← CRYPTO 101
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- [00:00]
Joe Kelly
Foreign.
- [00:10]
Bryce
All you good, wonderful citizens of Crypt nation, welcome back. Welcome back to another action packed high caliber episode here of the Crypto 101 podcast. I'm feeling fired up. All the bears who thought we were gonna get a complete capitulation in the market are proven wrong yet again. I don't want to be a grave dancer or anything, but it seems like bitcoin has been just a stalwart here in the markets. No matter what macro throws at it, no matter what hyper liquid over leveraged traders throw at it, you just can't knock bitcoin down. And it's, it's been a really, really fun season. Sell in May, go away. Was proven wrong this year. It was one of the best maze in history, both for the stock market and for bitcoin. So, man, I'm pumped up. Brendan, how are you feeling, man?
- [00:58]
Brendan
You know, I'll stir the pot a little bit here.
- [01:00]
Bryce
Bryce.
- [01:00]
Brendan
I'm okay with being a grave dancer on the bears. The bears can get wrecked. They can get liquidated. Let them go to zero until there's no sellers left. I'm fine with that. I think all of us here are fine with that because bitcoin is pushing higher and, you know, I really don't think anything is going to be stopping it anytime soon.
- [01:18]
Bryce
Yeah, man, I, I'm so excited. We're joined by an incredible guest today, Joe Kelly, the co founder and CEO of Unchained. We're going to be talking about all the bitcoin financial services that they're offering from the man himself. Joe, how are you doing and thanks for joining us.
- [01:36]
Joe Kelly
I'm great. I'm, I'm happy to join you in the hype train. We were talking a little earlier. Just got back from the bitcoin conference in Vegas last week and that was really an all star event and great, a lot of, a lot of great buzz. It's ready to go home by the end. But that's, I think that's like that mix of Vegas and conference botoug.
- [01:54]
Bryce
Absolutely. Yeah. Anytime I go to one of those conferences for three or four days, especially if it's in Vegas, you combine those two, it's just like, whoo, what a whirlwind. But real quick, actually, before we dive into everything about you and your company, give us the high level on, on that bitcoin event, it was like had a bunch of buzz. Everybody was talking about it. I saw the vice president spoke there and yeah, what was your, what was, what was going on? What was the high level, man?
- [02:19]
Joe Kelly
I think Overall, just it brought in a lot of like all parts, all corners of the industry. And also just now where the industry's at in maturity. You know, there's now politicians and there's senators and vice presidents. Last year a presidential candidate obviously too. So it's a real mix. I think that. And it's great just insofar as like even bringing enemies. We had like Brad Garlinghouse from the Ripple community. Guy like there, Peter Schiff with David Bailey. Peter Schiff had a booth. I love that dude.
- [02:50]
Brendan
How is that?
- [02:51]
Joe Kelly
That was kind of a hoot. Definitely a lot of our team was keen to meet him. So really great. And we've done the bitcoin conference really since 2019 as Unchained. And so I've also watched it kind of grow and develop and always kind of found our niche or our sweet spot of the parties we host and the ways the partners we partner with on that kind of a thing. So just all like a great time. The biggest stuff being talked about often tend to be these, these bitcoin treasury companies. I think right now that's just all the rage. Outside of that, Unchained had some announcements going in that people talk about later. And you know, I think there was otherwise a lot of other good innovation and just good things happening on the trade floor.
- [03:31]
Bryce
Beautiful. Well, it's always good to get the inside look. You know, those conferences, they could be expensive for our listeners. So they always like to kind of hear from our guests as to what's going on at these big deals. It's great to hear that those bitcoin corporate treasuries are really in full swing. But I want to really, you know, focus the conversation on what you're building, because I think what you're building is hyper relevant to our listeners. Something that they could actually use. Right. Sometimes we'll bring on people, they're. They're developing these big fancy platforms that, you know, at the end of the day, it's maybe for developers or it's for hedge funds or something that the average, everyday crypto, one on one listener can't really utilize. But with Unchained, it's something that whether you're a recent college grad or whether you're, you know, headed into retirement or already there, you could find an incredibly, you know, useful set of tools at Unchained. So I want to dive in just at the top of the pod, tell us what Unchained is, what your mission is and what you offer to investors.
- [04:28]
Joe Kelly
Yeah, I love that you characterized us that way. Or Saw maybe the usefulness or usability hopefully for your audience. That's where we started with Unchained. I think we, my co founder of my second company, we learned in that first business the pain, the challenge of starting a business had like no customers or you didn't know who your customer was early on even when they sold it. We learned a lot of good things by the end we started Unchained. We wanted to know who the customer was. And this was in 2015, 2016, the environment of where it's even here today. But even back then it was so strong. It was. I don't know about this bitcoin thing but blockchain technology, that's, that's the cool thing that's going to be what's for. Let's try to apply that to health care, let's apply that to real estate, let's apply it to these, these other things. Dentists, dental coin.
