← TFTC: A Bitcoin Podcast
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- [00:07]
A
You've had a dynamic where money's become freer than free.
- [00:11]
B
If you talk about a Fed just gone nuts. All, all the central banks going nuts. So it's all acting like safe haven. I believe that in a world where central bankers are tripping over themselves to devalue their currency, Bitcoin wins. In the world of fiat currencies, Bitcoin is the victor. I mean, that's part of the bull case for bitcoin. If you're not paying attention, you probably should be. Probably should be.
- [00:37]
A
Yeah. This has been a subject on the show for probably like four or five episodes in the last three months. Is generational wealth and talking about philosophy, history. I had Will Tanner on who's really obsessed with the land of gentry in England in the, I guess the 1500s through the early 21st century, and this whole idea of how maybe not ancient families, but old families acquired and then handed down wealth throughout time. And you're the perfect person to speak with. We're sitting with Matthew McClintock from bespoke to talk about how to manage wealth as a bitcoiner. This is something that you deal with every day and that you specialize in. I think your, your book of, of clients that have built their wealth via bitcoin speaks for itself. And you're very near and dear to the subject of not only wealth management, preservation, potentially growth, but passing that down via what you guys offer at bespoke.
- [01:47]
B
Yeah, I mean, that's really the, that's really the essence of it. I mean, we. I moved into the bespoke in this world through the lens of long term estate planning. And so my career has really always been focused on helping families create not just the right entities or the right structures and match up the right jurisdictions, but really think through the decision making process, the governance frameworks that are necessary to manage significant wealth across multiple generations. And it just so happens that in 2017, I started applying that expertise to bitcoin. And yeah, it's just as you and I have talked about this previously, I think to a certain degree. But bitcoiners have a very long time horizon. We have a tendency to view, to view life in terms of decades, maybe even centuries and kind of across generations because of the nature of the asset that we value so much. And a lot of what we focus on is then helping families really take that from conceptual value, like something that they hold dear and actually make it something that they can implement. And this idea of the landed gentry is interesting because as we saw in the evolution of English Common law. Because the Crown didn't like landed gentry to be able to continue to amass wealth and then pass that wealth across generations to their heirs. The Crown wanted a piece of the action. And so they enacted laws like the Statute of Elizabeth, which prohibited you from. From securing assets in a trust that was for your benefit, but was shielded from outside claims. And so that. And the rule against perpetuities, or the rule against perpetual trusts, which said that at some point, trust structures, especially ones that hold land, must empty out every so often, so. So that the Crown can have a piece of the properties that were held inside that trust. And so whether it's through the land of gentry, whether it's through things like the federal gift and estate tax that we have now, the income tax, the capital gains tax, whether it's the monarch or whether it's the Crown of the treasury, government always wants a piece of what they think is their share of somebody's wealth.
- [04:32]
A
Yeah, that was the fascinating thing. During that conversation with Will, we dove into a paper that essentially described this leakage of wealth that you described because of the Crown stepping in. But it really accelerated in the 20th century when taxes became burdensome and you had much of the multi, multi generation landed gentry families essentially end up with no wealth at all by the Vietnam War. And it was because of taxes, particularly. And I think that's why I love talking to you as it pertains to Bitcoiners, thinking about what they hold, the value that it sits at now, and the potential value that it could sit at at some point in the future that we're all pretty confident that it will be at, is if you have a sizable stack, you need to begin planning on how to protect that and prevent that wealth drainage that the state introduces via taxation.
