Bitcoin is one of the most liquid assets in the world.
Yes, the volatility historically has been super high.
We know what the returns have been historically.
There is more transparency in Bitcoin than with virtually any other asset for a variety of reasons.
And that's an interesting conversation that we've been having with clients is saying,
hey, you're interested in private or alternative investments.
This is another thing to think about.
And from a risk-adjusted perspective, we propose that Bitcoin is superior.
Deal.
Stupid.
Everything is bullish for Bitcoin.
Immoral.
It's going up forever, Laura.
Fix the money.
Fix the world.
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Welcome to Bitcoin for Financial Services Media,
the podcast where somebody 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 Gerard, co-founder of Citrine Capital Advisors.
We're discussing Bitcoin's role in wealth management and our fiduciary duty to serve our clients using Bitcoin.
Let's get started.
Hey, everybody. Welcome back to Bitcoin for Financial Services podcast.
We're honored to be with Gerard, founder, co-founder of Citrine Advisors.
Welcome to the show, Gerard.
Thank you. Pleasure to be here.
we got to know each other through the bitcoin financial advisors network i mentioned them on
the show a handful of times i've just gotten so grateful for that group one i think it's
awesome just being able to form a collaborative brain trust of you know folks that in the advisory
space are talking about bitcoin why don't you just give the audience a little background on
yourself background on your firm how you stumbled upon bitcoin financial advisors network and how
you started, you know, working in this space. Sure. So I'm co-founder of Citroen Capital. We're a
San Francisco based wealth management firm and tax preparation firm. Historically and primarily,
we have served tech professionals with company equity conversation and startup founders and
business owners. And we've been specializing and just dealing with the complexities of
equity compensation and private investments. And over time, that also has shifted to more of a
Bitcoin focus as well. That's exciting, man. One of the things that I would love your insight on,
and so it's a little easier to integrate Bitcoin, I think, into your business if you're kind of like
the sole shock caller. I know you have a partner. What have those conversations been like?
uh yeah i know he uh maybe orange filled you if you want to share that with the audience and just
what it's working like what it looks like working collaboratively with a partner to bring bitcoin
to the business to service bitcoiners or if you've advised uh businesses that you know are interested
in bitcoin but you know maybe one of the partners is you know unsure definitely yeah happy to dive in
so our bitcoin journey started in let's say 2014 approximately um no surprise because we are in the
San Francisco Bay Area, there was clients essentially more interested in Bitcoin than
we were at the time. Absolutely. That's fair to say. So clients were bringing up Bitcoin to us.
They're saying, hey, we have this or should we get into this thing? And no surprise, as the
traditional financial planner, we brushed it off as being super speculative. We said, hey, there
really isn't a place in the portfolio. Maybe we think about it in the speculative bucket,
but we shouldn't go outside of that traditional five or 10% maximum, let's say. And we truthfully
didn't really understand it at the time. And it was also admittedly quite a bit different than
Bitcoin is today, right? There's just so much more momentum, regulatory clarity, et cetera, behind it.
But that was kind of the experience that we had 2014, 2015. And we fast forward until maybe about
late 2018, I would say, and my business partner, Ryan, he's like, hey, we really should take
another deep dive into this. We feel like it's our fiduciary duty to our clients. We need to
really understand it far better. It's not going away clearly, and potentially it's going to become
even more of a important asset. So we really took a very, very deep dive into this and took the time
to go through books and podcasts and everything we can literally get our hands on and as of 2020 we
implemented bitcoin exposure in all client portfolios unless they opted out which was a
very small percentage that opted out so since 2020 we have had bitcoin exposure in the portfolio
so as i mentioned it was ryan that initially orange-pilled me and encouraged me to really
think about this in a much different way than we historically had. And that's been our journey.
And it's been an interesting one. And since then, we've really been obsessively researching about it
on a pretty much daily basis as many Bitcoiners go down the rabbit hole.
40 hours of Bitcoin podcasts a week.
Yeah, you have to. That's just a baseline. So I guess talk us through what were some of the
resources that you all pulled off the shelf to actually dive deep into this. And I know that
things have changed a lot. And I guess my real question is like, are we talking about 2016,
17, 18, or was it more 19, 20 when there was quite a bit more in terms of books, podcasts,
and resources to learn? Yeah, our research started definitely in the 18, 19 period,
and hasn't stopped. There definitely wasn't as many resources as there are today, of course,
it's progressed significantly. But we really just tried to listen to as many podcasts as possible.
