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How Bitcoin is Shaping Wall Street with Ray Kamrath

Jun 25, 2024

How Bitcoin is Shaping Wall Street with Ray Kamrath

How Bitcoin is Shaping Wall Street with Ray Kamrath

Key Takeaways

In this episode of The Bitcoin Frontier by Unchained, Ray Kamrath, the new Chief Commercial Officer at Bakkt, shared his extensive background in capital markets and his transformative journey into the Bitcoin space, initially met with skepticism but later embraced through principles of Austrian economics and sound money. Kamrath discussed the political influence of Bitcoin, notably former President Trump’s comments potentially swaying voters, and highlighted the future potential of treasuries holding Bitcoin once accounting standards are established. He emphasized the increasing institutionalization of Bitcoin, marked by political shifts and Bitcoin ETF approvals, and expressed optimism for Bakkt's growth driven by its multi-faceted business model.

Best Quotes

  1. "Blockchain technology and how it's implemented via Bitcoin is like, it's almost like an alien information drop. It's really, really powerful."
  2. "Eventually every treasury will hold bitcoin on their balance sheet, in my opinion."
  3. "I don't need the government to embrace [Bitcoin]. I think they will eventually, out of necessity."
  4. "The street was growing tremendously. Goldman was on fire. Tremendous firm, incredible. But everybody loved the system because it was working for them."
  5. "I'm an evolutionary, not a revolutionary."


Ray Kamrath offers unique insights from his extensive career in finance and his transformative journey into the Bitcoin space. Highlighting the political implications of Bitcoin, its future role in treasury management, and the anticipated wave of institutional adoption, Kamrath emphasized Bitcoin as a powerful, potentially world-changing technology.


00:00:00 Introduction
00:01:20 Who is Ray Kamrath?
00:02:38 Riding scooters and breaking arms in Austin
00:03:36 Ray first hearing about bitcoin
00:07:50 Talking about sound money on Wall Street
00:10:37 Gold vs bitcoin
00:11:36 Why join Bakkt?
00:16:15 An institutional-driven bull market
00:22:20 Government and bitcoin
00:24:39 How do you value bitcoin?
00:27:20 Monetary reset–what does it look like?
00:31:30 Which countries will influence the market most?
00:38:30 Collaborative custody and a network of keys
00:42:18 Bitcoin vs crypto
00:45:47 Where is Bakkt in 5 years?
00:47:10 Where is bitcoin in 5 years?
00:48:54 Passive flows, MSTR, and bitcoin
00:50:41 What’s something you believe that most bitcoiners would disagree with?
00:51:47 What’s the biggest risk to bitcoin?
00:53:59 Closing thoughts


(00:00) blockchain technology and the implic and the and how it's implemented via Bitcoin is like it's like almost like an alien information drop like it's really really powerful when the accounting rules and and everything gets sort of cleaned up and buttoned up and everyone feels safe eventually every treasury will hold Bitcoin on their balance sheet in my opinion I think on May 8th Trump came out and turned crypto into a football by saying you know if you're into crypto you're into Donald Trump well that put
(00:32) the Biden Administration and their their uh campaign into it alerted their radar that there was a demographic that he was going after it's kind of an important demographic actually because they may be Biden voters getting pulled into into sort of the Republican Camp by nature of just maybe their one-issue voters this podcast is mment not Financial tax or legal advice views expressed represent statements of the speaker in their individual capacity do not represent the views of Unchained and should not be considered investment
(01:07) advice speakers often have personal family or business connections to unchain which may include direct Financial benefits please see our disclosure at podcast awesome ray thanks so much for coming on the podcast hey thanks for having me of course for the audience that may not know who you are and what you do can you kind of tell us about yourself sure my name is Ray crath I'm the uh the new Chief commercial officer at back we're a publicly traded firm uh listed on the New York Stock Exchange um
(01:36) my job at back is I'm responsible for uh our commercial strategy which includes sales Business Development marketing uh the client experience that kind of thing so very excited to be here on the show get to get to talk markets these are great times in markets I've been in um Capital markets for about 30 years I'm I'm an fx guy so I come from foreign exchange worked at Goldman Morgan Stanley JP Morgan most of my experience has been at the early part of my career in sales and trading and then as
(02:12) electronic trading got more a part of the the norm uh I I had a fair amount of experience uh building and leading electronic trading businesses got into crypto in 2018 been doing various entrepreneurial projects some Consulting worked for some different firms find myself here backed uh ready to roll I like it just started on Monday oh oh nice very cool what by the way what happened to your your sling here yeah Public Service Announcement number one uh I would say uh don't come to consensus overzealous uh and bounce around town on
(02:52) scooters because if you do you'll break your elbow and a couple of ribs so I did that yesterday right outside uh on Congress not a good not a good idea did you just like did it fall over like what happened I hit a pothole oh God and did an endo over the bars and uh smashed into the ground I didn't get any scrapes or Cuts just a it feels like I got into a car accident so did you know did you know right away that you basically broke your arm yeah yeah so it's all good though nothing like one or two Advil
(03:23) yeah the fact that you're still here after that is pretty impressive getting the game well but you know it's uh it's just a just a slck it's a sling with a you know it's I'm good I can do it fair yeah thanks yeah well foder here still um yeah I kind of want to hear about like how you got into Bitcoin because you have this traditional Finance background that you said you got into like Bitcoin crypto around 2018 like do you remember first hearing about Bitcoin and like what you initially thought so