- [05:36]
B
Yeah, that's right. I've been on this kick lately about looking at what some of what the ancient fathers said about wealth. I've been kind of on a deep stoicism kick, kind of going back down that path that I started many years ago. But Seneca has some interesting perspectives on wealth, but then also kind of looking into the Gilded Age of the United States and what the Dupont family did early on, how the Vanderbilt fortune was built and lost, how Andrew Carnegie perceived wealth. And it's really interesting because the Vanderbilt generation, the Vanderbilt dynasty, if you will, was very famously built and almost completely lost inside of a century, from the time Cornelius Vanderbilt made his millions first in the steam industry, and then he amplified that through the rail industry, passed that on to his son, mainly to One of his sons, he had 13 kids, 10 of whom lived to adulthood. He gave all of that wealth to one kid, and then that kid doubled the family empire in nine years. And then when that kid died, he. He split it 50, 50among his kids. And then from that point forward, it just got pissed away, pissed away, pissed away. Over time, through extravagant spending, building all of Newport, Rhode island, all up and down Fifth Avenue in New York, Asheville at the Biltmore, just spending all this money, becoming the landed gentry of the 20th century in the United States. Enter the income tax and enter the gift and estate tax, and now you end up with a lot of highly valuable, illiquid property that has a significant carrying cost to maintain. And then before long, all of the family buildings on Fifth Avenue are bulldozed. The Biltmore is donated to a public trust in order to be, to become basically a nonprofit type of entity. And the family has nothing left of the hundreds of millions of dollars that the Commodore had built during the course of his lifetime. I think to a certain degree, the same possibility can become true with Bitcoin, because although bitcoin doesn't necessarily have significant carrying costs in economic terms, we know it's not income producing in its own right. The kind of financial chicanery that can take place trying to generate alpha on Bitcoin, we've seen how that has not ended well for a lot of people in the past. Either becoming forced sellers or losing to custodial counterparty risk or whatever, or being forced liquidation of an asset that's got massive capital gains tax liabilities and losing the underlying, but also carries with it the carrying cost of just the stress, the technology burden of maintaining private key security and being able to cascade that security over time, Then helping bitcoiners really think through, how do you apply generational thinking to an asset that is highly liquid, in technical terms, practically illiquid, very often in capital gains tax perspectives, otherwise doesn't generate income in its own right, but is this asset that they want to ultimately pass down for multiple generations? And it just, it requires a lot of complex thinking and it requires a lot of, I think, second order thinking in order to put the right structures in place.
- [09:30]
A
Yeah, and not only that, but I think really moving with the times that we're talking about before we hit record, like this new cta, the Corporate Transparency act that we talked about the last time we were together on a podcast and on the last trade podcast, you have to be aware of these moving variables that are being introduced and taken away from time to time and just literally be active with how you're protecting your wealth and trying to become sovereign. I mean, that's why many bitcoiners get into bitcoin in the first place. They recognize that is this neutral sovereign asset that gives them full control over their wealth, and then they begin applying that to other aspects of their life. And funnily enough, that ties in with wealth creation and preservation, like, how do you. How do you build your wealth and then make sure it's somewhat sovereign as you're living within this. This political apparatus, particularly here in the United States.
- [10:37]
B
Yeah, I think the sovereignty issue is really. It's complicated, I think, and I think it means different things in different contexts. I mean, it certainly means different things to different people, but I also think it evolves over time to a certain degree as well. And the way I think about sovereignty, you know, there's. It's one thing to be able to maintain total key sovereignty over your bitcoin wealth, as you and I have talked about previously. That's one of the first things that was pounded into my head as I was listening to the luminaries like Andreas Antonopoulos and other people early in the space. But if we rewind the clock a bit, on the block clock that I see there, bitcoin hasn't always traded at $96,300. Bitcoin used to trade at tens of dollars or maybe hundreds of dollars, at which point having unilateral control over key material is economically not that big of a deal, because it is like a digital approximation of cash when it's at those levels. Bitcoin, because of its design, because of its algorithm, because of its network effect, and because of the erosion of the US Dollar, we've got this massive delta that's opened up between the price of a bitcoin and the value of a dollar. And so now what might have been a stack worth $5,000, $10,000, even $25,000 back in 2015, 2013, whatever, that could now be worth millions of dollars or maybe many millions of dollars. And so the sovereignty aspect can become a point of. It can become a threat vector as well. And so a lot of what we try to help clients think about is, okay, to what degree does sovereignty mean unilateral key control? And does it mean. Can it also possibly mean maintaining privacy when you want to go obtain properties because you want to liquidate some of your bitcoin positions? That could also mean mitigating the 40% estate or gift tax erosion that will happen because of the value of your wealth, could it mean the 35 to 40 ish percent erosion from a capital gains tax perspective between state and federal, if you don't happen to be fortunate enough to live in Texas to be able to pay lower capital gains tax? And so I think the sovereignty conversation is not binary. I think the sovereignty conversation is nuanced and is a bit of a spectrum conversation. One of the things that I think I'm at least noodling right now, I don't really have a clear answer for it yet, is how does an individual's sovereignty kind of interface with, or maybe frustrate their heirs potential future sovereignty? So if I die with my key material, and maybe I've even figured out a deadman switch or some type of code that I have confidence in that will successfully transfer my Bitcoin to the people I care about, are they set up for sovereignty as well? Or will they? Or am I creating some type of manacle of restraint for them by maintaining too much sovereignty on my own? I don't know. I mean, I think again, it's. The sovereignty point I think is sometimes either overwrought or perhaps underthought because there's a lot that goes into, I think, structuring for sovereignty.