Unfortunately, at the time, the space was a little bit cluttered by altcoins, right? So
there was some of that going on in our early research. And fortunately, we didn't really get
involved in that aspect. And we were pretty focused very early on in the Bitcoin sense.
And it was just a lot of podcasts that we were listening to. Rick Edelman was very early in the
space, even though he's since somewhat migrated to other crypto, if you will. But yeah, we've been
pretty hyper-focused on Bitcoin only almost from the beginning.
What year were clients approaching you about it?
That was even before we were knowledgeable about it.
So that was probably 2014 was the first time that we really started to see about it.
And then we were trying to build frameworks around that without ultimately having much knowledge about how powerful this thing can become.
Yeah, man.
Well, a huge tip of the cap for you.
I was in kind of largely the same boat.
your basilic hadn't been you know founded that time but you know i'm traditionally trained in
finance and i was just like so easy to to brush off if you're in that world so uh you're having
a humility to you know listen to your your clients you get an idea of what direction they would like
to go with uh you know with their wealth uh is super important and you know i think it's important
for advisors to have your humility to to hear them out and and you know kind of embrace their ideas
and see how you could be you know helpful and so i think you know a lot of advisors will find
themselves in that seat, you know, where you've probably talked crap on Bitcoin, guilty. And it's
okay to like admit, it's like, you know, I was wrong about this is actually pretty sweet. So I
think that's awesome that you guys were able to do that. Yeah, I've kind of gauged the sentiment
over time, especially at financial planning conferences, I'll somewhat quickly steer
conversations towards Bitcoin to really see how they react towards it. And it was as recently as
2023, I want to say, where the majority were still laughing, saying, oh, wow, you guys have
Bitcoin exposure in your portfolios. Aren't you guys worried about that from the reputational risk
or isn't it too volatile or all the FUD, historical FUD that always gets thrown around? And I have
been tracking that. And even one year after that, 2024, it almost went to a 50-50 sentiment in terms
of who I was talking to. And then more recently this year, when I was at those same conferences,
it was almost the exact opposite of 2023. So in not that many years, things have shifted so quickly.
Yet I still feel we're still super early on, especially in the financial services industry.
Yeah. I'm curious how you all navigate the whole broader crypto conversation.
I speak with a good amount of financial advisors, even the ones in TradFi world that are at least open to the conversation.
They still group everything in this dirty C-word crypto.
And I'm just curious how you approach that with planners and advisors that you speak with at these conferences.
And if you've ever gotten any pushback from clients to want to broaden out that portfolio and how you've reacted to that.
Yeah, great question.
And so for the advisor lens, I will often get that question, right?
Saying, hey, I have started to think about this or maybe even believe in it.
But how do I know that Bitcoin is the right one and the only one?
Right.
And those are just conversations that you need to bring back to the to the basics, just first
principles.
Right.
You go back to why Bitcoin is why I'm so optimistic about Bitcoin.
So from the decentralized perspective, from the cap perspective for the supply and a variety of other things, I try not to get super technical because there's just so many different coins to begin with and you can't summarize all of them in just a couple sentences, which is usually you're not going to be able to have an hour long conversation with a lot of these folks.
So really just diving into the basics on what Bitcoin is, why we believe it's so different than everything else in the crypto casino world, and really distinguishing it as a superior asset.
What's also interesting to note is historically, we've also had crypto clients coming into our firm.
And from the very beginning, we want to disclose that and say, hey, we are knowledgeable about this space.
We can definitely help you.
However, we are extremely optimistic about Bitcoin and really nothing else from the crypto perspective.
And that also really relates pretty significantly to our core specialty in company equity conversation, where we see a ton of stock concentration in one or a handful of companies.
and that's really how we go about the planning and those conversations as well saying hey
this may do well right we don't know it may do well but this really from a planning perspective
we're going to treat this as any other concentrated risky position for the crypto lens
and this is why you should consider the riskation plus bitcoin exposure for example
yes i love it i love it we should be boldly bitcoin only uh and i imagine just being you
know in you know san francisco and the silicon valley you probably had more pressure than
most of buyers just kind of being uh you know a tech forward you know ecosystem out there
were there a lot of clients obviously they're coming to you with bitcoin or were you seeing
you know a lot of these other you know altcoins that they had interest in and you know were they
When you told them, it's like, yeah, we really kind of work with Bitcoin only.
