if you need to sell it.
So we have a product where we essentially swap Bitcoin with the counterparty.
They send us 100 Bitcoin.
we send them 96.5 bitcoin back that 3.5 bitcoin spread is our fee that we take so we charge a
three and a half percent as opposed to 21 corporate capital gains um the 96 and a half that we send
them has new cost basis so they can sell it tax-free to go buy more machines if you're a
miner or to invest in something else if you're an investor or whatever else um of the hundred that
they sent us, like I said, we take three and a half. The other 96 and a half does sit in a
segregated vault, non-rehypothecated with any other Bitcoin. So it just sits there untouched,
unmixed for the court over the course of a year. And then at the end of the year,
what they would do is they would send us 96 and a half new Bitcoin in exchange for their original
low cost basis, 96.5 Bitcoin back. So they like it because it's a fully collateralized,
non-rehypothecated loan, it feels like, structurally not a loan, but it feels like a loan,
where they can post 96.5 Bitcoin collateral, get 96.5 Bitcoin back tax-free. We like it
because we take no credit risk. If they disappear and never close that loop, we just take the 96.5
that we're holding in that segregated vault and we make the same amount of money. So we like it
From a balance sheet perspective, because like I said earlier, every time we put capital at risk, which includes making an investment, we have to hold more of our own regulatory capital to offset that risk.
Well, this is like almost as close to a risk-free investment as possible because it is fully collateralized.
So from our balance sheet perspective, we have to hold a less percent of Bitcoin to offset that risk because it's not very risky.
Whereas if we went out and we lent Bitcoin to miners, we'd have to hold a lot of Bitcoin as regulatory capital because that would be deemed as super high risk, as evidenced by the fact that since 2022, like 70% of all miners have gone out of business.
So that's the primary way we do it is through tax arbitrage through this product that allows people to get stuck to basis on low basis Bitcoin.
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well thank you for that uh detailed explanation and yeah it really is so beautiful like i'm
enamored with this like as you and i've had more conversations as i've you know learned more about
meanwhile there's just like all these things that not only you guys make good business decisions on
but that like overlap with like the bitcoin ethos and like insurance you know oddly enough
since like insurance being a little bit more of a conservative industry but a very solid foundation
to build additional financial products and services on top of.
And then, you know, Bitcoin itself, like, I think folks being a little bit more, you know,
conservative or, you know, libertarian leading at least, which is, I think, kind of counterintuitive
to the person that's not really, you know, in it.
They just think like constantly like risk on.
But a lot of my, you know, Bitcoiners I've interacted with, like, you know, personally
or morally, like have a little bit more of a conservative worldview.
and they're not looking for you a lot and they don't need to because everything's fully denominated
in bitcoin which is kind of like the the magic and you know you guys built a you know separate
business segment that has customers that is fully denominated in bitcoin and so it's so easy to
track it's like there's no staking there's no magic on how you generate bitcoin yield it's like
very black and white like we have bitcoin we service bitcoiners we get paid back in bitcoin
we will then pay you additional bitcoin in your policy it's like yeah wow it's brilliant yeah and
and what i like what i like about that framing is um and maybe maybe this is a way to relate our
product to like the more native trad fi insurance folks that might be listening is i and again i
I was picking Northwestern.
If you bought a 10 pay whole life product,
so like the analogous Fiat product from Northwestern Mutual,
there'd be an illustration where the columns would be like your premium
payments, your guaranteed growth,
your non-guaranteed growth and the death benefit when you die.
Our product looks the exact same.
We have like the exact same illustration where you have your premiums paid,
you have your guaranteed growth.
The last piece is you have your death benefit when you die.
For us, the non-guarantee is the future appreciation of Bitcoin itself.
So, like I said, if you bought a Northwestern policy, they'll probably guarantee you like 5% growth.
We guarantee you 2% growth.
So we're losing on a head-to-head, just like guaranteed growth in nominal terms.
But we're growing in Bitcoin, they're growing in dollars.
So then their non-guarantee is however much it is, a couple percent maybe.
Well, if you assume that the go-forward kegger of Bitcoin is 5%, 10%, 20%, 30%, 60%, whatever you assume it is, if you assume it's more than 5%, we have the best performing life insurance product in the world.
And I would venture to argue that a floor at a 5% kegger for Bitcoin over the next 30 years is a pretty good bet to make.
Yeah.
Okay.
um jamie this is this has been fantastic my my last question for you here is just like i think
products like these like i mentioned at the top of the show are so important for you know people
sitting you know in my seat to be able to add additional value to their clients what is your
guys's kind of outreach or reception been from you know advisors that are interested in this product
yeah i frankly i think that um and the reason i appreciate you so much and take the opportunity
anytime somebody asks me onto a show like this is
the biggest hurdle we have is just education.
We're the only people doing it.
It requires like 30 minutes of sit down,
ask questions, wrap your head around it.
At some point, I love doing it
because at some point like the light bulb clicks
and you can see it.
We're like, oh, it's just life insurance,
but the currency is different.
And that's why I typically start with like,
just imagine a life insurance policy in a foreign currency.
Like that's kind of like the starting point for me.
Just the foreign currency has the potential to appreciate 30 or 40% every year.
But that's really for me is the great benefit of being on this show and others like it is the outreach that we've received from advisors is, wow, this sounds really cool.
But I want to make sure I understand it so I can represent it accurately to my clients.
Because I know as well as anyone coming from the world that I came from, that the greatest currency that you have with your clients is their trust.
And as soon as they don't trust you, you're out of business.
And so I don't think anybody wants to bring a product to their client that they themselves don't fully understand.
And so I welcome any opportunity and our team welcomes any opportunity to sit down and do some of that education to get people comfortable.
That's amazing. I can attest to that for a team.
took me about a little slower than the average i wasn't gonna say it i was like dude stop calling
don't get this already uh this is awesome man how can people find you to get a hold of you
yeah our um our website is meanwhile.bm you can type in meanwhile.com and we'll go and see in
place uh i think our x or twitter is at meanwhile um my name is danny bear um you can reach out to
me on LinkedIn. My email is danny at meanwhile.bm. So you can reach out that way too. But like I said,
happy to either myself speak with folks or find the right person on our team to speak with folks
if they're interested in learning more. But really appreciate you having me on.
Pleasure, Zars. Danny, thanks so much.
Thanks, bud.
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