- [05:10]
Bryce
Yeah, dent a coin.
- [05:12]
Joe Kelly
They need a blockchain. So but I was like, man, you know, the number one users of the blockchain are bitcoin holders. It's the biggest asset. It's a real, live, functioning blockchain. And so if you're trying to develop blockchain technology, kind of anything air quotes like just go where the customers are. So the idea was for Unchained to be a company that serves long term bitcoin holders because bitcoin is money. We treat the business model and the asset like we're a financial services company. But we've always also had a very strong technology foundation. We acknowledge from the very beginning that due to bitcoin's novel technical nature and the capabilities you can have to hold your own keys and work with bitcoin in that way that we needed to also support that at Unchained. And that's both been important from just a fundamental security principle, kind of a like a bitcoiner values principle and a way we differentiate in a market that's noisy and has a lot of different custody solutions or other financial services. We always privilege that idea that clients can hold their own keys when they work with us.
- [06:11]
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- [09:06]
Bryce
And when you built Unchained, were you really building for the everyday investor that was kind of your primary clientele base, or were you focused on institutions and saying, hey, we're gonna, you know, equip institutions with, you know, a lot of great tooling? Where do you guys kind of split that really spend?
- [09:24]
Joe Kelly
Individuals. I'd say for the most part we have individuals, institutions, definitely some businesses like smaller companies. There's some minors, there's at least one public company minor that works with us. So we do cover some of the gamut. But to characterize us, we have 9,000 clients, most of them are in the US and most of them are individuals. And we have over 105,000 bitcoin that we help secure. It's also a reasonable density. We're probably not the best solution for somebody if you're buying your first $500 of Bitcoin, as soon as that bitcoin starts to be maybe the tens of thousands, hundreds of thousands of dollars material wealth you wouldn't want to lose. Start to look at real good security solutions, inheritance protocols, ways those assets can be passed on.
- [10:08]
Bryce
And so you, you, you say Bitcoin financial services on, on your website and that's kind of the whole idea. But I think a lot of people listening are like, oh, bitcoin financial services, is that a wallet? Is that an exchange? And it's not. But can you explain what it is that you, you're actually doing with financing and, you know, multisig and all this kind of stuff?
- [10:29]
Joe Kelly
Yeah. So really, usually the way we form a customer or client relationship is around custody first. So the client is somebody who holds 10 or 20 bitcoin. Now it's now appreciable portion of their household wealth. They want to make sure it's extra secure. They want to sleep well at night knowing that it's not sitting in a Coinbase account that might get hacked or might they get prevented from spending from due to that centralization risk or, or if they've already graduated or starting to use a hardware wallet, but that maybe is just one hardware wallet or so a single point of failure for them. So exploring multisig, the idea that using multiple keys to protect your Bitcoin and Bitcoin supports this natively. One of the things that creates more robust security in Bitcoin versus other assets or blockchains that don't have like a native multi sig option, Bitcoin lets you construct in its native scripting language addresses that have a rule set where primarily on chain, we use, for instance, two of three. So there's three keys associated with a Bitcoin address. And two of those keys are required to create signatures in order for the Bitcoin to move, such as a core building block, a core way that the Bitcoin software works and recognizes valid transactions and spends. And so when a client's coming to us and they're setting up what's called a client controlled vault, they're holding two keys, we're holding one, the third key. That means a client can lose a key or if they just don't have access to it, they can ask Unchained to sign when they're trying to move Bitcoin from their vault. But also we're very aware and we learned pretty soon after launching this vault product that there's still gaps in comfort, gaps in knowledge, or just that challenge of like, did I do it right? You know, even if you use a package of software and things like money and especially large amounts of money, they carry emotions. They carry emotions like fear and anxiety and helplessness or just these kind of challenging emotions. So we often like to deal with people, other people that can help us, assuage us or help us, talk us down or help us tell us, did I do it right? Is this the correct way for this to be, Am I safe? And so that's one way Unchain has learned and adapted is that we've known you can't just sell the software. You can't just sell a wallet. A wallet or a piece of software is not going to give that person that kind of end to end the fuller emotional experience. To know, to have the comfort that this is correct, this is good, my spouse or my heirs are going to be able to get the Bitcoin when something happens, those kinds of questions and causes for anxiety. So Unchained is kind of both there. That's that technology, service and platform that we've built and this white glove, like high service, high client service kind of minded firm. So those kind of come together. And in financial services, it is a service studio service is kind of in the name and so it's rare still to have like a financial services relationship with like a bank or investment advisor that you don't also get to call or talk to a human. So that human layer is important. We've always had a 800 number on our website place people can call when they have questions. When they're becoming a client or already client. We can, we can work with them. And the other kind of more like financial things that happen with Unchained. So we have one of the longest running lending desks. We lend dollars against bitcoin as collateral. Right now we do that with commercial loans only. So it must be an llc, can be a single member llc, but it must be basically an entity. That's where client posts bitcoin as collateral. Usually right now it's 200% of the principal they're looking for. So if you're looking for $150,000 loan, we require $300,000 of collateral. We've been doing that since 2017. That's what makes us one of if not the most longest running lending desk. Continually and without ever suffering any loan losses. Remember having we don't rehypothecate. One of the things that differentiates our loan product is that bitcoin always stays in the address it was put in and the client gets to hold a key. So that same multi sig format, it's a bit reversed unchained controls effectively two of the three keys while the client can still maintain one key. And that helps provide that cryptographic proof, that linkage that the bitcoin is where we told them it is and it is for the duration of the loan. We have a trading desk. We have over 30, almost 40mtls especially where required. And some states don't require it. But that puts us as trading enabled. And I think at least 45 states clients can buy and sell bitcoin through us directly from their cold storage vault.