I'm sure they kind of get a light in their eyes, finally somebody that understands.
But then you drop the hammer on them and it's like, by the way, yeah, Bitcoin only.
Did you see it diminish or they still weren't willing to work with you because you understood
the space broadly Or how did you kind of navigate that kind of questions fortunately we didn see a ton outside of bitcoin for those who did have uh exposure so we didn have to have a ton of those
conversations um definitely some and obviously uh in hindsight if we've been working together for
maybe a decade plus at this point you've also seen how bitcoin has done against some of these other
ones. And also sometimes over that same period, they might have gotten rug pulled. They might
have seen different situations happen in the space. So even without our guidance and advice,
that was probably something that they were going towards as well.
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free consultation. I'm curious, you know, you mentioned it kind of at the top briefly.
Sounds like you all are a kind of a one-stop shop in terms of financial planning, as well as the tax
planning, tax prep, maybe highlight that. I think that it's a very, very strategic move. You know,
we've, we've actually even explored that within our firm as, you know, finding really good
partnerships to kind of keep all of it more or less under one roof. Just curious to understand
how long have you all been at the tax side of things? And I guess, have you seen a ton of value
add and stickiness with clients where they're coming to you for both of those? Yeah, great
question, Jordan. So maybe I should take a step back and just give you a little bit of history of
the firm because that kind of goes along with that question as well. Our firm was launched in 2014
and almost from the very beginning when we were on intro meetings with prospective clients,
they would say, hey, who is the CPA that you guys can refer to or partner with? So even before they
hiring us they were asking hey who's the tax partner that you'll utilize because equity comp
often is not super straightforward not everyone really understands it and they want to make sure
that yes we have the expertise in that space but we also want to complement that with on the tax
side so almost immediately we started getting those questions and we started to initially
develop a partnership with a local CPA and over time that quickly morphed into a white label
solution that we were able to bring in-house through one of our financial planning organization
memberships and that lasted for about three years and then I want to say it was
2021 or 2022 where we officially bit the bullet in and officially hired Todd our CPA as a
official employee of the firm. So we've actually had tax prep offered to our clients more years
than not over our existence, but it's looked so different over time. And that's definitely been
a huge driver of our growth. I would say enter cautiously, Jordan, if you are considering this,
because, well, you come from a CPA background, not a financial advisor background, but nonetheless,
there are still a lot of things that we need to consider when incorporating these two somewhat
related but somewhat different services into one umbrella if you will but for us it definitely has
been a huge driver of our growth looking back I wish we did it sooner but there's also been a ton
of growing pains over the years yeah that's that's great insight your why don't you highlight
some of those things to consider? Yeah. So if you are a financial advisor, right? And you're
trying to incorporate a CPA purely from a business owner perspective, you have to think of, hey,
we're going to be paying the CPA a salary, right? And initially I was concerned that a CPA that we
would hire would be super busy during tax season and kind of not doing a ton outside of that.
The reality is 100% the opposite, right?
Todd has been one of the most significant benefits in having on our team.
He's busy, too busy sometimes.
So it's great to think about from that perspective where we're utilizing him to the best of his capabilities.
There are all kinds of compliance, operational things that we need to think about.
it was way more annoying than I thought it was going to be to find an E&O insurance for example
that was the last thing on my agenda saying hey errors and emissions insurance we can just add tax
prep on our existing E&O insurance and that definitely was not the case so that took up
months of my time to try to figure out that and get that all sorted so it was little things like
that over time and then I mentioned previously that the white label solution that we had
previously before we hired in-house that had significant growing pains as well,
where ultimately that was the catalyst for us hiring someone because we no longer felt like
that was the best fit for our clients. Yeah, it's really interesting. I mean,
the tax industry itself is just changing a whole lot. And I think it makes a lot of sense to pair
of the two just because clients need both, right? And even Bitcoiners, they need that tax planning
for their normal comp for any kind of capital gain loss harvesting conversations. And I'm sure
you all have seen it. Clients are happy to be able to go to one place and have one conversation
versus two conversations and then have to bring everybody up to speed all the time and things get
missed in between. So that's really interesting. I'm really glad to hear that it's going well. I
guess one final question maybe on that subject would just be, are you all seeing enough demand
on the tax front side that you are thinking you need to expand that part of the business? Or are
you all pricing it at a place where you feel good about keeping that specific client list tight and
not needing to hire too much more on top of that? Inevitably, we will need to, right? There will
be a natural maximum limit for that, but we're good with where we are now. We actually did hire
a new team member who is partially going to help on the tax side, depending on what time of the year
it is as well. So, Atok can get a little bit more help. We've also brought on additional software on
the tax side to make things much more efficient and streamlined than ever before. So we're
continuing to invest in that. I don't feel like we need to hire a second full-time person
on the tax side, but that can change pretty quickly, I suppose.
