You've had a dynamic where money has become freer than free.
If you talk about a Fed just gone nuts, all the central banks going nuts.
So it's all acting like safe haven.
I believe that in a world where central bankers are tripping over themselves to devalue their
currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor.
I mean, that's part of the bull case for Bitcoin.
If you're not paying attention, you probably should be.
Becca, welcome back to the show.
Hey, Marty.
Thanks for having me.
Happy to be here.
It's great to have you.
I was just going through your X account while you were making coffee.
Yeah.
You guys are doing spaces.
I think this is where I want to start.
You guys are doing spaces, and I'm interested.
I haven't been able to hop in.
Mm-hmm.
What are the number one questions that people have for you guys at AnchorWatch?
Because I think you guys have built up the brand in an incredible way over the last few years.
And brands well established.
But this whole idea of ensuring your Bitcoin in cold storage with a unique custody setup that AnchorWatch has really pioneered.
How comfortable are people with it?
right now. Getting comfortable. So I think one of the amazing thing about our product or the
kind of combination of our product is that it really is next level security. So the custody
platform is in fact unique, but we would certainly say it's superior to legacy multi-sig. The
insurance is unique, but that's a whole new concept. And so the reality is that it takes a lot to get
people familiar with what we're offering. So what we find is that just actual long form
content, you know, having the opportunity to have conversations with people is really important.
So right now, what we've been doing spaces on regularly is inheritance. So we've been really
highlighting how our custody platform works for inheritance, but we get lots of questions in
general, just about how time locks work, how the key management happens, still questions on
how it is that we're a required signer, but it also becomes self-custody, things like that.
And then, of course, the insurance, what it covers, how you do claims, dollar denominated
versus Bitcoin denominated. So there's lots to dive into when we talk to customers.
Yeah. I mean, inheritance is a big one. I think that's that the inheritance question is
planted in the back of the minds of many Bitcoiners and has been for many years, which is like,
uh, like, uh, it's, it's a little iffy. It's a little iffy. I mean, it's, it's turned into
a little bit of a joke, but what happens is people tell us about their treasure maps when
we get on calls with, with customers and they start telling us like, Hey, I'm looking at you.
I heard that you're really good for inheritance. I feel pretty good about my setup. I've, you know, I've walked my wife through it. But I'm just, I'm not quite confident, right? And so they tell us what their treasure map directionally is. They don't obviously share their exact details.
but it always it's always a little bit of a scavenger hunt right so it's like a certain
piece of information is in a file cabinet and then that takes them to the next piece of information
and then maybe they say marty i put marty's name down as my trusted advisor um i i got
there's a lot of people who put very specific uh bitcoiners down as their trusted advisor and
their trusted helper. I have a feeling that a lot of the industry is putting the same five or 10
names down from what we hear. And so there's a lot of confidence being put into these individuals
that they're still going to be around and available to provide that guidance. So yeah,
there's a lot of questions that we've tried to solve with the design of our product.
Yeah. No, there was one point. I've never told Matt this, but there was one point
where I was like, if anything happens to me, all right, here's where you go.
You find this and then you just go, go ask Matt and he'll know what to do.
Cause he'll see it and he'll know what to do. Like, it's like, well,
at least, at least you and Matt, like it makes sense.
But I think there's a lot of people who put down you and Matt who you've never
had a conversation with. They just, based on your reputation that they,
they say like, you can trust this guy. And, uh, you know,
I think you, in fact, are like people's escape hatch.
If you're out there and I'm your escape hatch, please.
I don't want that responsibility.
But I mean, I think what we're getting at is a highlight.
It's like the ridiculous nature of how lackluster the solutions for this very important problem have been.
Yeah, totally.
Totally. I went through this myself before we had developed this for Anchor Watch where I had my own treasure map for my family. And I think it's a good one. It's straightforward. It wasn't overly complicated. It was easy to follow.
And so I told my family, three different subsets of my family, you know, all you have to do is start in this location.
And if you start in this location and you read what is there, it will get you all you need.
Don't worry.
And like four to six months later, I checked in with the family.
And I was like, hey, remember the Bitcoin, the Bitcoin inheritance?
What's that location?
You know, where do you start?
And two of the three subsets of my family didn't remember.
Like, they just straight up didn't remember.
One of them remembered with prompting.
And that's freaky.
Super freaky.
Yeah.
And, I mean, it kind of highlights the need for a protocol that sort of takes the onus of gathering the key information and getting access to the addresses out of the hands of the people who will be inheriting the Bitcoin.
and is what you guys have been working on.
Totally.
So the way we actually execute the inheritance protocol
is using what we call the recovery layer.
So the custody solution that AnchorWatch bill is at its core,
it is shared custody between the customer and AnchorWatch
while you're insured.
So customer has their own private keys.
We don't have a backup,
but we're also a required signer while you're insured.
After you're insured using TimeLock,
so enabled by Miniscript,
It goes to pure self-custody. So if we've disappeared off the face of the earth, if we were bad actors, if we refused to sign for any reason, it does become pure self-custody after your insurance policy ends. And that's why those private keys are truly your private keys. It is self-custody.
right between those two layers though. So there's the, we're both required signers and then there's
pure self custody right between those layers. There's a multi-institutional recovery, recovery
layer. And so that's what we would use in the case of the death of a client. And that's the
multi-institutional is where Anchor Watch has our keys. And then we have a recovery institution.