(03:49) my love affair with Bitcoin and I have one uh it's intense it's not dramatic it's just a deep you know longing uh for for I'm a big fan but it predated Bitcoin so being FX is a macro Market uh and so understanding money money flows uh Capital markets was part of sort of my background I got into sound money and the idea of Austrian economics in the early 2000s started reading about that you know when you orange pill Austrian economics then all of a sudden you realize that the current system is
(04:33) unstable when timing how unstable not clear but it just it didn't make doesn't make sense it didn't to me at least so I started buying gold for my personal account for my family savings uh and buying uh you know gold pieces whenever I whenever I had had an opportunity so I was a gold bug first and then like a lot of traditional markets folks who needed to be humbled which I did I read about Bitcoin really early I was introduced actually twice to bitcoin really early uh and of course being like the
(05:16) global head of foreign exchange at Jeff and like I know everything and I looked at it and I passed but I didn't really take the time and I think that's everyone has that everyone has a different story a lot of trafi folks have a story like that or at least if they were introduced maybe five or seven years ago it it was like too good to be true it's like oh gosh this this can't be real so I kind of passed I stuck to my gold uh and then I got reintroduced again uh a friend of mine a very good friend a mentor of mine sent me a a uh
(05:52) USB stick and said everything you need to know is on this so I was on a flight to London for work and I had maybe three days to do to do uh meetings and so forth and I started like I opened up my laptop on the flight over and I started digging into the white paper and all the different side you know notes and medium articles like everything that that you could possibly get your hands on and I couldn't stop canceled a bunch of meetings I remember I was I remember I was in the uh the Ned hotel and I was like okay I'm just going to hang out
(06:26) here and just like I'm not doing that meeting this was I'm was too into it um and uh that's and it was like a a two-day bender on like Bitcoin reading and I'm like holy well first of all I was like holy how did I miss this because then I looked at the price and and then you know anyway I got I got I got into it at that point uh about three months later I left Wall Street and felt that it would for me like I it felt like a once in a-lifetime opportunity to be a part of something significant wall Street's significant we play a part
(07:03) in you know in in capital markets and capital formation and business and it's important uh no doubt people give it give it some shade but it's actually a really important piece of our society but this seemed different this seemed more evolutionary than just important and so I just I left Wall Street and looked not you know decided never to go back and just you know been doing different things to to be a part of the the space share knowledge you know help businesses grow build the ecosystem but it was yeah it was that uh gold bug
(07:39) transition in 200 late 2017 on that USB stick that a good friend of mine gave me that it got me in and that's it dang yeah that's pretty pretty cool story I'm curious like back to your your sound money days and like on Wall Street did you talk about like sound money and those ideas like with your colleagues and like what did they think of this gold bug guy talking about it's funny it's a good question uh uh so at that time I was at Goldman Sachs and I was a managing director co- co-head FX sales
(08:13) and was in charge of electronic trading uh and the e-commerce business and Goldman at that time was was already public at that time it was early 2000s so 2004 five and six and the the street was growing like tremendously Goldman was on fire tremendous firm incredible but everybody was was they love the system because it was working for them there was a couple of folks that knew of a coin dealer in the in the in the uh in the Alleyways of Wall Street and sort of the back alleys there was this it was two floors down a basement and he would
(08:53) take checks from Goldman folks so I would go down occasionally and write a check for I don't know for $10,000 because I was like okay let's allocate more and then I'd come back to the desk with a jingly backpack with a few uh you know 1 oce Maples and uh and I did that a few times and then one time of course like I tell my stories all the time I love to you know to tell stories what what's in your bag so I told them and I'm pontificating about sa money and getting grief from everyone like you're
(09:23) insane like none of this makes any sense and in some ways like they were right like it's it the US e is a really big economy I don't think the mechanism for how we structure our economy and how the government is working in the debt and the Fiat system is sound but it's huge and I think a lot of like myself included a lot of bitcoiners a lot of a lot of people who are fans of the fundamentals don't realize that it could take decades for Change and so like I realized right away that I was an outlier uh I didn't know if I was early
(10:02) or or what but I just knew that no one around me thought I had to made any sense including like people who I really respect who are into it now uh gave me a hard time back then uh but anyway so yeah they they probably bought it earlier than me because of course yeah yeah because it only took like two or three years later everybody figured it out you know and uh in 2008 when Bitcoin came on it was my my own sort of like you know Bullocks and arrogance to be like to pass on bitcoin it was crazy fa how do you think like gold and Bitcoin
(10:39) coexist today like are they competitors are they compliments like especially with your perspective as like someone that got into sell money via gold I own both I think it's smart to own both I would say to answer your question they're complimentary nobody knows how things are going to play out nobody knows what the world will look like I think everybody who's into goldbug or a bitcoiner would say there's going to be some kind of reset of our monetary system and if you you look at either like both of them are viable candidates