Yeah, that's interesting. Gerard, I want to circle back to, you know, when you're going to these,
you know, traditional financial conferences, talking to, you know, financial planners,
etc. What do you think has kind of been the catalyst for their change in tone about Bitcoin?
A lot of them is simply because they were forced to. They were forced to probably from their own
clients or other advisors. That's what I'm seeing is I see less and less people who are not interested
in Bitcoin, even if they're still opposed to it. They're still a little bit more interested,
a little bit less closed off to that.
So I would just say the natural forces
of either peers or their clients
really pushing that.
And obviously the media and momentum in general
is really in favor,
especially recently of Bitcoin.
So I think all of these things
really have just been a reason for that.
Can you also,
so I've been in the room
and some of these financial advisor events
And, you know, it seems like private investments, private credit, kind of like the advisor being able to say to their clients, hey, we've got access to, you know, different types of investments that aren't open to everyone.
It's like a really good driver.
It seems like how do you see Bitcoin fitting into, you know, the Blackstones of the world or or whomever it might be that come in, they pitch at these different events and they kind of talk through their their product.
obviously bitcoin is its own animal we don't necessarily we are a decentralized network of
users but i'm just curious how you see the two comparing and if you are seeing any products
that are coming to market that you all are recommending to your clients that are bitcoin
native maybe that fit into that private investment category yeah great question so we've had
many questions from clients, especially asking about, hey, when and if is it appropriate to
incorporate private or alternative investments in their portfolio, whether they're private equity
or VC. And a couple of years ago, we took a pretty deep dive into this and it really
confirmed what our thoughts were. And ultimately, as you go down the rabbit hole, you really start
to think about a lot of things in comparison or from a Bitcoin lens. So that's also how I was
looking at that with, but from a alternative or private asset perspective, there are numerous
problems that we found. And ultimately, this is what our clients wanted to hear from us.
number one is the space is just opaque so there isn't transparency they don't mark the assets
to their market value which hugely distorts the theoretical volatility or returns
so from that perspective there's all kinds of things going on but that ultimately is because
the assets are not being updated the values are not being updated on a regular basis and even if
you're lagging by a couple days or a week or a month versus the benchmark that you may be tracking
that really influences and manipulates those numbers significantly number two is from the
just total cost perspective usually a lot of these funds are doing a two and twenty percent
framework so super expensive and that's a really high bar for how much you need to perform simply
to kind of get to square one if you will so that was a big one and that's also something that i'll
tie into my previous comments is a lot of these conferences are also promoting alternative
investments and they have a lot of vendors in that space that come to those and a lot of them
are saying, hey, we have access to the top funds. And if literally 100% of the people are saying,
hey, we have access to the top funds, then by definition, that just doesn't make sense, right?
You can't have every single person there saying, hey, we have access to the top funds.
What about the bottom funds? Does anyone have access to those? So, but that's the reality is
the top quartile, if you will, definitely can and should outperform significantly and have
outsized returns but the middle or even the bottom tiers especially when you're factoring in the risk
or illiquidity of these really have major disadvantages and to tie in the bitcoin piece
there i'm looking at this where bitcoin is one of the most liquid assets in the world yes the
volatility historically has been super high we know what the returns have been historically
there is more transparency in Bitcoin than with virtually any other asset for a variety of reasons.
And that's an interesting conversation that we've been having with clients is saying, hey,
you're interested in private or alternative investments. This is another thing to think
about. And from a risk adjusted perspective, we propose that Bitcoin is superior.
mic drop oh i love that um well i i think that's really smart but it's interesting too because to
me you know so it's like okay when we're looking at clients your entire portfolio what's your your
risk appetite what do you want exposure to um and this ultimately kind of correlates you know to
position sizing across different asset classes and that's just one of the most common questions
I get from my peers,
friends, family,
my clients is when it comes to Bitcoin,
especially if they're new,
how big a position
do we take?