- [14:56]
Bryce
MTL being a money transmitter license, is that right?
- [14:59]
Joe Kelly
Yes. Yeah, yeah. The money transmission license. Basic framework you have to have if you're conducting buy, sell kinds of transactions for clients. We have some lending trading. We have an IRA account, one of the few and rare IRA accounts where you can hold bitcoin and hold your own keys to it. So also unique in that way. And then we have a registered investment advisory subsidiary. So for people especially where you get to a point where you might be debating do I sell some bitcoin to borrow some or you know, do I can I retire in five years based on much bitcoin, I have some of these kinds of things. These Questions? It's really hard for a lot of people to engage their traditional wealth advisor on topics around their Bitcoin. The advisor might be ideologically opposed to it, they might have compliance reasons, they can't talk about it. Many of reasons why people like have to hide their Bitcoin from their, their advisor. So we help to kind of fill that gap with this RIA we have. It's a wholly owned affiliate here called Sound Advisory and provides financial planning, tax advice and other ways we help clients.
- [16:00]
Bryce
What's the name of it?
- [16:01]
Joe Kelly
Sound Advisory.
- [16:02]
Bryce
Sound Advisory. Okay, cool. I'm going to look into that one.
- [16:05]
Joe Kelly
Yeah. And then lastly, just kind of the most recent Arctor journey as we announced a couple weeks ago. Gannett Trust Company. It's another wholly owned company here at Unchained. It's a licensed and regulated trust company by the state of Wyoming. Just received its charter. It'll be open for business within another month or two. And that's going to be where even more of those kind of fiduciary financial services around, like financial planning, the wealth management sides of the business will occur. We'll be able to do things like full custody or custody where clients don't hold their own keys and especially where people are planning for different kinds of trust structures and other kind of more advanced estate planning vehicles. Gannett Trust will be there to help with that.
- [16:46]
Brendan
Man, there's a lot going on there. Definitely a lot to unpack.
- [16:51]
Bryce
I could see also before you get to your question, Bren, I could see why you guys only focus on Bitcoin because imagine doing that for the millions of different crypto assets. It would be technical, just confusion for everybody. And for the dev team it would just be insane. So it makes sense that you guys focus on your lane and do it perfectly.
- [17:12]
Joe Kelly
Yeah, you recognize that. And we did have a period even we supported Ethereum as loan collateral for about 18 months. And it was both a nightmare for our dev team. It was also not very practical as just a business. It was only about 5% of our loan book. And so we kind of learned from that of just, yeah, you have to make this business model work in Bitcoin or it wouldn't work anywhere else anyways.
- [17:34]
Brendan
And you know, I think that this can go back to a larger lesson, which is that oftentimes people come into the crypto market and they try to dip their toes into everything, whether that is owning a thousand different cryptocurrencies, whether, or trying to get involved in every single ecosystem. And we're talking from people who work in this space full time. And we recognize that you can dip your toes in too many different avenues and sometimes it doesn't make sense to always do that. So I know that that's not a one for one example here, but the general idea is that you can spread yourself out too thin and sometimes it doesn't make sense to do everything all at the same time. But you. I want to go back to a point that you said earlier because you've called the biggest bottleneck in bitcoin adoption educational, not technical, not a regulatory. You said it was educational. So what do people still like, misunderstand the most about it?
- [18:32]
Joe Kelly
I do think one of the. I'm borrowing from a friend or the way they put this. One of the most dangerous ideas about bitcoin is that you're too late. Like that, that idea which is by now like over a decade old. People.
- [18:48]
Bryce
I've heard that every year for the past 10 years.