- [14:52]
A
Yeah, I think inheritance protocols, how do you pass down keys, particularly when the person generated the wealth ultimately passes, and then you have this ceremony which is you either pass the keys that already exist. That's actually a question, a good question to ask you is like, what happens at that moment? Do you have to pass keys that already exist and give control to the beneficiaries of your will, your trust, whatever it may be? Or does that Bitcoin need to be moved into a new wallet, a new setup controlled by whoever is inheriting that wealth?
- [15:36]
B
I would think about that from a couple of different perspectives. I mean, there's no technical reason why you couldn't just pass the key material. And the Bitcoin never even moves as now the inheritors receive the keys to control the Bitcoin on that address, that can certainly happen. And there's nothing inherently flawed with that structure. I think from a practical matter, you've got the tax issues to deal with on this. And until, unless and until such time as Bitcoin is not subject to tax at any level, transfer tax or income tax, marking the transfer of ownership is really, really important for both the, the estate of the dead person and for the recipient who inherits the Bitcoin. And here's, here's the point here again, under the current law, the total value of your holdings, whether it's Bitcoin or real estate or fiat or whatever it is, the entire value of your holdings will be considered to be in your gross estate from a estate tax perspective, subject to your then available estate tax exemption. And you might, if you live in, you know, one of maybe a dozen or more states, you might have a state level estate tax as well as federal. And so to the extent your wealth is over that amount, there could very well be estate tax due. And the rate in the United States right now is 40%. So $0.40 on the dollar above your federal exemption amount would be due to Uncle Sam. If you live in a place like Massachusetts, you might also have like a 16% state level exemption. Excuse me, a 16% state tax above the $2 million state exemption. And so there's a lot of factors that go into this. So there's the question of whether or not the assets are properly disclosed and appropriate tax paid on those. Now if we want to get cute and say, well, we're just not going to pay the tax because who's going to know the beneficiaries who receive that bitcoin at some point in the future, they're going to have to be able to substantiate how they came about having that bitcoin. And if they failed to disclose that on a gift on estate tax return, then they will not only have penalties and interest that relate back to the date of death, if they knowingly fail to disclose, they also will have criminal liability for tax fraud. And so that's just the, you know, I'm kind of the wet blanket in the room, but that's just the way the law works. And from a capital gains tax perspective, the beneficiary would like to be able to demonstrate that, that they received that because somebody died, not because somebody gave that to them during their lifetime. Because if I give bitcoin to somebody else during my lifetime, either outright or in some type of trust structure, their basis from a capital gains tax perspective is the same as my basis was. So if I had mined that bitcoin or If I bought $10 bitcoin and then I just gave that to somebody else, well, their basis is $10 on that Bitcoin. Even if I get, if I whole coin them just out of the goodness of my heart and it's like a $97,000 gift, their basis would be my cost of acquisition because it was a transfer during my lifetime. If on the other hand, I die and then the beneficiary can substantiate that they only received that because it was included in my estate. Now they get a basis reset or a step up in basis to the fair market value at my date of death. So if they get $97,000 bitcoin through my estate, well, guess what, their basis is $97,000. So they were later sell. They would have capital gains tax based off of that $97,000 basis instead of the $10 basis. So you kind of have these competing objectives depending on if you're the hodler who's planning from a wealth structuring perspective or if you're the beneficiary on the receiving end of that gift. There are kind of cross priorities here that need to be navigated.
- [20:20]
A
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- [22:08]
B
It's only slightly harder with Bitcoin than it is with anything else. This is just the tax law. I mean, you could substitute the word bitcoin and just throw in like Apple stock or real estate or gold or whatever. The analysis is the same. It's just that the reality is that the same normie land laws that apply to traditional assets also apply to Bitcoin. And that's again, sometimes that's how the cold, harsh reality comes crashing upon the rocks of sovereignty. It's like the crown still wants its pound of flesh.
- [22:49]
A
Yeah, well, that's why I feel like we're about to have another, another bucket of cold water thrown on us. Because as I'm sure you're aware, with Trump taking helm of the White House again, moving fast, we're barely a month into, not even a month into him putting his hand on the Bible and getting inaugurated notably.
- [23:12]
B
He didn't put his hand on the Bible. He did it. Melania held it, but he didn't touch it.
- [23:16]
A
Oh, interesting. Well, yeah, Watch video being inaugurated in the, in the vicinity of a Bible.