And I always kind of default to the
company line.
My client specifically is like, well, as a fiduciary,
we actually have a lot of flexibility to
determine that I know you have some really smart thoughts on that Why don you kind of take us through how you view Bitcoin through a fiduciary lens Definitely So a lot of our investment
philosophy is around, let's say, passive or index-based strategies, right? Super, super common
in the advisory community. So if you believe in that, by definition, we know the market cap
approximately for Bitcoin. Obviously, it varies, but we know approximately the market cap for
Bitcoin. We also know the market cap for global equities. And that, just by pure mathematics,
gives you approximately a 2% or 3% allocation in Bitcoin. Now, if you believe in the index or
market-based market cap weighted approach, that's really what you should have in the portfolio.
And to go further, if you are more optimistic, then we definitely want to have more than that
in the portfolio, which is, of course, where we land. If you're pessimistic about Bitcoin,
then yeah potentially you have less uh but it's also kind of a uh if you if you think of it from
a shorting strategy where if you were to short or be pessimistic about bitcoin then you have less
than two percent that's a very scary position for me to be in so i would think at the uh at the core
you want to have some minimal exposure two or three percent and depending on the client's comfort
and the advisor's comfort, you might want to dial it up from there.
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I mean, honestly, a pretty natural place that we could take the conversation from there is
all this concentration in AI and, you know, where people are like, oh yeah, I'm invested
in a balanced portfolio, but then you go look at the weighting in the S&P, right?
And I mean, I'm no expert, right?
So you guys correct me here.
But it seems to me that everyone's making the same bet on AI.
Gerard, I know we could go a lot of different directions on AI, but maybe we start with just
position, you know, portfolio positioning with AI.
And then I would love for us to get into the conversation of your thoughts on how Bitcoin
and AI actually will end up working together in the coming years.
Yeah, so for us, so many of our clients already are at those companies, whether it's
Microsoft or Google or OpenAI or Anthopic.
So they already have direct or indirect exposure to AI from the company equity perspective.
then we also have some of those clients who say hey what if my company doesn't pan out but i'm
still super optimistic about ai in general so they may be at a open or anthropic but they'll say hey
can i get ai exposure kind of across the board so then we'll talk about of course you do have
some ai exposure already through all the public companies in the portfolio
right and then we'll also have clients on the opposite end of that to say hey we actually have
no exposure to these companies because we don't work there we don't have company equity
so what can we have from from that lens to be able to have some exposure in addition to what
we have in the private company portfolios so this is something that I've been it hasn't been
published yet actually but something that I've been researching and and starting to write on
is the overlap, the synergy between AI and Bitcoin, which I'm sometimes hearing being
discussed, but not as often as it maybe should be. So with my thoughts, I really focus on three
different things. So number one is the energy demand that is needed from an AI company or
data center, let's say, right, which is significant. And that's only going to grow realistically as AI
continues to gain momentum. So where Bitcoin comes in from that perspective is they're basically the
exact opposite in terms of the profile for how much energy they need or can use over time. So
with an AI data center, it has to be online 100% of the time, right? You can't go on your open
at your chat GPT, you'll enter a query and it'll say, hey, let me get back to you tomorrow morning.
that's just not how it works right it has to be online and it has to have power 100% of the time
that's non-negotiable bitcoin is the exact opposite where it can come on with a ai data
center and be able to soak up power when it's not in demand or it's inexpensive or it can
essentially stabilize the energy system that the ai data center is running on
whether or not you're pairing that with solar or wind energy, and whether or not you have battery
capacity to back that up. There's been tremendous, just a lot of different studies on what happens
when you introduce a Bitcoin miner to that kind of flexible flexibility on the grid and the demand
it requires for that. So that's number one. Number two is all the AI agents that are starting to be
developed and as they progress and become more advanced they're going to need some kind of
internet money quote-unquote which is kind of the funny thing that a lot of people refer to
bitcoin as but that's where i believe we're going in that topic is internet money where
these ai agents will be able to transact with each other seamlessly without human intervention
and they'll need a money to be able to do that.
And this is also an interesting conversation
in regards to what we previously discussed
with Bitcoin versus crypto
is crypto can't do this for a variety of reasons.
They are permissioned.
They're not transparent.
Variety of other things you might want to say,
but Bitcoin is the only one
that can make this work for AI agents.