(11:18) to participating in a new system in some manner uh so I like them as complimentary I don't think that they uh they're they're the antagonism that sometimes zealots on either side that's kind of like just ego in my opinion I think they're complimentary yeah fair so with all of your career experience you you ended up at back like what made you want to join back good timing uh for backed right now actually uh an incredible company one of the there's only two I don't know if you knew this there's only
(11:54) two publicly traded crypto firms that are not minors in the US so our origin story uh led us to public uh so we are public we backed in coinbase uh that's a good thing in many ways it's it's a tough thing sometimes because the upside of being public is uh there's a an like you have to it's a high hurdle right there's a lot of responsibility to be a public company there's a lot of regulatory expectation about transparency so you you have to run a buttoned up company and and on the commercial side
(12:35) that's really good but if we're still a young company right and so we have this you know GE should be public they're big the public markets are meant for big companies like that Apple these are companies that are very well established it's not public markets are a challenge for young companies because the rules are not necessarily designed for young companies there's like aour J so we're kind of in this interesting spot where we we are public it's great for us commercially uh but as a business
(13:07) sometimes it can be a challenge uh some of the the requirements that are on us are expensive some of the responsibilities that we have are while are necessary that we do than other companies don't so it can it can be heavy sometimes um so first the the fact that it is the only public company I would say outside of the miners other than than coinbase certainly attractive I also think if you look at the portfolio of back we have a loyalty business we have a crypto business and inside the crypto business we provide
(13:45) infrastructure for retail Brokers so a company that wants to run a spot crypto business for their retail customers as a brokerage firm they can do all of the pieces themselves they can manage all the kyc the AML the onboarding they can all you know do the custody the reporting arrange liquidity for the trades they can do all that or they can Outsource it to us and so that's our core like our core crypto business is our brokerage capability essentially it's Brokerage in a box uh and we have uh great clients as partners
(14:24) and we're super proud to be in that space as a silent sort of Quiet Partner to a lot of great Brands uh and that's exciting and I think there's tremendous amount of room to grow that uh not only with more you know have more clients that look like ours but also change sort of our product lineup and and do more things and attract different types of clients so I like that brokerage piece a lot I'm super excited about that um we have qualified custody with nydfs as our regulator that's a rare thing there's
(14:59) not a lot of nydfs uh qualified custodians uh we launched that in November of 2023 that's a that's a that's a tough business in the sense that it's a it's a serious business to be regulated by the nydfs so I love that I believe that we're moving into an Institutional cycle uh and uh qualified custody is important and in some cases will be mandatory so that's a great piece that I like as well and then there's a growth mindset in the company and so we're working on a bunch of different projects that are
(15:40) adjacent but complimentary to to custody stuff like uh trading we're build you know we're launching a trading platform uh which I'm happy to talk about in June and we're going to be sort of building that out a little bit and I think all of those pieces plus the growth mindset the fact that we have great regulatory profile I mean we have 50 mtls a bit license a trust license from nydfs broker dealer like we have all the pieces to really be a meaningful player on and and in some way in some markets
(16:13) we are but like I'm talking about a really big player in the space and just the opportunity to sort of lead that business and and and Lead that strategy in the great teams yeah it's too compelling not to say yes that's awesome yeah you talked about how this might be an institutional CLE can you kind of elaborate on what you mean by that yeah I mean if you look at if you look at the space there are many institutions who are primarily servicing retail investors and if you look at the way and that's unusual actually like a lot of
(16:47) times in my history in markets the institutional Market comes first and then they open it up to retail but due to like the nature of crypto and regulation and how different it is as a capital Market uh and an asset class it started out retail and uh and it uh it's if you look like for example the trading businesses uh and Al I'm going to give myself a segue into something that we're working on so like the trading businesses and the brokerage firms they call themselves exchanges but they're really brokerage houses so like
(17:28) all the household names are they they call themselves exchange but they're really brokerage firms for retail and and I make a distinction I I say that because the custody of the asset the settlement of the asset the trading experience all are in the same vertical in the same brand in institutional markets you usually see a separation of trading venue Clearing House custodian all of that gets intentionally separated and you see a more Open Marketplace where the institutions are encouraged to trade with other people so like all the
(18:10) parties that are in institutional servicing institutional clients are are very open architecture like for example in foreign exchange you could have a prime brokerage relationship with BMP paraba but trade with 30 different banks and it's like you don't just trade with One Bank you have to like they have a requirement to to trade in multiple places spread the risk out and so forth and so there's there's a lot of opportunities right now in the institutional space that are all supported by just the evolution of the