We've chosen Coin Corner, their regulated exchange out of the Isle of Man, been around for 10 years,
never had any losses, Bitcoin only. So they have their own set of recovery keys. So if the client
dies, the time lock will open to that recovery layer a month before your insurance policy ends.
And we could move the Bitcoin from this impaired vault into a brand new vault. So if you die early
in your policy, so if you get hit by a bus, you know, just a month into the policy or something,
what we would tell the beneficiary is like, okay, your Bitcoin is going to sit here safe and sound.
We know that you don't have access to your spouse's keys or if it's a trustee, that's fine, whoever the beneficiary is.
But let's say on September 12th, that's when this recovery layer will come open.
We would work with the beneficiary to understand their intentions.
Do you want to continue hodling the Bitcoin?
If so, if you'd like to be our customer, we'll get you set up on a brand new vault.
We'll take care of you.
You'll get your own signing devices.
We'll educate you.
If you need to liquidate it to take care of family matters, you know, we'll assist you in getting the Bitcoin where it needs to go.
And then that layer is also insured.
So if you have questions on like, well, how do I really know Anchor Watch and Coin Corner won't misuse the multi-institutional custody to steal the customer funds?
That is specifically covered by the insurance policy.
And that's why that recovery layer happens while you're still insured, because it gives you that peace of mind that we can't misuse it.
The way time locks work in Bitcoin, though, is once they're available, they're always available.
So even if you passed away very close to the end of the policy and it actually the vault then did go into self custody and maybe the beneficiary just didn't get in touch with us because they were busy with other things or maybe they didn't get in touch with us at all.
And we had to look for them and like find out why we weren't hearing from the clients.
eventually when we find that beneficiary, once available, always available. So that recovery
layer is still available even after the vault is in self-custody. So that's how it can be foolproof
because it really doesn't matter when the event happens, we will still be able to assist
in recovering the assets. And then we have the legal side of it as well and making sure that
we have documentation and everything is very, very clear for your trust attorneys, estate attorneys.
We dealt with it all on that side, too.
Well, that's a natural segue into my next question, which is how are the estate planners and attorneys that you've interacted with interacting to this solution?
Really positively.
So we consulted with a number of them in the design of how we did.
So this came to life in our terms of service.
So when you actually read the language there, it's very clear, very easy to understand how we approach account ownership.
We're very clear that AnchorWatch never claims that we have ownership over a customer's assets.
So we're always looking for the rightful owner, and the rightful owner is either the customer themselves or their beneficiary or their estate.
And so it goes through from a legal standpoint, kind of the order of operations and who we view as that rightful owner.
It goes through the steps needed to kick off the inheritance protocol.
You would submit a debt certificate.
Depending on certain states, they require some additional documentation.
But then we would be able to recover that asset.
And we also built into the customer dashboard really easy to access instruction sheets.
So there's a button that you can click right there in your dashboard.
It will give you a PDF that can be put in your file cabinet, given to your beneficiaries
or given to your lawyer or your trust attorney.
And it shortcuts the path to the recovery.
So it explains that this client, this individual has an account at AnchorWatch.
It explains who AnchorWatch is.
It shares our license numbers, three different forms of contact information, and just clarifies to whomever is going to be kicking off that protocol that you don't need to file an insurance claim.
This isn't an insurance claim.
And it just takes them right through that and makes it super easy.
So the attorneys who have looked at it, very happy with it.
And it's also flexible in terms of the trusts themselves.
themselves. So some people already have a revocable or irrevocable trust, we can ensure
that that trust itself can be the client. Or we have other people who the individual is the client,
but they have a trust set up. And if they pass away, the trust is the beneficiary. And so any
of those are doable with us, we're happy to be flexible on that structure. Yeah, and it's,
it's massive because i've had many conversations with estate planners and attorneys on this show
throughout the years and the inheritance thing is always always uh just a headache in terms of
it's typically the you know it's put on the estate planners to sort of figure out and really walk
through with the individual um how this is actually going to happen when they pass and there is some
trust involved in sense of like all right we're going to split up the keys and yeah have an
attorney that has access to it but if you can codify it and that's the beauty of what you guys
are building and the beauty of bitcoin more broadly is like as it matures you can codify it into
like just suspending conditions on the protocol totally totally i mean and yeah additional
functionality will become available as well when we you know when we make the transition to tap
route. But even today that you can set up the key management today, you know, between trustees,
for example, or between the lawyers, you can do that ahead of time if that was important to you.
But I think the most important thing in in this is just that your beneficiaries don't need to
understand Bitcoin. Like you can ensure that they will receive the benefit of your legacy
without actually counting on them to understand key management or even know where things are.
And I think that's a huge difference.
It's a really huge difference.
Even collaborative custody.
Collaborative custody provides amazing backstops against a single point of failure.
But for inheritance, it still requires that the beneficiary have at least partial access to private key material
and can handle it well for a long time.
So it's a big improvement, I think.
Yeah, and I think one of the things that makes these conversations
or the thought of just like inheritance planning around Bitcoin specifically
is so daunting is that it has been historically a pretty involved process
of literally setting up legal structures and processes with estate lawyers.