So really fascinating to think about
from that perspective.
And number three is looking at all the AI content that almost is believable for real, right? You can make videos and images and it's getting very, very close to becoming impossible to understand what is real, what is not, what has been authorized and so on.
So similar to how when you're holding Bitcoin in self-custody,
you are cryptographically signing on that transaction
with your device, I believe that that same concept
will be applicable to future AI content.
So you'll be able to sign cryptographically and say,
hey, this is something I created.
It's on the blockchain with a timestamp.
This is when I created it.
I did create this and anyone will be able to similar with the Bitcoin blockchain, be able to go on there and easily and transparently verify that to see if it's original or if anything has been changed.
so three somewhat futuristic ideas on how i believe ai will supercharge bitcoin uh and to
take a step back uh i think this is really important because it applies to those clients
we're asking questions about hey how can i participate in ai even though i don't have
company equity directly in this one company or how can i potentially hedge against this with ai
doing super well. And this is one area that I've been focusing on, and I think it is going to be
very powerful in the future. Yeah, that's fascinating, man. And yeah, it's kind of our
investment thesis is we want exposure to real world hard assets predominantly, but
we really kind of view the two macro trends as Bitcoin and AI. And if you don't have exposure to
that, or you're not investing in companies that are actively building in this space, like to
probably be left behind, like pretty bearish SP, you know, 493. I'm particularly interested in this,
you know, the AI agent component, I've done some, some research on that. And we can kind of, you
know, parlay this into how you, you talk to Bitcoin about your clients, but the, the custody
aspect of giving, you know, an AI agent permission to spend out of a wallet. How do you think that
actually ends up working? That's a great question. I think that all of these things are
in its infancy and we're simply just going to see. It's really tough to predict how that happens. I
am quite confident that AI agents in general will be able to transact across the board,
but specifically what permissions they have and so on is tough to say. What I will say,
and tying in the Bitcoin lens is if they have to jump through hoops, if they have to
work with a either a fiat or or a crypto that doesn't have final settlement all these very
very important things the the framework very quickly falls apart and is no longer possible
so i think with bitcoin we're able to build on that especially with second layer tools like
lightning and and so on um and i think those are the the ways that we can navigate that
yeah i can almost think like i could think about seeing even utilizing open ai's you know existing
api right you just top it up uh and then it uses those credits as you're pushing you know api calls
through and i'm i'm honestly not super uh you know up to speed on the whole ai agent in terms
of like being able to make its own decisions. My understanding is that, you know, I can run
things through like a Zapier or an N8N type of tool and then plug ChatGVT in as one of the steps,
right? Is how I'm basically understanding. But Gerard, you're kind of talking more so
these agents that are in some ways, they are making decisions based on a knowledge base that
you've given them autonomously and potentially they have budgets set for, you know, okay, we need
to get this done. We need to find either a person or an agent that can do this for us at the lowest
cost. Up to this level, you have the permission to spend out of this wallet. Sure. Is that how
you're thinking about it? Absolutely. And I think we can only begin to be curious about all the
different ways that this might play out.
But essentially, you touched on APIs already.
They might be buying compute resources in the future.
They might be buying just additional capabilities and services.
They might be also factoring in how Nostre with streaming and everything on that platform.
So there's just so many different varieties of utility that we can bring to this.
But I'm extremely excited about it. And yeah, just continuing to think about all those different frameworks.
Very nice. All right. Well, I think maybe we take the conversation. I know right before we got started, you had mentioned that you're wanting to really hit the hit the ground running this coming year and speaking at a bunch of different conferences, be it more traditional finance conferences for financial planners, as well as the Bitcoin conferences.