(18:45) asset class right like so the uh particularly the last two weeks you know I think the last two weeks from an Institutional adoption perspective are maybe the most important two weeks in the last couple of years we started I think on May 8th Trump came out and turned crypto into a football in this front to your moment Ry is talking about Bitcoin now becoming a political football each day that goes by it sounds like he's increasingly right at the end of 2023 unchain actually surveyed over 400 investors across the US to learn
(19:22) about their current bitcoin positions respondents had to be between the ages of 18 and 78 years old and have at least one investment account what we found was very surprising to me from the survey 55% of the 400 self-described investors owned some Bitcoin While most probably own very little there's still a critical point Bitcoin is now something that many Americans use to store wealth politicians that decide not to embrace Bitcoin could be hurt by this growing unique cohort of Voters and now back to by saying you know if you're into crypto
(20:02) you're into Donald Trump well that put the Biden Administration and their their uh campaign into it alerted their radar that there was a demographic that he was going after it's kind of an important demographic actually because they may be Biden voters getting pulled into into sort of the Republican Camp by nature of just maybe they're one isue voters and so like scared the Biden Administration and all of a sudden you started to see a bunch of stuff happen you started to see a break in the Democratic party Sab
(20:37) 121 uh was uh approved by in the Senate I'm not sure where that will go there's still a veto threat uh it's possible that it's vetoed but it's certainly the to see a a Break by I think it was 11 Democrats voted in favor of repealing Sab uh 121 uh then fit 21 the the the the whole you know the industry B bill passes uh I believe the house with 78 Democrats supporting it no one would have guessed that five months ago so crypto is like a football now what does all this mean if the regulatory
(21:18) uncertainty uh and the fear of being punished by by by the regulatory apparatus because ambiguity disappears there's more institutions coming they all want to come but they have they have real responsibilities as an Institutional provider it's not like whether we you know I don't have the same requirements when I'm buying for for myself as if I was working for a company so for many institutions the the move that's happening right now where the risk of participating is going down is really important so I think
(22:00) we're moving in that institutional space I mean you go back further you could say the Bitcoin ETFs the now we have ethereum ETFs like there's just been a whole series of things that are moving in the industry's direction so I think institutional adoptions happening but we haven't even begun I mean it's like not even in second Pitch of the whole G baseball game I think I like it yeah so do you think this political trend of like embracing Bitcoin is something that will continue like it it seems like over
(22:28) the years people have said oh you know the government will ban Bitcoin like it's too good to be true but now it's like they're all like converging on potentially trying to support it at least as of right now do you think it's going to get more and more prominent I wouldn't characterize it I would disagree with the way you characterize it I wouldn't characterize it as an Embrace of Bitcoin personally I don't need the government to embrace it that I think they will eventually out of necessity so
(22:55) you know they may adopt it as part of monetary policy they may adopt it at out of Geo geopolitical security policy like there could be a number of reasons for the for the government or the state to like really get into it all I need is ambivalence and like you know the fact that it's a political football I think and hopefully that Trend continues means that they're just deescalate what started with choke point 2.
(23:24) 0 right like it was like Hey we're actually going after it like I think we've just retreated to I don't want to go after it because I can't and I'm not going to support it and then let's just try to win the votes on some other basis I think that's where we've gone but for me right now that's good enough yeah I think I think we'll get to a place where they're going to get forced into it the game theory would suggest that uh but I'm happy right now with just leave it alone or and and then you know some
(23:53) clarity will be helpful which I think is part of leaving it alone is allowing that there's so many people in the space like you know uh in the in the in the industry of in our industry that are lobbying uh you know Congress and they're doing a great job trying to push help Congress create real meaningful legislation there we have there's a couple of associations that are just doing you know really good work and if moving to like a neutral state is all we need to let them do their job right yeah that's that's what I'm excited about
(24:31) yeah I agree it's definitely good that they're walking back you know kind of bad uh regulation and stuff like that um yeah it's very interesting what do you think like I I always like to ask like traditional Finance people this question like how do you think of valuing Bitcoin like it's a it's an asset that has like no future cash flows unlike almost every you know any sort of equity or Bond like how would you think of actually trying to like value what a Bitcoin is worth so so that's the part that gets a lot of
(25:01) people wrapped around the axle a little bit like a shace around the axle they just can't get over that like first of all bit to me Bitcoin shouldn't have a cash flow right like it's it's the only like properly and permanently deflationary asset assets require yield because they're they're part of an inflationary system so you like by Nature they have to have that and then we measure their richness or dearness based on on whatever yield they're generating against a perception of inflation