- [23:23]
B
It was proximate to a Bible.
- [23:25]
A
A lot of, a lot of talk about tariffs. He's been publicly posturing in the lead up to the election and post election tariffs, my favorite word. We're going to throw tariffs on the world and hopefully eliminate the income tax. And really hearkening back to the Gilded Age here in the United States when that's what the, the tax structure was. It was heavy tariffs, no income tax. You have Elon Musk, his, his new right hand man who's publicly vocalized his disgust with the estate tax specifically. Do you think there's any possibility in this four years they try to make moves to eliminate the income tax and reduce, if not eliminate, the estate tax as well. And even if they were to do that, what is the likelihood that that tax structure remains intact after this administration?
- [24:20]
B
Yeah, great question. I will tell you that I think the highest probability is we'll get an extension of the 2017 Tax Act. I mean, I think that is the highest probability. And I think, I mean, it has to happen. If it does happen, it's going to have to happen this year because the 2017 Tax act expires at the end of this year. So that means that we go back to the pre2017 tax regime. There's, I mean there's just no way that a Republican controlled Congress and the White House will allow the 2017 Tax act to expire. So I think at a minimum we get an extension, which means at a minimum the estate tax Exemptions remain at $10 million per taxpayer plus indexing for inflation. So it's 13.995 million per taxpayer this year. I suspect that's going to continue and continue to graduate up at a minimum, depending on just, I think depending on lots of factors. I think there's a non zero chance we get a completely reimagined tax code. Whether that means following the Czech Republic's model, like you and I were talking about before this, of suspending recognition of gain for Bitcoin that was held over a three year period of time. Maybe we see something like that, some type of relief around capital gains tax, either for crypto or just generally, maybe maybe a reduction in the income tax, maybe a flat tax. But whatever happens will be temporary. It will be temporary because unless a tax bill passes with a 60% majority, a 60 vote in the Senate, which the Republicans don't have, 60 votes in the Senate, if the tax bill does not pass with 60 votes, it must pay for itself within a 10 year window as calculated by the Congressional Budget Office. That's the upshot of the Byrd amendment. So that's why every tax law since I can recall has a built in expiration date. So, so whatever tax law we get, it will be temporary and will probably last no longer than nine years.
- [26:58]
A
What KPIs do they have to hit if they don't get 60 typically? What does the CBO typically throw out there?
- [27:04]
B
Well, it's got to pay for itself in commensurate. You got to have enough revenue that they can map out to pay for the revenue reduction from the tax cuts. And so there's this whole convoluted formula that some things are taken into consideration, other things aren't. Tariffs, notably, are not part of the equation. So tariffs aren't counted as tax revenue. So any revenue that the United States gets through tariffs would not count towards the computation as to whether or not a tax bill will pay for itself. So I think unless you can get 60 votes, you're looking at another decade of trying to figure out how these things work.
- [27:54]
A
Yeah, it's been fascinating watching Doge go in there and at least try to figure out how our money's being spent and where it's being wasted and publicly stating, all right, here's what they're spending their money on. We're going to cut this, we're going to cut that. As we all know, that's all well and good and I think moral just and something that we should be doing is you still have this overwhelming overarching boogeyman in the spending discussion, which is defense, Medicaid, Medicare, Social Security, third rails that are rarely touched. Actually, I think if you're going to touch one of those rails, maybe defense, I think the, the coalition of supporters behind Trump, particularly from Silicon Valley tech scene, investment scene specifically, they have placed a lot of chips on these startup defense tech firms which are marketing themselves as companies that could produce what the military industrial complex does on an $800 billion budget with 10% of that budget. And they're arguing they can do it quicker, more efficiently, and most importantly cheaper. So maybe we get some spending cuts there. But the overarching point of this ramble that I'm on right now is that the crux of all these tax policies that have amassed over the last 112 years, 112 years since the income tax was introduced, they stem from welfare programs essentially where are necessitated by the fact that we have created this fiat monetary system, Frankenstein, that dictates that you need to give handouts because the money's broken. And that's one thing I hope Bitcoin does is assert itself as a reserve asset at first and then hopefully a global reserve currency. And it just sort of naturally, naturally solves a lot of these spending issues that, that evolve from the fact that we messed up the money and just we operate on this debt based system and hopefully once we get back on sound money, we can have more sensible tax policy, which in my mind is very low.