And I think in terms of the process of getting onboarded into Anchor Watch's Inheritance Protocol, what's the time look like from like, all right, I'm going to do this too.
It set up and we good to go I mean from the point in time that somebody reaches out to us and they interested to become a customer to having an insured vault with the inheritance protocol set
up is less than a week. And really that, that timeframe is just mainly to send them their
signing devices because they set up their private keys themselves on brand new signing devices.
And so just the mail time. So a few days we would quote them, they fill out the application. That's
like a 15 minute thing. And then we'll send them the welcome kit that has the signing devices and
some goodies. And then it's just setting up an onboarding call and going through and creating
their vault. During the application, that's when they provide their beneficiary and their secondary
beneficiary and contact information for both. And then from there, everything about the
inheritance protocol is just built into our services. We don't charge extra for it. If we
do need to assist the beneficiary and recover it we don't charge a finder's fee or anything like
that this is just this is just part of our services and it's just built into everything
that we do natively yeah and i guess on top of that like since you guys have been out market
really hitting the pavement and uh telling people like hey you should be insuring your bitcoin we
have always a london cover letter you can insure against five dollar wrench attack losing your
private keys which is also a big a big thing yeah like how how would you describe the state of
the market in terms of people understanding the importance of like insuring your bitcoin and
really taking care of it i think i mean it's definitely coming along we it it is better
understood at the commercial level, for sure. So commercial clients who already are buying
insurance on other aspects of their business and are used to needing to secure insurance to provide
comfort to others, right? So I mean, if you think about directors and officers insurance, for
example, you know, the company might buy that for themselves and they are the customer of that
insurance. But really, the reason that you do that is to give peace of mind to your board members,
right? So you wouldn't want to serve on a board if the company didn't have D&O in place. And so
this concept of having insurance not only to protect yourself, but to also protect other
stakeholders is really important. So fiduciaries, fund managers, company business treasuries,
Bitcoin treasury co's, they definitely are all seeing the benefit and they see that having it
insured, having in very secure custody makes LPs feel better, makes investors feel better,
makes regulators feel better. So that's definitely coming along on the individual side.
Um, uh, I would say, especially at the mid and higher level, uh, policy size where people are
really thinking about wrench attacks, um, it's definitely hitting home. So I think this wrench
attack thing in the, you know, over the last six months has been really intense, like really,
really intense. They've been accelerating, uh, significantly they're happening in the first
world. They're getting violent early. So it used to be kidnappings in the first world anyway,
for recent history for the last decade or so. You know, a kidnapping would happen,
a ransom situation would happen, and it would take some time to actually build to violence.
But recently, over the last six months, they're going straight to violence. These are tactics
that we're seeing more in like Central and South America cartel kidnappings where they would go
straight to chopping off a finger, pulling out fingernails, things like that. And crypto wrench
attacks are going that direction right now. So it's definitely on people's minds. And the other
thing that's very interesting in terms of the reports is that if you look through the publicized
reports, there's a lot more that happened that are not publicized. But if you look through the
publicized reports, you'll see that the size of attack is less than you would expect. The ones
that make the news are like 10 million, 20 million. They're significant dollars. But if you look at the
people who are actually attacked, it's like husband and wife kidnapped and held in their home and
tortured for $268,000 or $300,000. A guy was murdered, I think in December for $58,000 of
crypto. And so I think just having any amount and being public about it actually puts you at risk.
And insurance really is the solution to that because you can have very clever key management
and risk management concepts. You can have your passphrase, you can have decoy wallets,
you can have multi-sig. But at the end of the day, if a gun gets pointed at your kid's head,
generally, you know, people hand it over. And so insurance serves a really important purpose.
It's really the only backstop. And even giving your keys to a custodian, you know,
even that does not solve a problem. So I've talked to people who are like, look, I don't want the
counterparty risk of a sole custodian. That's, you know, the antithesis to my owning a Bitcoin.
However, I'm thinking about it because I just don't want that risk in my home.
But the reality is, even if you don't hold your keys,
wrench attacks are still a possibility
because they can still just put the gun to your head
and tell you to make a withdrawal.
So it's a new paradigm.
And I don't even think I've mentioned this to you.
We actually just started selling K&R insurance.
So kidnap and ransom insurance, we're able to sell that as of last week.
We'll start marketing it soon. But it's a different policy from our wrench attack policy, our custody policy. And so they actually cover different aspects of this risk. So our Anchor Watch custody policy, if you're a customer, if your Bitcoin is forced to be sent, so gun is to your head or my head or coin corners, any heads, right?
If the guns are pointed and the Bitcoin moves as part of the theft, that is covered by our policy.
So ours covers the loss of the asset itself, whereas the K&R policy covers a whole bunch of things, a lengthy list of coverages that are all specific to a kidnapping situation.
So it covers the ransom, which is different from losing the asset.
So if instead of saying, send us your Bitcoin, if they said your family has to gather $5 million and send it to us in whatever currency, that would be covered by KNR.
The most important thing, especially if you're a high profile person, if you are known to be, you know, a Bitcoin holder, if you're public, if you're a company executive, the KNR policy covers the hostage negotiators.