(25:38) Bitcoin is by Design like outside of that system so it it it shouldn't have you're actually like it I'm not saying you shouldn't like there are really emerging particularly lately in the last like six six to eight months there's there's new ways to generate yield so I I am supportive of of it but at at a base case it doesn't need to have yield there are safe responsible good ways to do that to get yield from Bitcoin and I think the industry is really like adapting fast post FTX and and some of
(26:11) the other stuff that happened during that time period so I'm I'm bullish on yield for Bitcoin holders it's it is collateral so like you should be able to generate some yield off of that I'm just saying you don't need it uh and then that's how I would start the the answer your question and then for me personally it doesn't need evaluation which like I'm going to get shade for that like because it's like sounds so I would say juvenile to be like it doesn't need one but it doesn't for me
(26:41) like I'm not selling it I know it's it's I know it's like it's you know it's like buying you know Manhattan property on Fifth Avenue it's you know 75 years ago it's like I'm not selling that thing so I'm good with it I have no idea right I just know it's up right like like it's I just know it's up and it's deer it's you know it's there's going to be a limit to the supply and I have some and you know like and people who hold it will be glad
(27:09) they did so I don't get too wrapped up with I don't think of it as trading I would never trade it I'm a Trader by background and it's the one thing I'll never trade my life yeah very very cool you talked earlier about this idea of like a a monetary reset when that occurs or if that potentially occurs you know at some point in the future like how do you think that that changes like financial markets in general like do valuations come down massively do public markets change like how do you think
(27:36) about that that's a I mean I it's an impossible question to answer because you'd have to in order to answer that properly you'd have to have a good idea of what the reset Catalyst will be and then what would be the actual mechanism to reset it right like nobody knew that Breton Woods was going to happen and what the effect would be until it happened uh so I can't really answer that but I can give you some general feelings which are it's probably going to be an environment where the US is not the the dollar is
(28:18) not the reserve currency anymore I feel it's probably likely it's kind of run its course in my opinion uh I don't know when that will be I mean it could be another 30 years for all I know but at some point we won't be the reserve currency that's safe to say that because nobody's ever been the reserve currency forever so it's like I'm not on a limb there but that does have an effect uh on us As Americans so I think there will be an adjustment period I'm I'm not a I'm more
(28:50) of a uh I don't think the Dollar's going to collapse I'm not a I'm more of a milkshake Theory guy which basically you know says we're just going to become we'll soak up all of the Fiat value into the dollar and then it'll you know something will be reset so I I don't think that I'm not a big believer in that like it's going to collapse Theory I think it'll be more of just just constant debasement in the near term there will be an adjustment externally probably more than in the US in US markets uh but
(29:23) then after that uh we we'll have a big adjustment uh I I don't really know how to answer other than then uh it probably means the US dollar has less significance than it does now and the effects that part of like when I get asked that question it's usually like they want an economic answer I think it's more like social and political and geopolitical because is really like G to end up being more important because when we lose the the significance as the reserve currency our ability to project power globally
(29:59) changes our ability to maneuver events in our favor as a nation state changes so I think it'll be more of like a geopolitical social change than it will be economic yeah so it's on some level that's somewhat optimistic because I'm also a Libertarian and I'm not I'm anti-war and so like it's helpful if we're doing a little less of that power projection yeah that's fair so basically you're saying there's going to be a shift of power but it's also going to be more of like a a decline in power Maybe
(30:28) from like large nation states yeah something like that yeah just I mean we've the United States has been you know the strongest Nation holding everybody together Global policeman and that's you like it or you don't like it it doesn't matter I just feel like it's we're coming to an end when was the last time your spouse made a Bitcoin transaction with your keys Unchained signature is a private client experience designed to not just make you a Bitcoin hero but toensure sure your loved ones
(30:59) are comfortable managing Bitcoin wealth with quarterly security meetings personal trust and Ira accounts included on call technical support a discount on trading fees and more signature also includes invites to Unchained exclusive events featuring speakers like T Amer Peter ston and Parker Lewis sign up for Signature today at unchain dcoms signature to turn your family into Bitcoin Legends and now back to the show to that and and I don't know what that'll look like yeah that's fair uh we had a question
(31:31) from this guy on Twitter his name was bits Gap he said which countries will influence the current bitcoin market and why do you have any any insight there I think the US without without like without any hesitation whatsoever the US is the largest Capital Market Bar None we have the structure of the US if you look at sort of the way the SEC and and and and legislation has been set up in the United States for the investment business there's a heavy there's the the legislation tries to push retail Capital into the hands of
(32:16) of institutional managers who were then regulated by the SEC other nations don't have quite the level of like I would say the web of Regulation forcing that change so in the United States the Advent of the ETFs being approved is singlehandedly one of the most important things for Bitcoin because it now the largest Capital Market in the world has a traditional method of asset allocation into the space now you could say that the Bitcoin ETFs are like a supermaxi would say that they're dumb you know like they're not the real thing why