- [30:13]
B
Yeah, low probability. Yeah, yeah. I think the way I think about that is you look at the, the primary recipients of the third rail of spending and that's the largest voting block, or at least historically the largest voting block in the US and that's senior citizens. Granted, the millennial generation just flipped them in this latest election as the larger voting block, but you're still dealing with a very large, very noisy voting bloc that relies extensively on Medicare, Social Security and have these kind of halcyon days kind of reminiscences of a great military in the traditional analog sense. And so I think it would be an uphill slog to really touch those third rails and do something meaningful about them unless and until the baby boomer generation is materially irrelevant. Now, I could be mistaken about that. I just, I think that. That is worth considering. You know, I think ever since we got off of the gold Standard Fully in 1971, we've been just drunk on the euphoria of being able to play these monetary games with a truly fiat system that is addictive not just for government, but for the people that rely on that government. Thus the subsidies, thus the handouts. And now if you're talking about taking all these subsidies away, whether it's health subsidies, farm subsidies, Social Security subsidies, away from people, even staunchly conservative people, I think, again, that's going to be a very difficult political argument to sustain because it's like, it's all well and good, Marty, I will take money away from you all day long, but once somebody starts taking money away from me. Wait a second. Now that's. Now you've got me. Now you got me upset. So I think we're going to see something similar when. And we already are seeing this to a certain degree when we see the cuts proposed. They're impacting red states. Now all of a sudden, those senators are saying, oh, wait a second, wait a second, don't. You can't take the funding from this program in my state because all these farmers or whatever it is are so reliant on those subsidies. You can't take that away. It's like it's all well and good until your ox is the one getting gored, and then you'll often kind of turn. So we're still in the very early days of this, but I think it's going to be. I think Trump has a much more difficult task than the first four weeks of effort suggests he will have.
- [33:12]
A
Yeah, that's the term that's been thrown around a lot in the first month of his presidency, is he's inheriting a Gordian knot. And you can't untangle a Gordian knot. You have to cut it in half. Unless you're willing to do that. And it seems like he may be maybe willing to.
- [33:32]
B
Elon Musk, have the. Certainly have the will to do that. And so far they've got a. They've got a Congress that's going along with them. And the Congress is acquiescing to pretty strong executive powers right now. We'll see how long that holds.
- [33:46]
A
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- [35:56]
B
Yeah, I mean the way I was taught it in my social studies class in grade school was three co equal branches. The legislative branch being Congress, enacts the law, executive branch carries out the law and the justice, the judicial branch interprets the law. And what we've seen through, and we're seeing this now, what Trump is doing, what he's doing fundamentally is not necessarily that new. I mean, this idea of legislation by either executive branch rulemaking, as we've seen through Treasury Department and other departments especially, which led to the Chevron doctrine, either legislation through Executive branch rulemaking or legislation through executive orders or legislation, declarations of war, which Congress is the one who can declare war. But presidents have, for generations now have effectively declared war without Congress's action. So Trump is just, I think, leveraging the momentum of a very strong executive branch, but he's doing it to a level that I don't think we've seen before in this country. And I think that one of the perspectives I have, having been on this planet here in the United States for now over five decades, it's like this will not always be. And so the norms that are being reestablished right now will someday be the norms that govern the other side of the aisle. And so to the extent Trump and especially the MAGA branch of the Republican Party with the power that they have in Congress, they're having their heyday right now and it feels really great for them right now. But we could be as short as four years away from a complete 180 degree reversal. And if a far progressive Democrat president with a progressive backed Democrat Congress has the same norms now that the Trump administration is exploiting currently, we're just going to be whipsawed back and forth. So I would caution people who are maybe conservative leaning, but maybe to a certain degree MAGA agnostic or libertarian minded, like I certainly am, like we might want to temper our enthusiasm to a certain degree because there is a cyclicality to our politics and the norms that have built up over time are designed to create constraints and guardrails that should govern whoever is in power. So if to the extent Trump and Musk burn down the House, better be careful what we get on the other side of that.
- [39:07]
A
No, this is something that was very predictable and really it was Obama who opened up this Pandora box, Pandora's box, with the normalization of executive orders. I believe in a second term. And people were saying back then like, all right, you're going to do it. It's going to be abuse. And we've just seen this slow upward acceleration of the abuse of the executive order. I said this on the show a couple of weeks ago. It is exactly what you said. It's going to come back. Imagine when President AOC takes the helm, these type of executive orders that she's going to sign, she's going to one up him day one, night one in the Oval Office. She'll have a stack of 500 executive orders.
- [39:46]
B
Well, I'll tell you, we're busy enough under this current administration with clients that are looking to establish secondary residencies. It'll be even Busier with President aoc. If we end up going down that.