um you know it's something that i know wyatt and i have spoken about at length about just this
fiduciary duty i'd want to give you the opportunity to talk through how you see you know how financial
advisors specifically i guess since they are driving investment decisions should be thinking
about bitcoin and if they're not thinking about bitcoin you know what are the risks there as well
yeah definitely so definitely something that i'm very interested in to continue to
promote in the advisory and financial services space um i i really do feel like we have a fiduciary
responsibility to not only understand what bitcoin is but also be able to apply the framework from an
advising or tax lens or what have you um and the reality is the numbers uh kind of speak for
themselves where we're at approximately one in seven uh americans that have bitcoin exposure now
so um purely from the business owner perspective if you're not able to or willing to advise on
bitcoin they're probably going to fire you so hopefully that's incentive enough um to be able
to learn about it um and it no longer in my opinion really appropriate to say hey uh bitcoin is no longer for you It too volatile you can really ignore it from that lens you really have to take a deep dive and if you believe in those
things you need to now back up and say hey this is why i believe it's too volatile or this is why
i believe it's not for you right it's okay to uh to non-incorporate it my challenge is that you
need to understand it to the point where you can make those make those points um but from from
to continue the conversation um as many bitcoiners will probably say we believe that money is broken
right so we need a system and asset that's designed to be able to help them navigate the
world going forward where their fiat currency is is just a melting ice cube if you will right it's
It's not able to uphold their purchasing power over time.
And as Lynn Alden famously says, nothing stops this train.
And I think it's really important to understand what the problem is and going from there.
So the challenge that I'll have for advisors is to, number one, simply understand what money is, which hasn't really been taught in financial advisory training, if you will.
So I think that's where we start is what is money? What are the ideal properties of money that you would want to have, regardless of if it's Bitcoin or not? If you're using fiat or gold or whatever else, there are pretty universally agreed upon metrics on what you would want sound money to be.
and from there we can talk about the differences between fiat and bitcoin and crypto as well can
be baked into that conversation and ultimately going back to the scarcity and security of bitcoin
and whatnot so that's how i would think about that and then ultimately because we are talking
with financial advisors we're going to be talking about how it fits into the portfolio are you going
to be taking self-custody? Are you going to be implementing one of the ETFs? Hopefully,
you're not leaving your coins on a exchange, especially a non-Bitcoin only exchange.
So those are the different things that we're going to be chatting through. And that's
what my conversations with fellow advisors usually look like.
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One of kind of my pet theses is why the wealth management industry has been slow to adopt
Bitcoin is because it really kind of threatens their business model.
Do you think I have a leg to stand on there?
How do you think about this?
I would modify your claim a little bit, Wyatt.
I would say that financial advisors have big egos, and that's a large part of it.
I don't think that threatens the business model is accurate or even appropriate to claim because
let's say most advisors are on the AUM. We're not, but most advisors are on the AUM model.
And if you're on the AUM model, you have the ability to incorporate those Bitcoin ETFs into
the portfolio and charge on them just like you would any other asset. There are also
spot Bitcoin platforms that you can implement if you don't want to do the ETF. You have the spot
Bitcoin platforms directly that you also can bill on as well as part of your advisor practice. So I
would say in most cases, you have the ability to as an advisor be able to add that into your
lineup, your framework and still be able to be compensated for it. And you should be able to
be compensated for. Bitcoiners really need financial advice. And there are definitely
tools to be able to navigate that cleanly. Yeah, that makes perfect sense. I know we're
getting close to our time. One quick thing, I actually just ran across a client that is in a
situation, it sounds like you run across very often, which is very heavily invested in Bitcoin
and then also having a lot of stock options in a Bitcoin-related company as part of compensation.
I'm just curious how you normally would go about,
I know that's probably more concentration than you would normally see,
but just curious to get your thoughts on how you would approach a conversation with a client like that
who's obviously not an investment advisor,
But just curious to get your thoughts on how you potentially de-risk that portfolio into other positions.
Sure. Yeah, we do see definitely some what we'll call real Bitcoiners, which are folks who have been holding for years and decades sometimes.
And often because we are on the barrier, they also have company equity exposure and concentration risks and so on.
And often some of those are also illiquid or private assets as well.
Ultimately, everything comes back to the client's goals.
So we really need to deeply understand what their goals and objectives are.
But ultimately, once we do understand what they're looking for and wanting to do, there's really only so many ways to de-risk, right?
You can potentially divest from the company equity if you have the ability to.
Maybe there is no market for that, or maybe it's private and you can't and you'll be blocked for that.
So then you move on to, hey, what other liquid assets do we have?
So we have seen those situations as well, where they basically have illiquid assets and they have Bitcoin.
And I really don't want to sell Bitcoin and don't want to recommend that.
But ultimately, that might be the only recommendation that we have and the only strategy that we have.
You could also, I suppose, take debt against the Bitcoin.
Everything has its tradeoffs.