(32:59) would you ever own that okay well fine you own the real thing maybe my mom doesn't right my mom's 87 she's got an investment advisor and maybe she's not comfortable you know having a nano in the back you know in a safe in her in her bedroom like you know maybe everyone at you know here would but like my mom doesn't like that but now her capital is going to be put to use in in the space so you can like that you can not like that that there is now a highway system from the largest Capital Market and
(33:33) savings pool in the world in world history into the space and it hasn't even started I mean straight up like Bitcoin ETF is just the beginning we're going to get leverage ETFs we're going to get index ETFs actively managed ETFs you know and all of that you know that whole that's what you had asked earlier about institutionalization like it hasn't like this is now just the part is just getting started what does that mean to a core like Maxi Bitcoin holder it just means the price is going up so if you
(34:07) don't like it like I get it it's not going to change anything but you're going to benefit from it you know so I don't know it's I don't know it's I get it like I I mean I was I early I wasn't a fan of the ETFs you know when I first started thinking about the space I'm like oh well that's antithetical to the whole concept but like Perfection is the enemy of the good right if it if Bitcoin gets adopted and and a a reasonably large percentage of holders are through sort of Structured Products like
(34:44) an ETF or or asset management or something like that okay I mean it's just it's the you want to get to half a million at Bitcoin you're going to need that that energy and so I think it's all complimentary yeah it's fair I I agree I think like ETFs are kind of top of funnel for Bitcoin it's like everyone wants some of the number go up technology and they just want to get exposure at first in the easiest way possible and I guess for older people you know that have a lot you know millions of dollars in their you know
(35:15) Charles Schwab or Fidelity account it's kind of easy to just click by there at least to get started what it also does so this is um you know we're here in Austin Texas this is my third or fourth consensus conference and I was having breakfast this morning with a prime broker in crypto and I was laughing because I was recollecting that in my first couple of conferences I couldn't believe the environment so like my first conference was in late 2000 or early 2018 after I did my whole you know London sort of
(35:52) thing uh uh and I uh I remember going to the first couple conferences and people were yelling at trafi folks right like there'd be like a like a like a little older maybe they maybe they had a jacket on which is like crazy you know like they were were you know like they just looked like they were from like Wall Street like and I did right and uh and they'd yell at me like like I remember like somebody from City Bank was speaking at a conference in New York and it was like a proper crypto conference and like a couple of like Libertarians
(36:26) were like yelling at him and I'm a Libertarian but it's like they were like giving them get out of here Wall Street like all that stuff and like that was like 2018 I was sitting at a table this morning over breakfast with somebody who runs Capital markets at a prime broker in crypto and we were discussing ways to squeeze a basis point out of like out of like the system like how do you how do you optimize for Capital and balance sheet and leverage and we were having a conversation about like maximizing Prime
(36:56) brokerage and balance sheet and literally what we and I started laughing and he goes he was new to the space relatively new and I started laughing I'm like we're talking about a basis point here like you wouldn't believe how far like for me I just felt like I was in the Twilight Zone because what's happening with all this institutionalization is it's bringing in like new folks there's new like trafi needs to be fixed but that doesn't mean that there's nothing to learn that's
(37:25) ridiculous right and so what we want in our environment is the best of what we've learned in trafi and merge it like I'm an evolutionary not a revolutionary and some people don't agree with that but it's just come a long way right like and this that's you know and when you come to this conference at consensus I think the trafi Wall Street folks have learned to blend in but the conversations are very different they're very like professional now it's really cool actually yeah yeah these
(37:57) conferences are so interesting I I was at one one time and I I was at the booth and had one guy came up to me he's like yeah I bought drugs off the Silk Road now I'm like have like $50 million worth of bitcoin I was like oh okay cool and then the next guy would be like yeah I'm an energy executive in in England I'm like oh okay cool and it's like the same people coming up to you you know within 30 seconds and they're just like was that was that recent it was in Amsterdam at least maybe last year or two years
(38:22) ago right yeah weird it's a great Vibe it's a great there's a great Confluence it's like we're at the Crossroad you know yeah yeah it's insane um I know backed and Unchained have a partnership um how do you think about like the idea of know individual custodians like you know single off they're the ones holding the keys or like the the network of keys concept where like Unchained holds a key backed holds a key and maybe another person holds a key like how do you think of those two you know ways to custody
(38:51) Bitcoin digital assets so I think it's kind of like our discussion about owning Bitcoin or owning the ETF F like there's there different people have different preferences and you can take an approach to you to be dogmatic you know and say full self- custody Hammer your you know your Hammer your seed phrases into a titanium plate and then embed them in your you know in your thigh like you know whatever it's like crazy like what we did and some people do and I'm not saying I do or don't do that but you know you know you