- [18:50]
Joe Kelly
And yeah, believing that, you know, that that's, that's harmed a lot of portfolios. That's like, that's that one of those like errors of a mission of just like not, not doing something because you felt like you were too late. And so let me, you know, let's go Explore the other 99,000 cryptocurrencies or something like that, because maybe that'll be the next bitcoin. So I think that's just something to be wary of. And I think bitcoin, part of what has kept me in here. I'd be curious if this is also the same for y' all just at least, you know, and as it represented the kind of industry or place I could stake the next decade or more of my career into. When we got started was it's an immense rabbit hole of intellectual topics and curiosities that, you know, are at the intersection of so many aspects of modern life, such as computer science, technology plus cryptography plus social systems, design of economies, design of central bank like functions where all those things mean. And so that is a lot to unpack. And that's part of the overwhelmingness of like the education idea of just people kind of look for simple answers, look for simple things. What's gone up the most recently? Let me kind of pile into that. I think astute investing has a lot of. Whether it's counterintuitive things or just things that you can't. You always have to leave your. You have to examine your first feeling a bit more. I think hopefully most of us who heard about bitcoin and tend to be rational or skeptical that first hearing was. It wasn't, oh, I'm already too late. It was before that was. That sounds like a scam. That is not that. That can't be. That can't be right. Or this is just. This sounds like everything I heard that was a scam. And I think that's great. It's a great instinct because it protects you, like a lot of our fears or anxieties do and just innumerable circumstances. But I love being wrong. One of my favorite things is in the year, tallying up how many things, how many ideas did I change? What assumptions have I had to overturn? And bitcoin will do that for you. And with you, whether, whether you. I mean, as long as you're willing to examine it or like, ask the question.
- [20:57]
Bryce
Yeah, it's funny, I get that question all the time, like, am I too late? And I finally come up with my response where I was like, are you too late to money? Like, are you like, you know, every time that you earn a paycheck, are you too late to cash? Because bitcoin's going to be that digital money of the future, whether you believe it or not. It's very clearly going that way. So are you too late to money? Well, if you're not too late to money and earning a career and saving, then you're not too late to bitcoin because it's always going to be there. Trust me, it's not changing. And so it's. Yeah, I love your framing there.
- [21:29]
Brendan
Imagine if people said the same thing about the stock market. Oh, 15 years S&P 500. 15 years, you're too late. You're done. Don't invest in it. You know, look back at that in hindsight and it's like, yeah, you know, there's going to be periods of hurt, but you look out to the big picture. And again, I think the big picture of bitcoin is painted so much more clearly than any kind of stock market or traditional asset that we could ever compare. You look at the. The chart of bitcoin over the last five year or 15 years, it dwarfs just about anything else that we could see. So in like, every time frame, every time frame, everyone.
- [22:07]
Bryce
Dude, it's a. It's a funny point. Like, are you too late to bitcoin? No. Are you too late to the stock market? No. Are you too late to getting out of Fiat or your bonds position before they unwind in the debt spiral? You might be too late for that if you haven't repositioned, like, Some of these big bond funds like Cantor Fitzgerald, they realize, like, they hold all these bonds, all these bond trader funds, and they're like, we need bitcoin exposure to hedge this sovereign debt sort of crisis or spiral that could happen if we keep raising our deficits and our productivity doesn't reach up. And America, like, is kind of the focal point because it's the biggest market, but it's really the cleanest shirt in the dirty laundry pile. Like all the other countries have bigger fiscal and monetary issues, so you might be too late to that. So you should definitely get out of all your fiat. Not all of it, but, you know, as much as you're willing to lose. But no, it's a really funny point. I'm glad you brought that up. But like actually going to like the, the sort of the idea of like Cantervich, Gerald, like all these other financial services companies that are now like going not all in on bitcoin, but they're certainly now here. How does that affect your business? Because, you know, here you are, you know, you're past the startup phase. You're in that sort of, you know, teenage adolescent years. But now you see all these megaliths, these, you know, guys with billions and billions of dollars, I mean, BlackRock with trillions of dollars, Fidelity, they're getting in. So it's validating to everything you've been doing. Are they coming to you for like, hey, could we buy you? Are you like, hey, we're going to be the next BlackRock? Like, how do you kind of think about your positioning in the market?