And so that is actually very expensive and very important. So if you didn't have coverage, your first call would be to 911, right, that, you know, my family member, my business partner was kidnapped. And then if you wanted to bring in professional hostage negotiators, you'd be like Googling them and trying to vet them. And then once you had chosen one, then they want you to wire them a retainer for their services.
And so then you're not quite sure if you're even if they're good, if it's worth this money and if they're even honest.
And are you wiring money? So it totally removes that because our K&R policy is also backed by Lloyd's of London.
And and so Lloyd's and these these insurance syndicates have all the very best crisis response teams.
So the hostage negotiators, they're all on retainer.
And so as soon as a claim comes in, you've got that resource.
It's working for you immediately.
They're coordinating with law enforcement.
And so they're going to take over from there and resolve the situation.
So it's the cost of that.
But more importantly, it's just having that service.
And then there's a whole, you know, it also covers medical expenses, income loss, like,
you know, if you need time to recover after that event, mentally or physically, it cover
it, you know, if a murder happens, it covers things, you know, regarding the recovery of
the body, things like that. It's, it's, look, it's pretty morbid stuff, but we're going to say
we're getting morbid here, but it's, it's pretty, it's pretty heavy, but it does actually provide
all that coverage. And so they're, they're good to go hand, hand in hand alongside each other
because they cover the full aspect of the risk. But that, I mean, look, it is, it is hitting home
for a lot of people because these attacks are very frequent now. I think overall, I'm not trying
to fear monger. I think overall, this is still a low risk or a low frequency situation. It's still
very unlikely, but it is accelerating significantly. And because of starting to sell K&R,
we have additional visibility into attacks that don't make the press. And there's a lot, right?
If you were a victim of one of these and it was resolved, right, whether it was resolved with the person getting arrested and no money sent or it was resolved by a ransom having been paid and you walked away safely.
Either way, there's a lot of people that if that happened, you don't actually want it in the news, right?
If you're able to keep it on the DL, you'll do so because it just invites more attention to you.
So there's a significant number, you know, for everyone that's reported.
There's a good handful that are not not reported.
So it's a real problem.
Yeah, and I think the publicly available data I last heard cited a couple of weeks ago was that up until mid-June of this year, there was 30 public sort of kidnapping attempts and attacks on individuals to give up their Bitcoin and crypto.
Yeah.
And last year, it was 30 for the whole year.
For the whole year, yeah.
And then on top of it, then there's a whole bunch more that are not on that list at all as well.
And then, I mean, and those are only really the first world ones or the ones that made Western media as well.
And then there's an entirely whole separate thing of small dollar attacks that are happening, you know, that happen in poorer countries in Asia and Africa that those don't make the list at all.
But I think, you know, it's it is a real problem.
And this year in particular has been a big uptick.
Yeah, the France, the France string was interesting.
Because he had that guy in Morocco who was essentially, he was young too.
He was like 26 and he was contracting out kidnappers and friends to go after all these people.
He wasn't very good at it, but didn't get away with a ton at the end of it.
But yeah, I mean, he wreaked a lot of havoc for sure.
Yeah.
It's pretty crazy.
It's a bit morbid and unnerving to talk about, but it's important to talk about.
it's important that people are aware of these risks and the fact that there are ways to protect
yourself against them or mitigate the risk. And we try to do both, right? We're definitely trying
to mitigate as much as we can just by being our client in the way that the keys are distributed.
It would be really challenging to steal your Bitcoin. If you're an Anchor Watch customer,
You know, we have plenty of opportunities to slow down the process. We're a required signer. Even if there is a situation that we're aware of, we always have the opportunity to pull in law enforcement as soon as we're aware. So, you know, we can we can help to mitigate. But, you know, we have to protect it from the other side, too.
And the other side is if it's successful, then it's covered by the insurance.
And in that way, if you're in that situation, you don't have to be trying to outsmart the people and try to outthink them.
Like you really can just focus on keeping yourself safe and just understand that the Bitcoin, you know, it's not a risk of ruin.
We've removed that particular risk.
And so in that situation, you can simply focus on doing what you need to do to survive, survive that event.
yeah and transitioning to uh less morbid but just as important i think for
through your business i mean like having been in the market now for as long as you guys have
i think one of the core theses of of your business and why we're proud to back you and excited to
back you at 1031 is like the diversification that you guys bring uh alloys of london and
reinsurers in terms of the quality of the premium revenue and more importantly, the uncorrelated
nature of the premium revenue. Yes. Is that being validated in your mind?
Say what was that question? Is that that's being validated?
Oh, yeah. I mean, I think it's it's a really cool thing about how we are fitting into traditional
insurance. So I mean, insurance is a capital market. So the reinsurers or the insurers,
they have their pool of capital, their reserve capital, and they can allocate it to really
whomever they want.
So it's like they have, there's a pie of insurance dollars that can be set against whatever risks
they want.
And so a certain large portion of that pie is property insurance.