But yeah, that's one thing that we're seeing is needing to solve for simply cash flow,
not even a bigger thing like a house purchase or whatever but simply solving for cash flow
to be able to live their lives and it's great to have a huge net worth on paper but if you don't
have funds to at least live your life on a daily basis and potentially enjoy it to go further than
that we're kind of missing the point as well right so we need to really use bitcoin as a tool
yes in a lot of those cases we might need to sell the bitcoin if we have no other options
it also really comes back to how comfortable they are with bitcoin as an asset versus something else
that really goes into our framework as if they're extremely comfortable with the potential volatility
and really understand what it is that's something we'll definitely incorporate as well into the mix
ideally we're able to divest from the company equity because they can probably get more of that
over their careers versus Bitcoin is going to be,
in our opinion, more and more difficult to attain
over time just based on price momentum.
Yeah, that's interesting.
One of my last questions for you, Gerard,
how do you talk to your clients about custody?
Custody is a really interesting one.
We've actually started exploring that more
And we've been very transparent from the very beginning that Bitcoin in self-custody is the superior form of ownership.
Yet it's not appropriate for so many of our clients, especially because they were not Bitcoiners when we first started incorporating Bitcoin in their portfolios.
And many of them don't have the desire or even skills or just detail-oriented mindset to be able to take self-custody.
So we will talk about self-custody versus the ETF. What are the trade-offs on doing this versus that? We do feel that self-custody is superior, but historically, the majority of our Bitcoin exposure, especially from the client's lens, has been through the ETF.
I would say that's been great because it allowed us to have that exposure.
We didn't need to rely on them to buy the Bitcoin, set up a wallet, etc.
But we're having more and more of those conversations over time to say, hey, we've had this thing.
There is also self-custody Bitcoin.
This is how it's different.
This is why you might want to consider it.
And once they want to move forward in those conversations, advising them on wallet setup,
best practices, how we incorporate that into the estate strategy and a variety of other
implications from a planning perspective. Yeah. And I assume, so I assume you're not
normally advising folks to go straight up from the ETF into cold storage. Is it kind of like,
we're going to draw a line in the sand, assuming they're, I guess, DCAing into it and okay,
post this date, now we're going to acquire Bitcoin into this other. So we don't trigger
a taxable event is that generally how you're doing it yeah we're definitely taking it on a
case-by-case basis but in some cases we'll say hey we have a very healthy amount sitting in the
bitcoin etf let's also consider just starting to accumulate spot bitcoin and then this is
once you start doing that these are the recommendations and best practices around
wallet in custody setup and we'll talk through all those different details there's depending on
their sophistication level and comfort with those self-custody frameworks that will really dictate
what we might recommend and what services we might want to bring in in addition to that
and really just going from there. So it's really been a super customized solution based on what
the client wants or needs and we're happy to just talk about Bitcoin.
aren't we all that's beautifully said
cool well this has been great gerard i really appreciate you coming on
and um yeah i think more and more financial advisors need to be listening to
uh guys like you and guys like wyatt and just getting the perspectives of you know a couple
folks who have been in this space for a long time now and very very excited to hear uh you know
we could talk offline, but about some of the conferences you're planning to go to this coming
year and speak at. I think that that's actually a big part of this podcast as well as trying to
get out into the years of as many, uh, normal advisors, traditional financial advisors as
possible, uh, to kind of spread the, uh, spread the news kind of thing so that everyone kind of
gets up to speed as quickly as possible. So really appreciate you coming on. I'll let Wyatt, uh,
close out with any of his thoughts that he can hand off with any, you know, any closing thoughts
for you and where people can find you if they want to work with you. Yeah, definitely, Matt. No,
this is a great conversation. It's always a pleasure to have a Bitcoin for Financial Services
Summit veteran and speaker on the pod. So we're looking forward to having you back out again in
October of 26. We're workshopping, doing some cool things just to make it, you know, bigger and
better. And, you know, like Jordan said, we just want to want to grow the pot. Like we want more
folks being able to speak confidently to their clients about Bitcoin and the prowess of Bitcoin
and what that can do for them. And yeah, we believe here rising tide lifts all boats and
we're super thankful for the work Gerard is doing in that space. Thank you. Yeah, it's been a pleasure
to be here. Looking forward to potentially being involved in the Bitcoin summit as well later this
year or later next year. And where folks can find me is citraincapitaladvisors.com. So if you want
to work together, happy to have a conversation and see if we're a good fit. Lovely. Alrighty.
Thanks so much. And we will talk to you all soon.
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