- [23:40]
Joe Kelly
Yeah, I mean, good question. I appreciate I've used actually several times the last couple of months the characterization of Unchained as in adolescence. And that just kind of shows up sometimes. And like, what we're also learning as emerging leaders and managers and what is there to say about our business model in some of that respects? And so I've often thought Duongchain is just a very reflective of the industry overall in a certain way. Just because we have always hewed to being very bitcoin native, very bitcoin focused. So the industry is kind of growing up. There's a couple ways I'd say, just in terms of positioning that the best thing we've earned and we continue to work hard to earn is that client relationship and that client trust. We earn that through the doors of like their bitcoin journey and just where they're at, how they secure it, how they set up, how they feel good. And that's the key, the key leverage point for us to then sell other financial services. I do think it's not unlikely that in the coming years Unchained will help or have means by which through either a trust company or otherwise, that maybe your stocks, your traditional securities and bonds would like live near your unchained Bitcoin balance and portfolio with us kind of a thing. So we do advance towards kind of a roadmap of more of a complete financial services provider or more complete suite of things that we can do for clients just given the trust and the leverage point we have in that place within their financial life. And I think the key thing that differentiates Unchained on that entry is around the Bitcoin. And there's a way Unchained to build and design its services that's very anathema or like very hard for a traditional financial services firm to go out and do. There's a significant innovator's dilemma in how to come over to this world of self custody enablement. Businesses like BlackRock, Fidelity, many others, they work in this centralized custody model. The assets come into the asset manager. The assets either stay there or maybe they go elsewhere, but they're kind of managed or administered by the centralized asset manager and they fee on that. The business model has this captive assets plus a fee and sometimes maybe some risks baked into that transparently or not. But just like where are the assets, where are the stocks, or where the dollars that are there? And that's like where business models like Schwab. My numbers are dated here, but I know early on with Unchained it was like 60% of the revenues, 60 or 70% of Schwab came from the interest Schwab is making on cash in brokerage accounts.
- [26:12]
Bryce
Wow.
- [26:12]
Joe Kelly
Like the cash was just in there. Schwab markets it in Treasuries. The client gets a tenth of that, if that at all. So I don't know the exact figures, but for them and many other businesses, that's still the kind of main engine of cash and how they make money. So not really make money when stock trades are free or that business has kind of been commoditized as well. We've had to kind of learn that as well ourselves. Just kind of in the hard way of again, when we're helping clients secure their Bitcoin and they're holding majority of the keys, we're no longer this captive custodian. We're no longer able to then like, you know, lend out the assets. There's not really even much of a good lending market for bitcoin anyways, but that's not something we can do. So I can't like slap a bill on you. And if you try to withdraw your funds now, but you have an unpaid balance, like you can't take your bitcoin out. So your clients, they have what I call a sovereign recovery backdoor. Any client control vault, anytime they can take the wallet config file, they give them a start and they can move that into another open source wallet and move their bitcoin with their own keys without ever touching an unchained web property if they wanted to. So it's that kind of preserving that access to the base layer bitcoin that is part of what makes Unchained unique and more trustful for our clients when they come in the door. And it's just again, something that, like, if your business model, like these traditional solutions depend on the capture of the assets and the feeing and the doing things with those client assets, at the end of the day that you're just going to be unwilling to just kind of breaks your business model. It's a very different, different format and different setups. So it's, it is though, you know, a time when more of those companies are looking at the industry. And I do think there's ways we'll partner with them over time. I do think there's something to how hopefully in our mission with Unchained, the custodial ecosystem for bitcoin evolves such that there's not just this kind of this topography that's just like a few big mountain custodians like the Coinbase, the Bny Mellon or the Bitco kind of a place that already with Unchained, I mentioned the almost 10,000 clients we have and the 105,000 bitcoin that bitcoin is secured by around 20,000 keys because each of those clients tends to have two keys on average. And so that's just a very different landscape for security for the bitcoin that's here versus the bitcoin at Coinbase, which is centralized and probably has more than one key. I don't know what their security setup looks like, but it's just very different attack surface than, oh, you want to come try to get all the bitcoin in a chain. You're going to have to work your way into these thousands of keys somehow kind of, I think so that's a truly more decentralized custody type of format. We would love to see over time, traditional custodians embrace this kind of way of working with clients and customers on they're just one key of many that might be used in multisig for different products.
- [29:13]
Bryce
And when you think about sort of like I look at we mentioned the corporate strategies or the corporate treasuries, like strategy like these ETFs, does that come to bear on your, your business at all? Like all of these new ways of getting exposure to Bitcoin that no longer maybe people have to hold private keys, they kind of outsource it to Michael Saylor or, or to blackrock. And of course there's an element of trust there that you have to trust that they're doing things right and yada yada yada. But have you gotten any sort of, you know, feedback from your clients on, on that or have you seen the market change a bit?
- [29:53]
Joe Kelly
We definitely looked at. There's a lot of new discussions early on, especially early last year and late 23, about like the ETFs, like will those be competition? And I can't say or think of any clients. Surely there's probably at least one, maybe less than five though of clients who left on chain for the etf, you, Honor. That may happen. I mean people may decide that managing their own keys is not for them. And the securities and brokerage industry has evolved enough such that your brokerage account is a pretty solid experience. And the passive inheritance and things like that for A portfolio of ETFs and securities is pretty well known. So that's great. It's definitely expanded the total addressable market in demand for this kind of asset. And so that's good. I think the treasury companies, that's kind of more of an arbitrage story for me of just like the point in time we're at the, the way there's just a dislocation or there's just a different difference in pricing for different corners of capital markets and who's willing to pay what and what stories sell and how different investors are willing to jump in on something that's trading at a premium to its asset value of bitcoin underneath. So I view that as like I'm a temporary phenomenon, but long term, yeah, I think people will see more people go from zero to an ETF to then eventually holding real Bitcoin than the inverse.