Within that property insurance, there's a little sliver called specie.
uh specie is uh kind of small weird things so fine arts and uh expensive jewelry things like that so
most of our coverage falls within specie and then there's crime as well uh that's also like internal
crime and that's part of property as well and so when lloyd's looks at us we are a way to have
access to a risk that is uncorrelated from the rest of the property bucket So property is dominated by homeowners especially in the last five to six years Homeowners is dominated by wildfires and hurricanes And so you have these weather
events or these fire events, and they can have major wipeout years. And hurricanes in particular
have wreaked all sorts of havoc on the insurance industry. And so we can come in and we,
while there are risks of physical disasters causing a Bitcoin loss, it's very small,
right? Because of the way keys are distributed and we're a required signer. So really, we provide
a completely uncorrelated pool of dollars that help them balance their own portfolios,
because they have their own risk appetite, they have their own KPIs. And so we come in and we're
just this very nice kind of uncorrelated pool of money that comes in and balances their own
portfolio. And we hope that because our custody is so secure, you know, we hope that we will
continue to have low losses. And therefore, the insurance industry will continue to see Bitcoin
as a good risk to insure.
And what that will mean over time
is that over time,
the costs will come down
and the dollars will get bigger
because they'll say,
look, we're willing to open up
a bigger sliver of pie
for Bitcoin insurance.
And that pie will get bigger.
The costs will go down a bit
because you've proven to us
that the custody is very safe.
And so we'll just continue
getting more and more access
to the capital markets that way.
Yeah, I think there's a good sort of parallel
to a disconnection in the market that exists right now
in Bitcoin lending where if you do it in a way
where you're not rehypothecating, unchained,
has really led the way in terms of their collaborative custody.
Bitcoin and escrow sits in a multi-sig.
You can audit it on chain.
And just the nature of Bitcoin as collateral
despite how it's custody.
Just run with the assumption it's not rehypothecated.
Like it is literally the collateral's there.
If you're the lender and you need to recoup your principal
because the borrower's not paying it back,
Bitcoin trades 24-7, 365, sell, get your principal back, you're good.
Very little risk of losing your principal.
I think what you guys are doing on the insurance side,
it's like the same thing.
If you can ensure that you mitigate the risk of loss to a very small surface area due to the nature of how you guys are leveraging mini scripts, when people are holding a policy with you, it's like, oh, like this is relatively low risk, like the cost of that capital should come down.
That's definitely our thesis. So we are already insuring private loans. So loans where an individual has negotiated a Bitcoin backed loans with their own bank. And the bank agreed to do it. They negotiated terms on their own, but the bank stipulated that they wanted the collateral insured. And so they ended up using us for insured custody. And we were able to do kind of a side letter to their loan agreement.
And so that's already in place today. And we do think over time, though, you know, if you have a loan with uninsured collateral versus a loan with insured collateral, we think it will be bring down the cost of the of the loan for the borrower, just because it gives a lot more peace of mind to the lender that, in fact, the collateral will stay safe.
So we're going to be offering that within our own platforms next year. So in 2026, you can borrow against your Bitcoin in our platform. But we're also talking to really the majority of the Bitcoin back loans in the space already.
So we announced that we'll be ensuring arch lending a couple of weeks ago.
So that will be coming out shortly as soon this year, talking to some of the other lending platforms.
So I think this this idea is catching on very, very well.
And it's appealing to both borrowers and lenders.
Nobody wants the collateral to disappear.
The, you know, the benefit of the product disappears if you can't trust it.
And then I think, you know, we always looked to the mortgage industry as an example. And, you know, so banks will let you highly lever the house itself, highly lever, but they do have that rule that you have to have insurance.
You can't close on a mortgage without the asset being insured.
If you don't have insurance even for a day, you can't close on the house.
And so we just view, especially as banks come on, that they will, and I think they will,
start doing Bitcoin-backed loans themselves.
I mean, the broader PradFi banking, I think they will.
But I do suspect they will actually stipulate that the collateral has to be insured.
um that's a little different from the the guidance that came out this week too uh which is was a cool
cool development i think for bitcoiners yeah and this is this is going to sound weird to anybody
listening to this but like this is what gets me going uh because there's i just hopped off of
spaces earlier today and people are like oh like it doesn't seem like uh layer twos and all that
are having that success that they should be like defi is not really materializing on top of bitcoin
it's like listen it's all interesting cool like lightning's awesome it works but let's be real
there's an order of operations to all this uh bitcoin's going to succeed number one more people
need to adopt it uh and come to the realization that i should be receiving receiving this as
income or selling goods for it and so like there's going to be a a period of time between now and when
And that is sort of widely the way people use Bitcoin widely.
Really?
Before that, like we've talked about this many times off air, but like I think we've had many conversations about this with Anchor Watch and the 1031 team.
Like the next order of operations is Bitcoin as a collateral asset throughout the traditional financial system, the Bitcoinization of finance and a critical building block to enabling that and getting people comfortable with using Bitcoin as a pristine collateral asset in traditional financial products is insurance.
And so that's what I want to get through to anybody listening to this.
Talking about insurance may seem boring at times, may seem a little morbid at times.
But if we're talking about fundamental building blocks for actually integrating Bitcoin into the financial system, this is like a table stakes needs to be there, needs to be in the market and available to people.
And I mean, it does make sense, right?
Like the idea of using a high amount of leverage, like right now, like loans are very over collateralized.
Even that's that's a temporary, I think.
Right.
I think that's a temporary reality of the development of using Bitcoin as collateral.
I think that those collateralization rates will come down, but insurance will help that, I think.
Because, again, like it it's fair that a lender wants to feel confident.