(39:26) can go that far or you could say look there different people have different preferences and institutions have a in some cases a requirement for qualified custody some people will want to do full self- custody and I think the collaborative custody partnership that backed and Unchained have is incredible uh because it is it is literally like a whole new way of doing something and it Blends some of the confidence and professionalism and that you might get out of a qualified custodian that we have it back so like you know let a we're holding one
(40:07) of one one of the uh pieces of key material so but we're publicly traded firm we have nydfs we buttoned up like that's helpful in a lot of ways it helps you feel more safe chain of custody and transition you know and that kind of protection over time like you're not going to lose the Nano that you buried in you know in the backyard like kind of thing you know what I mean like so some people like I I know a lot of people were like I love Bitcoin I'm G to just leave it at the exchange well that's not a good solution
(40:42) actually like leaving it just at The Brokerage exchange or brokerage house is like the worst of all solutions right so let's if if we can move away from that into choosing between self pure self- custody quality ified custody and collaborative custody like and make those the choices for everyone not just like retail but for everyone then we're that's that's a combination so I'm a big we're stoked to be a part of it uh and to be your partner in that like so it's it's a great product I I see it scaling
(41:16) yeah it's great to hear so I guess your view is like you don't see them necessarily competing it's more of like there's room for each of those Solutions just depending on who the person is or who the institution is that's trying hold the Bitcoin I mean part of that is my personality part of it is is just the fact like human beings have different preferences they have different feelings of risk and I think you know both of both Unchained and backed are service providers in the space and if you know
(41:45) we can choose to be dogmatic or we could choose to be responsible but offer varying solutions to different preferences and so you know back I can speak for back like we're very responsible company we have our own ideology and belief system uh about security professionalism regulation how things should be done but we also are here to serve people that's you know that's our business and so recognizing that people have different preferences just allows us to be a more meaningful partner to more people yeah how do how
(42:19) do you think about like Bitcoin and other cryptocurrencies as well like how do you view that Dynamic are you asking Ray or you asking Ray the CCO of back maybe both I like I actually uh I think that the uh I I am as a personal investor I am more comfortable with Bitcoin probably because it's just I understand it more I've done more work on it it's possible that if I was more of a if I was a little more Tech SA and I understood some of the value proposition better of some of the other layer Wes like ethereum and salana like
(43:06) I understand them but not at the level I like Bitcoin is pure sound money in digital form in this Frontier moment Ray is talking about Bitcoin being pure sound money in digital form what is interesting about gold is how imperfect it really is civilization is getting more and more efficient and more and more productive at mining more gold if you assume a 2% annual Supply growth rate in Gold then Humanity mined more gold in the year 2023 than all gold ever mined from 3000 BC to the year 1800 with the same assumption gold
(43:45) production leaped from 36 tons mined in the year 1800 to about 3,000 tons Min just last year a 100x increase in Global Production so yes Bitcoin is actually pure sound money we've never seen a monetary asset this scarce and now back to Ray right and like as we talked about earlier like that was my background and passion and still is so I like get it and so like for me personally like I like to do things that I understand I like to invest in things that I get I get ethereum and and salana and you know AI Avalanche and like all the others like I
(44:26) understand them I I haven't I just it's just doesn't light me up personally from from a business perspective it's not like I don't have a preference you know in other words we're here to support Bitcoin of course because it's the first blockchainbased you know digital asset it's not for for me to decide whether a new layer one is going to have broad Commercial Appeal or not it's for me and our company to decide whether there is Broad Commercial Appeal and demand and how can we best service our clients who
(45:05) have that demand so I don't really have an ax to grind from a business perspective except as it relates to how we as a responsible business can serve those needs right like my ax is more about how and and can versus should like in other words like if there's an a layer one that people are like the industry in the marketplace is deciding as Commercial Appeal and is adding value like who am I to say like you know like I've but my our conversations are more along like are we allowed to do that how does that fit into our Regulatory
(45:43) Compliance envelope you know that kind of thing like those are the questions that we ask yeah now that makes sense where do you see backed in five years or so it's a good question um well we're we're in an interesting place in our in our timeline like I mentioned you know we're we're public we have a big we've gone through some leadership changes we've got a we've got we've got a big Vision we're building out a trading venue uh that will be attached to our custody business we have uh the
(46:20) brokerage business growing I just know from my perspective on what those vision that vision is to give you the shorter answer I mean I talk about the vision all day long free advertising why not but uh there's so much room for this company to grow and where it grows and like who like I just know that it if I were to bet in five years it will be a lot bigger than it is now we're just we have so much capacity to to do stuff the space is growing the wind is at our backed uh is at our back uh so I'd like to think from a market