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- [34:12]
Brendan
Do you have more freedom than those corporate, you know, spot Bitcoin ETFs and I would assume that you do. Like you definitely do.
- [34:20]
Bryce
You can't spend your bitcoin ETF anywhere or your microstrategy. You can't put that. All it is is like right, investment, exposure. And so with your platform you're able to kind of spend the bitcoin, right?
- [34:31]
Joe Kelly
Correct.
- [34:32]
Brendan
And yeah, that has to give you an advantage because you were walking through it and you were explaining it and I was thinking of all the restrictions that are on these tradfi companies that you know, they have all these strict regulations of what they can and can't do and it's very, very narrow. I mean you look at it and they even tried to say hey, there's this built in feature called staking. Can we at least do that? They're like not yet. That's going to sit in the wallet. You're not going to do anything with it and it's just going to, you know, sit there and you're allowed to buy and sell and that's it. But you all are a lot more robust in your approach in what you can do, right?
- [35:08]
Joe Kelly
Yeah. I think overall supporting the physical asset itself is there empowering our users to be able to do that as well. And I think someday hopefully true in kind redemptions come to the ETFs. I'm not very studied well studying that that would be, that involves some practical utility for that and probably helping just like kind of market structure parity on spot in those, those ETFs. But yeah, I mean it's, they're definitely restricted. I know not a lot of ETFs can be for instance marginal or they can't get a loan on Bitcoin ETFs inside your margin account just like you could with most everything else. I think.
- [35:43]
Brendan
Yeah. And I think it's important to just especially for the listeners to understand this because I've heard the angle that oh, once these Bitcoin ETFs come out, there's not going to be a reason for these crypto companies for these bitcoin custodial Companies for, you know, owning Bitcoin on your own, you know, fill in the blank.
- [36:01]
Bryce
Right.
- [36:01]
Brendan
We've heard all these crazy theories of like the Bitcoin ETFs are going to put all these other things out of business and that's just not true because there's a lot of, there's, there's so much variety that could be ETFs wouldn't.
- [36:12]
Bryce
Have like the way the ETFs wouldn't have any value if places like Unchained or all these other exchanges and wallets didn't exist. Right. They would just be ETFs of a asset that had absolutely no utility, absolutely no spendability or whatever. It's like the fact that there's, you know, companies like Unchained and all these different wallets or custody services means that the ETFs will have value over time. That's the way I think about it.
- [36:35]
Brendan
And they serve a purpose. Right? We like the ETFs. They serve an awesome purpose for sure. They give access to people who previously maybe wouldn't have gotten access to crypto. However, they're not this all encompassing solution of like this is the only way crypto is going to be done moving forward. So, you know, we like it. But there's so much more outside just the world of ETFs, which we know is a hot topic right now.
- [36:57]
Bryce
Totally. I want to go back, Joe, to something that you mentioned. The, I think, I believe it was the Gannet or the Gamut Trust Company.
- [37:04]
Joe Kelly
Yeah.
- [37:05]
Bryce
I want to know what that is and what that kind of unlocks for you.
- [37:09]
Joe Kelly
Yeah, cool. So it's Gannet, G A E, double T. And that's named after the tallest peak in Wyoming, which was named after the founder of the U.S. geological Survey. It was a pioneer in a lot of cartography and map making for the United states in the 1800s. We felt that was kind of appropriate. We like liking ourselves as navigators is sort of our name for ourselves at Unchained as an archetype. And we're participating, kind of mapping out this new landscape of Bitcoin and Gannett Trust. Yeah, it's been an effort Underway of almost 18 months, I want to say, between true inception and capability. And the big cap is having the budget, frankly we could embark on that with here at Unchained. And yeah, there's this dearth of, I mean there's a lot of custodians have trust companies because what you need to have what's called qualified custody is a trust company that's a bank or trust company as it's defined. Qualified custody is a designation or a thing relevant to SEC regulated funds usually that can't hold if they're investing on behalf of clients, they can't then hold the assets that are the clients.
- [38:18]
Bryce
Right.