Right.
Like that's that's a very reasonable, a reasonable basis to start this discussion.
And so having the insurance there actually just that is the way institutions gain confidence is is it removes the risk of a of a wipeout.
And I think, you know, the guidance this week from the FHFA that, you know, Pulte tweeted out the other day, you know, it's a step in that direction.
It's that guidance was not about Bitcoin as collateral for a mortgage.
It was about guidance on taking into account somebody's Bitcoin to determine if they are like their total assets and if they're a good credit worthy.
Yeah. Yeah. Yeah. And so, I mean, I think it's a step in the right direction.
I think it's still up to individual banks and bank officers.
Like, I think it comes down to individuals, how they actually put that, bring that to life.
But it's certainly it's certainly promising.
And like I said, we've we've already done private loans where a bank officer was open to to viewing Bitcoin as collateral itself.
And we were able to help help out with that and make that happen for those customers who otherwise, you know, just would not have been able to get that deal done.
And by doing it, they're getting better rates than some of the companies that are operating in the space specializing it.
Like if they had a really long-term relationship with their bank, they're getting good rates as long as the insurance is in place.
Yeah, it makes sense.
And it's great to see that there are individual bank officers out there willing to understand this and be like, okay, yeah, this makes a lot of sense.
And I mean, to that point, going back to the LTV, the LTV, I think it serves two purposes.
One, for the lender or the liquidity provider that's giving the cash to the lender.
Right.
This is a bit foreign to us.
We need to have some assurances about we want it over collateralized.
Right.
Their benefit.
And then the borrower's benefit too, considering the historical price volatility of Bitcoin up to this point.
I think people may not like it.
you need to put up $2 of Bitcoin to get a dollar and a loan back. But I think considering the price
volatility historically, like that is a good buffer. And like, it's just like sort of guard
rails for borrowers to make sure you don't get blown out. Totally, totally. And yeah, I think
it seems like on the borrower side, they're, they're more than willing to do it right now.
And, you know, we'll see what happens with price action too. Like, I don't know where you are on,
on four-year cycles versus are you a cycle guy or a slow grind?
I'm getting yelled at for even mentioning the potential for a super cycle,
so I'm not going to say it.
Okay. Are you a super cycle guy?
I make fun of super cycles.
Yeah. I'm becoming more convinced.
So, like, it's just going to be a boring grind up into the right.
So, I mean, that seems to be the sentiment at the moment.
I've always been pretty hardcore on, like,
you follow the pattern until the pattern breaks,
And right now we're still on a four year four year pattern.
But I will say if if we do transition to the slow grind up, I think it actually it does ease the transition into TradFi because it means that they can start modeling Bitcoin in a more predictable manner.
And so things like LTV or the rates, you know, looking at how they view collateral, looking at it in terms of your overall financial health.
If TradFi can actually say, look, you have this much Bitcoin and sure, there's some volatility, but we can trust that if you have this amount of Bitcoin a year from now, you'll still have this amount of Bitcoin or maybe it's going to be worth more.
that's easier for them to stomach to understand to model uh you know at the aggregate for their
own financial models than something that's having 80 drawdowns um so i mean i we'll we'll see what
actually happens but if it does transition to a slow grind up i actually think it it enables
faster transition of integration into financial products and then that slow grind turns into a
hyper bitcoinization real quick when it's like oh why are we gonna but i'm in ganda i mean going
back like going back to like building blocks and table stakes for this to be enabled again like i
think what you're building is critical to that what you and the team at anchor watch are building and
then like we were in dc last week we're talking with andrew homes like if you think of like what
they're doing at battery like if we i don't know if it's this cycle next cycle a couple cycles from
now but you can squint and see if the traditional financial system obviously andrew and the team at
new market who spun out battery they're coming from the traditional financial system they're
pretty comfortable very comfortable with bitcoin as collateral with that that like we're going back
to like cycle theory discussions about what's happening like if that takes hold reaches a
critical mass like you're taking bitcoin off the market and holding it off for long durations and
And that's where you can get a liquidity profile and volatility profile that it makes sense for all this stuff.
Yeah, battery. I mean, battery and what Andrew has built there and the team is one of my favorite.
It really is. It's I met them really when they were first launching, which was right around the same time we were launching as well.
And so both our companies have kind of grown and been working through kind of this hybrid Bitcoin TradFi world.
And so we end up, you know, at the same events and speaking to the same people.
So I've had the opportunity to watch them develop as we've grown as well.
And I just I'm a huge fan.
I think it's a really clever.
It's very simple, right?
Like it's a very simple blend of Bitcoin and a traditional investable asset class, but it's one that benefits the individual or the business taking the loan.
And obviously, you know, the the ideas that it will provide good returns both to them and to battery themselves.