(47:01) I'm not supposed to give market cap uh uh expectation just a lot bigger there's a lot of room to grow cool yeah good to hear what about Bitcoin like where do you see Bitcoin in in five years I don't make projections because remember earlier I said I didn't value it I mean I value it it's dear to me but I don't even personally put valuations on it just like I like it's going to be higher right you know I'm a big fan this is my big fan that of the and I don't know exactly the ratios have you've
(47:32) heard the research report that that it came out about two years ago and it's a it's a gem I'm hoping it's true I read it once or twice but I use it all the time when I'm at like dinners and family and stuff you have a portfolio of $100 and you have $100 in the S&P 500 and you have a portfolio of of $98 of cash and $2 of of of or of Bitcoin maybe it's $4 maybe it's two but it's like a small amount and that portfolio of cash with a little bit of Bitcoin outperforms the S&P 500 portfolio every single time
(48:13) over any four-year period you want to like project so like that's what I like I just got all I need to know is that right like if and then where it goes from now it just will be a lot higher I it's it's interesting like I'm not like I'm not as I don't get as bullish like euphoric like I mean really like it could go to a million for I know but it but like it's I'm not also not going to sell it it's really to me like for me personally it's like it's not for me it's for my kids and grandkids so it's
(48:50) like I don't know it's could be more yeah Fair what about do you have any opinion on like passive flows in Bitcoin I feel like that's been a kind of a Hot Topic recently with like micro strategy potentially going to get added to the S&P 500 and then you know everyone kind of passively buying the S&P 500 maybe micro strategy keeps going up other companies copy micro strategy do you have an opinion on that I think it's genius yeah I think I think Michael sailor is a a real revolutionary guy like I mean
(49:22) he's in his I think micro strategy an incredible company not giving investment by but it's an incredible company I think the strategy that they're deploying is super interesting and it's possible that a Vortex like you just described like happens so do I think others will adopt it I don't know I do think that from a treasury management perspective given you know kind of that portfolio comparison that I just did however that is true I mean not some I don't know it's exactly true but it's
(49:58) like close you know as my dad would say close for government work uh it's close enough that when the accounting rules and and everything gets sort of cleaned up and buttoned up and everyone feels safe eventually every treasury will hold you know you know Bitcoin on their balance sheet in my opinion uh it'll be a part of prudent it it will shift at prudent uh treasury management so that's all I think that that micro strategy is doing they're doing it probably more aggressively than than than what will be
(50:32) the norm in the future uh but I do think Bitcoin as a part of Treasury management will be ubiquitous yeah I agree with that what's something that you believe that you think a lot of bitcoiners would disagree with that I'm Satoshi that's that's correct just a guy from FX was Lot in the space uh that was actually I could have left you there let's see that's a good question yeah and I didn't know this one uh what do I think uh that I believe well I think I to be honest I think I may have already said something
(51:12) like there's been a couple of things that hardcore that I've said I'm a little more pragmatic than I think part of it is because I'm in the service industry in the space so pragmatism is sort of a requirement on some level you know different V varying degrees of pragmatism uh but holding space for other other coins and other opportunities and stuff like that is a fair amount of like the Maxi and me cringes when I say that stuff like that U so maybe it's that yeah that makes sense last question we can probably
(51:47) close it out what do you think's the biggest risk to bitcoin I'm pausing not because there's two ways to interpret my pause one is he doesn't have an answer and two is there's lots of risks I think there are a lot of risk it's hard to pin down uh I do think I mean I really believe that blockchain technology and the implic and the and how it's implemented via Bitcoin is like it's like almost like an alien you know like information drop like it's it's it's it's really really powerful
(52:36) and I the risk to me isn't that it won't develop the risks are about timing I think like I think given enough time Bitcoin will do its thing the risks are more about like when most people that are in cryp I think they're almost like looking at it wrong it's it's a it's a it's going to happen like we're going to have massive continuous growth over a long time but I just don't know whether I'm going to see it probably like I I'm I'm betting that I would right but it
(53:10) could take a while and I I'm not enough of a computer scientist to say to speak to but stuff that I don't really fully have my head wrapped around nor probably will ever will be existential threats like Quantum Computing and stuff like that things that like ask people they're going to give you better answers but there'll be there's probably risks out there that like I'm not qualified to like say that are like more computer science related than anything but to me it's like my the thing that I that keeps
(53:39) me up at night is like when not like if kind of stuff I guess that makes sense coming from the the Gold World waiting a l while yeah it's taking a long time actually I mean I'm a little bummed out that Gold's only you know where it is I mean I wish it I wish it were a little higher but it's the most manipulated Market in the world so that's what you get yeah fair enough well Ry I appreciate you taking the time to to sit down with us uh is there anywhere that the audience can go to learn more about
(54:06) you and back sure uh uh is our is our corporate website uh I think my Twitter handle is ramrath I don't really tweet there to be honest although I probably will start doing more of that and you know you can find me on LinkedIn cool awesome well thanks Ray this was great thank you very much enjoyed the conversation awesome thanks


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