- [38:19]
Joe Kelly
Be with a third party custodian, typically a qualified custodian. So this way, even though Bitcoin especially is not a security, but the way that SEC managed funds still for these assets that they're required to go at a qualified custodian. So that's always one way Coinbase or Bitgo or many other traditional companies have maintained a trust company and then that. That performs the qualified custody like box check for their clients. But that's kind of it. It's kind of this boring like infrast piece just around checking that box for a certain type of client. But there's a lot more. Like one of the things we see at Unchained is on the order, maybe 10% of the account types we have here are trusts. So it's kind of a newer world for me over the last decade of learning this. But you know, trust is somewhere in between a corporation and like a person. But it is the kind of thing that have its own Social Security number, so its own kind of identity, like type status. It's not used usually for like liability purposes. It's usually used in like asset sheltering or creating a lot of certainty about where the assets go and who inheritance them on certain timelines. So if you're wanting assets to live somewhere that's protected from being sued or like, you know, creditor protection, that's that one use case or you already preset at the trust so that when you die, you're hit by a bus, there's a trustee. There's some way this goes explicitly in a way that's maybe separate from your will, which might be like generalities or, or cover more like personal items and artifacts. So yeah, trust and trusts are. It's a legal. I don't want to say fiction because it's really reality, but it's like it's a legal. It has manifests in like the legal and judicial system. You want the thing that a judge will say, this is what happens. And then like that's what happens. Which is different than like physical. The kind of physical reality of Bitcoin which. Where the keys sign and where the keys like design this is going to the blockchain. So that difference is something that kind of gets mediated through a platform like Unchained where you can set up Your trust which then has the EID or basically the Social Security number with it, the designations and then also PDFs because the legal system likes things that look like statements, oh my trust has 100 bitcoin in it. And then somebody else is like what do you mean? And show them a blockchain address really getting very far. But like oh a PDF says Unchained on the, on the letterhead and it's got this address and it's got this detail. It's stamped April 30, 2025. So like that just kind of gives that like little package for. This is a real asset, this is a real thing you can give to an attorney or your accountant or these other people in your lives that like will understand those things. And so and also people that use Unchained today, they have these trusts that many times maybe don't require an institutional trustee or don't require like somebody to administrate the trust. Like they're kind of self administering it on their own. Now certain trust types require that like the person creating the trust doesn't also then control it. It has to go somewhere else. And that somewhere else typically in our financial system looks like a trust company. It's like a trust company. It's kind of in the name on the one hand but the trust company is then like the place that is there to be a longer term, a longer lasting institution over people's lifetimes because people die and then the assets that persist and move on, like somebody needs to be trustworthy to help see those kind of move on. So trust company really kind of performs that role in a lot of people's financial lives. And as they've evolved or like as an ecosystem, trust companies also perform areas of like wealth management, sometimes like investment advice, sometimes loans or lending. Like a lot of that kind of stuff happens inside of trust companies that we bundle in with overall the wealth management picture. So there's a way, there's just an extra capability for Unchained to our knowledge and from what we've seen especially across our client base, there's no Bitcoin native or like Bitcoin focused trust company out there. So this is kind of the first and current rule only there are some trust companies that will work with the asset but then they outsource the custody to an anchorage or to like something else. They're not, they're not as like ingrained in it like we are and like Gannett will be able to hold keys with our clients kind of this native multi sig. Format. So, yeah, it's a way as well. Just recognizing in the more complete evolution of Unchained and the services we offer that things like inheritance or things like around these trust type entities, we were only there at like 80 to 90% and this gets us set to like 98% kind of a thing from overall completeness.
- [42:56]
Brendan
Yeah. I mean, on the topic of trust, can you walk us through a simple inheritance plan with your company? Because, you know, this is kind of a growing topic the longer the crypto is around. How do you help your clients ensure that Bitcoin doesn't just become inaccessible at some point in the future?
- [43:17]
Joe Kelly
Yes, this is a great sweet spot for us. An inheritance, it's both simple and complex, really, depending on the person. I mean, the simple part around the bitcoin security and where's the bitcoin, especially when you're using Unchained, is there's two keys for that person or maybe their household. There's one key at Unchained. And typically what we recommend, or what I think is practical, is that the person setting up the account, they've done it in consultation with their significant other or spouse, and they make that spouse aware of at least where one of those keys are. So, hey, the safe in the house, it has your Bitcoin key. Something happens to me, call Unchained, tell them you have this key, and then Unchained's got you. And we do. That's really our role. We've done that now for fortunately, tragically many deaths from many times a scenario like that has happened. What's important for us, though, is now a financial institution and a service is that we need the evidence that this is when someone's coming to us and say, hey, my husband just died. I'm looking to recover their Bitcoin in this account. I have the login and I have the key. Help me. Well, we don't know this part of why in some ways, even just like KYC is important because now, well, if that person, you know, Doug Smith was, who was on the account, like, that's who we're going to take instruction from. But if now Doug Smith's wife is coming up with like the death certificate, the probate or evidence that like this is where the assets should go from the standpoint of more now the legal system, now we will operate our key. Now we will operate like, you know, to the letters of, like that, that kind of instruction set. And the person who died can have made that easier for everybody. Their spouse, judges, others by having a very clean Will very, very well spelled out, like elimination of what's, what's to happen and that this. All my bitcoin, all my everything goes to Jane or whoever kind of a thing. So that's just, that's where the physical, we get the help of the security, the physical movement, the consultation with the survivors around the asset. We are restrained or constrained around just doing what is like legally supposed to happen in that case, which has to do with titling and like just asset inheritance kinds of flows and. Yeah, that's, I mean, I think that's the simplest case usually.