And I just think it's a very approachable way to pull capital in, get it, you know, long term holders in a very approachable way that you don't have to be a maxi to understand the model and to be willing to take a step into Bitcoin adoption.
um i'm yeah i think it's i think it's great and so again going to the price action and
does that model work better on a uh a four-year cycle or a slow grind up and i think
on on that product in particular i think it works either way um you know either way they can manage
that product that benefits the the borrower uh in either scenario it's cool yeah just extend your
duration as long as possible capture totally stay in cycles capture multiple cycles but i mean to
that point of um hitting the road and bumping elbows with the battery team at events that maybe
don't cater exactly to bitcoiners like what is your perception on the sort of acceptability as
bitcoin broadly in in the trad fi world as you been i think it is changing rapidly to our benefit as Bitcoiners You know I think the initial kind of steps into TradFi were almost the degen side of TradFi
initially over the last few years. So it was like the more aggressive hedge funds managers,
right would would have exposure but now it really is it's becoming more conservative
um you know bond obviously obviously bond traders uh are getting involved who were traditionally a
a more conservative investment class pensions um but just talking to wealth managers they're all
their clients have bitcoin it was always kind of set aside uh just like as the part of their
clients portfolios that they didn't actually touch or speak to and now they're educating themselves
um they're not resistant uh they're curious um they're making plays they're advocating to their
own leadership to allow themselves to like interact with their clients about it so i think
it's actually changing really quickly uh like really quickly like in in this year alone it's
i feel like it's different now than it was at the beginning of the year yeah well
on the perception of tradify changing like that's one thing i think a lot of bitcoiners have top of
mind particularly in the last year or two whether it's strategy the etfs the emergence of the
treasury company in public markets meeting that has been becoming a fervor and you could see it
turn into a mania as we as we head towards the end of the year all these guys are cussing with
the single point of failure sort of uh yeah custody solutions like coinbase fidelity whatever
it may be i mean this is your pinned tweet about like uh make sure you know like it's
that you're insured make sure you understand what that actually means we've talked about this before
in the context of other exchanges that will market that your coins are are insured if you're holding
them if you're custodying with them but it's really just a small minority it's effectively
uninsured yeah and that's a pet peeve of mine obviously that's like they're like to what we're
saying earlier like you could imagine a scenario like drawing on the analog of mortgages where
if you're going to begin to integrate this into the trad fi system like insurance is demanded by
some of our stakeholders within some of these agreements and like could it actually be a forcing
function to drive these larger institutions to more optimal custody setups like anchor watch i
think so so historically insurance just wasn't available or it wasn't cost effective if if it
was available and now it is i think there's anchor watch has uh kind of one hurdle to get past to
really uh become a viable option for a lot of companies and that's that we're becoming a qualified
custodian. So we talked to lots of publicly traded companies and fiduciaries, and they're like,
I like the custody model a lot. It makes sense. We need the insurance. I need that for sure.
But are you a QC? And we were not. So we are in the middle of that process, and we will become
a qualified custodian this fall. And then at that point, I think what we will see is that we become
the anchor watch is actually one of the top options for these Bitcoin treasury co's. The
companies themselves, the leaders of them, they understand the risks of putting out a honeypot at
an uninsured custodian, sole custodian, but they still do need to check the boxes. The insurance is
a way to set them apart. It helps them raise money. Because again, it makes the investors
feel confident that it's safe. And it just gets away from, you know, this. And look, one inside
bad actor, you know, what I fear is that a bad actor will have gotten a job at a large custodian,
and will spend years infiltrating their systems to plan a large heist.
And if you read the fine print on the ETFs, you know, even the ETFs in their prospectus,
they say that this is uninsured.
And effectively, if the principle is lost, there's no recourse, right?
That's not ideal, right?
So, yeah, we view this and ourselves as actually the responsible alternative. And what we think will happen is once we have QC under our belt, I think what we'll see is something of fiduciary flight, where if you're a fiduciary and you're responsible, how can you pay, you know, BIPs for uninsured custody versus maybe slightly more, not even a large amount more, but just slightly more for insured custody?
If you're a fiduciary responsible for your client's funds, it just doesn't make sense. And in fact, paying significant BIPs for uninsured custody, even that you have questions on, right? Because there is certainly a cost to maintaining a very secure system. So I'm not saying it should be free. It just can't be. This is an expensive thing to maintain security at that level.
But once you have hit a certain infrastructure standpoint in terms of your costs, then at that point, storing private keys is a low lift activity.
It's a tiny piece of data, right, that you can store all the world's Bitcoin on Google, Google Drive or AWS for like 20 bucks a year.
So it's not about size of the data. It's about security. And at some point, paying BIPs just for the security of the platform, I think the market will push back on that to a certain extent.
But paying for insurance, insurance, you're actually securing the collateral.
So that's why it is BIPs is because the more insurance you want, the more collateral that needs to sit in reserve, they're ready to cover financial obligations.
And so you are actually accessing the capital market with when you buy insurance and you're purchasing that promise, that guarantee of being your fail safe.
Yeah, that risk transfer.
And to your point earlier, like, who's to say that having the insurance doesn't unlock some level of capital on the other side?
You do the cost benefit analysis of like, it's worth the BIPs because you're going to make X amount of money on the back end.
You'll make X amount more.
Yeah, I think so.
Seems like it could be a big market.
It does seem like it's going to be a big market.
We're excited about it, in fact.
So it's been a fun year for us because a lot of things are happening that are the premises for why we built Anchor Watch, right?
So we are getting the enjoyment right now of it's the satisfaction of having skated to where the puck was headed.
And that feels really good.
It feels like all the work that we had done, I mean, even before launch, right, we were so heads down and building towards this vision of what we thought would be happening in two to five years.
And here we are a couple of years later and it's starting to happen.
It's awesome.
It's like it's just kind of things that we predicted and not us alone, but things that we felt strongly enough that it was worth leaving our careers and building a company for.
um you know they're they're starting to happen it's and i think it's going to keep happening and
we're going to crush it's going to be awesome no it's it's been completely gratifying to watch
as you've been building this out over the course of the last three four years and uh
what uh what people often worry about is like like you have two like when you build for this moment
yeah there's like two outcomes it's like the dog that finally caught the car or like you built for
this outcome so that you could sprint and it's been fun i think you guys are squarely in the
ladder sort of outcome which is like is it's not like you caught the car it's like what do we do
it's like no we've been waiting for this like let's go and run yeah and i mean yeah at this
point it's like the car the car's getting the speed and we're we're right alongside it right
now and uh it's it's gonna get insane and uh you know we're ready for it we're ready for it like
we were just off calls with Lloyd's this morning, um, getting extra capacity. Uh, and I think,
you know, just little anchor watch startup anchor watch, we're going to double the amount of
insurance capacity that's available to this industry, you know, in a year. That's, that's
crazy. That's crazy. Like we, and we did that through tech by the way, right? Like through
really educating them on how we can diversify risk like we talked about earlier, but also
diversify the risk of key management as well. And by giving them that confidence that, hey,
we can actually limit your losses meaningfully at the aggregate by the way that we do key management,
you know, was the difference that made them unlock a huge pool of capital that previously
wasn't available. Yeah. And what can anybody who's listening to this, how do you think they
should take action? What do you guys need right now? What would your message be to anybody
listening to this? Yeah. I mean, look, I think we covered on a bunch of stuff, right? So I think
if you're an individual and any of the earlier part of the conversation, whether it was kind of
protecting yourself from wrench attacks or inheritance, you know, we're happy to
bring you on as a customer, you can reach out to me, Becca at Anchor Watch, or you can sign up for
a calendar event directly from our website at anchorwatch.com, and we'll get you squared away.
And if you're an institutional customer, if you're one of these larger players and you're
trying to look down the road at your options, if you're diversifying custody, if you're trying to
understand your custody options, your insurance options, I can also write custom policies.
So if you're a large player and what I've described isn't exactly the insurance that you're looking for and you're looking for some other level of insurance coverage on your Bitcoin or the custody of your Bitcoin, let me know.
And for the right size clients, we can do that directly with Lloyd.
So we can get you a custom Lloyd's policy that's really oriented to your exact business.
And we're always happy to talk to those people, too.
so just get in touch
I want to stress
I'm trying to figure out like
it's not boring to beckon I
sure insurance is a boring
to many of you but
it cannot be overstated how important
something like this is to unlock
the wave of
capital that gets comfortable with
Bitcoin that many have been talking about
it's like a literal critical
piece of infrastructure that
enables all this
So I just want to thank you, Rob, the team at Anchor Watch for putting in the time.
It's been a grind.
And like you said, you've been building for this moment.
The moment is coming.
And I just couldn't be happier for you guys considering watching you guys do this over the last few years.
And I know you're going through a bit of a personal battle right now.
And I think it would be remiss of me not to mention just how impressive you are individually.
Thank you.
Do all this with what you're going through and doing a class and strength that I only wish I had.
Well, I'm at the very beginning of it.
So I'm sure I will have my days here as we go into later in the summer and the fall where things are going to get a lot tougher.
But today I feel good.
Today I feel strong.
You know, this is one of my last podcasts where I still have the hair.
That's going soon.
And that's going a week from Friday is when that that will happen.
So I'll have my all of my moments for sure.
But the support of you and, you know, the 1031 team and just the Bitcoin community has been very transformational for me, really.
And having having Anchor Watch, the team is so good.
They're so strong that there's there's really no impact to the business right now.
And that will continue.
And so that gives me a lot of strength and having the opportunity to at times, you know, just be focused on work is wonderful.
I love Anchor Watch and I love what I think, like what you said, I think we built it for a reason.
I think it's going to improve adoption.
I think it brings more adoption and liquidity to Bitcoin.
and the opportunity, despite all this stuff going on,
to take a few hours and just focus on that,
it's a good escape from it all, and I'm grateful to have it.
Well, we're all grateful for you and what you're building, Becca.
This has been incredible.
Thank you.
Hey, it's scary to think about.
Inheritance, insurance, rent tax, but you've got to think about it
if you're out there.
You do. I can tell you.
You got to think about it.
So go hit up Becca and the team at Anchor Watch.
Start thinking about it if you haven't already.
And we'll catch up.
There's plenty that's going to happen between now, the end of the year.
Yeah, next time we talk about how we turn on the Bitcoin yield flywheel using insurance.
We'll just get really exciting.
That's going to be a big one.
You know, the question is very controversial in the space.
Where does the yield come from?
Well, but I can tell you.
I can tell you right where it comes from.
It comes from insurance premiums.
So yeah, let's do that one next time.
I would love to dive into that topic sometime soon.
It is literally the only thing that makes sense
in terms of Bitcoin yield to me right now.
But we'll do a deep dive on that.
All right, we'll jump into that one.
Thanks for having me.
All right, peace and love, freaks.