- [45:32]
Bryce
Yeah, no, that sounds, that sounds awesome. And it makes a lot of sense again, like for, for folks like myself. Right. Like, I just had my first born son, you know, super stoked. My wife and I are like, oh my God, like crypto. Like, you know, so we got to get with, you know, you know, thinking about the inheritance planning. It's like something that I never thought about five years ago or even, even last year. But now that it's here, it's like these are, these are real things that you got to think about. And you know, like, it's just crazy that, you know, we finally are at this point where, you know, crypto is so valuable that it's, it's really worth protecting through more than just like you said, the physical security, but also sort of the legal security as well.
- [46:16]
Joe Kelly
Your, your cousin or your sister or whatever. Like in this kind of, you know, that's a message of me or like.
- [46:21]
Bryce
Yeah, you don't want to have to have it go through probate. Right. And through the court system and get stuck with the state and have some, you know, random person or random family member claim that it's theirs and draw this out and your wife has to pay legal fees if you're deceased and all that kind of stuff. So I love what you guys are doing and I think it's truly incredible. And my last question, Joe, while we have you, I know that you have the new Bitcoin legacy project and I wanted to hear a little bit about what this initiative is and kind of long term vision.
- [46:51]
Joe Kelly
Sure. So Unchained's always been in this position of supporting and having been supported by the bitcoin community, the broader set of people that believe in bitcoin's ideals work their damnedest and hardest for it to exist and continue to exist either because they're at a company or because they're just like an individual cares on Twitter or X. So we've supported that through like meetups at our offices Here in downtown Austin, where I'm at, we have, we sold floor leased the second floor of the little fill building. But half of it is kind of more of our corporate offices and the other half are split between a hacking co working space called pleb Lab and then a space called Bitcoin Park. Normally Bitcoin Commons which hosts meetups every month. There's one week of a meetup every night about bitcoin design for products design lightning Bitcoin development. And it's a co working space. So there's people in there that start bitcoin companies and work on their, their projects. So that's kind of one, one area or place that we've been at doing for many years. But we also have like products that Unchained. I didn't even mention we have a donor advice fund lets you donate bitcoin physical bitcoin where it lives in a multi sig that you hold a key to. And so like churches or other charitable causes that you want to donate actual Bitcoin to. DAFs are a way to do that if you also want to manage like the timing in terms of like which tax here gets the benefit of the donation. So that's all. Yeah. And we've, there's open source development. We have open source projects ourselves. We help support developers that work on those and other outside projects. And so the Bitcoin legacy project is one way to kind of cohere all the things we do kind of from just a budgetary standpoint of also being clear like where we are spending all this. And yeah, to really just kind of show the world like formalize what does happen, what already happens, and then strengthen some of the commitments to certain partners that are deserving of that financial support as well. So Bitcoin legacy project, look it up. If you're somebody who believes you're deserving of a grant or have a project that you should know about, feel free to send an inquiry.
- [48:53]
Bryce
That sounds awesome. Mr. Joe Kelly, co founder and CEO of Unchained. Where should people follow your journey? I know you have an X channel or an X handle that's quite popular at Unchained. Is there anything else that y' all like to, you know, kind of proliferate news through?
- [49:12]
Joe Kelly
Yeah, I think that actually the biggest one that let me capture it, we have a weekly newsletter if you want to sign up on our website as well blog that gets some regular updates, but those are all good places to find us.
- [49:23]
Bryce
Fantastic. Well, we greatly appreciate your time. Thanks for, for you know, showing everybody all the amazing services that you offer. And hopefully if anybody who's listening right now is interested, please visit their website. We'll have all the links in the show notes. And it'd be super helpful if you mentioned that you heard about Joe and unchained on crypto 101 podcast. That will just increase our street cred. And all you good, wonderful citizens of Crypt Nation, you guys are amazing. Thank you for joining us week over week. I mean, now over 660 episodes now, we're still something like that. So we appreciate you guys in the audience watching Joe for being a great guest. And I'm sure we'll be crossing paths again soon. Whether here at the Crypto 101 podcast or any of our summits or any of the virtual events that are going on or the physical ones, we'll see. I'm sure we'll see each other around. But again, thank you for your time and yeah, we'll talk soon.
- [50:17]
Joe Kelly
Thanks. Bryce and Brendan.
- [50:22]
Bryce
Foreign.
- [50:29]
Zoe Saldana
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That's okay.
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I'm good. Seriously.
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Really, I'm fine.
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Joe Kelly
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