- [39:58]
A
Road, that's what I was going to segue this into is more importantly bringing this back to what we were discussing earlier, sovereignty of your wealth with this whipsaw, this back and forth and this abuse of executive powers. That may seem good now, but in the future, everybody who's beating the table saying, yes, more, more, more, is going to quickly change their tenor for more and more and more to please stop. This is insane. This is unconstitutional. And I think being able to separate yourself from having to play within that whipsaw and actually create true sovereignty is important. So like on this topic of finding secondary residency and I guess the broader topic of multi jurisdictional setups for wealth preservation, that's something that you've done a lot of work on as well and something that should be on people's mind.
- [40:52]
B
Yeah, for sure. I mean, and it doesn't have to just be all doom and gloom either. I mean, to a certain degree it's just opportunistic. We just kind of have this general philosophy that, you know, in a hyper connected world like we live in now, I mean, you and I both know people all around the world and we interact with them perhaps as often as, if not more often than we interact with our own family members sometimes. So our relationships are already global. We have a digital asset that can be everywhere and nowhere at the same time. The laws of various jurisdictions, the regulatory frameworks of various jurisdictions, those should be considered assets in a playbook that we figure out how to leverage. And so whether you're talking about wanting to establish the legal right to live in another country in case we get to another lockdown situation, you are prohibited from leaving one country. Well, if you've got a legal secondary residency in Portugal or Italy or New Zealand or someplace like that, if you have a legal residency there, you have the legal right to be there. And so you would have, by establishing a secondary residency, you maintain a high level of freedom of travel when you might not otherwise have that freedom of travel. And when you have significant wealth, however you define that, I think it's just, I think it's shortsighted to maintain all of that wealth in any single jurisdiction, even if it's a great jurisdiction like the United States is. And the United States is a great jurisdiction for assets. But as we've seen very recently under the Obama administration and the Biden administration, and even really under Trump's first administration when he was very much anti Bitcoin or like a no coiner type of mindset. It's like if you've got a lot of wealth in Bitcoin or crypto, whatever you want to call it, they're not the same. I mean, I don't equate the two. But if you've got this wealth and this type of asset that doesn't have a clear regulatory framework or maybe even a hostile regulatory framework, you better have, you better have banking, you better have financial relationships in a more favorable jurisdiction. And so even now, during this Trump administration, we're still doing a lot of multi jurisdictional planning for people because again, part of the cyclicality of politics like we talked about, part of the fact that we're already living in a globally interconnected world. The geopolitical order is changing in real time. We want to create a level of mobility and versatility to our wealth. And that means having certain structures with certain financial relationships and certain fiduciary relationships lined up in more than one favorable jurisdiction. So we have optionality. And so in the event you, in the event we. Let's say it's not President aoc, let's say it's President Warren and Vice President aoc. Well, do you want to hold a whole lot of your wealth in Bitcoin or in crypto and all of it's in the United States under President Warren's administration? Probably not. It'd be nice to already have established economic relationships in a place like Switzerland or in a place like Canada even, or in a place like the Bahamas or someplace that's more favorable to managing these assets that could very well fall out of favor again, as you and I have both seen. Yeah.
- [44:43]
A
And so pulling on the thread you mentioned Portugal, Bahamas, Switzerland, Canada, maybe even. What else is on that list?
- [44:52]
B
Well, I think it depends on what we're solving for. So from a structure and ownership perspective, again, I kind of look at this from a buckets, like buckets perspective. If you're talking about US Domestic planning, you're probably going to be using states like Nevada, Wyoming, South Dakota, Tennessee, New Hampshire, Texas, potentially for US Domestic offshore, you might be looking at something like Nevis for a limited liability company, island of Nevis in the Caribbean, you might have a Cook Islands trust, maybe multiple Cook Islands trusts. You might do something in the Channel Islands. You might have banking in the Isle of Man, you might have banking in Switzerland or Liechtenstein, if you can get it. You might have some banking even potentially in Singapore, although they're kind of making some moves right now. If you're looking at residency options, that is a constantly shifting Landscape, and it kind of depends on what you're looking for. If you can establish residency by inheritance, which means if you've got like Ireland, I think if your grandparents immigrated from Ireland, I think you can pick up citizenship through your grandparents. My family has been here since the 1640s, so I can't claim Irish citizenship through, basically through birthright. I've been here too long. But if you don't have the inheritance type of structure, whether it's in Ireland or England or wherever, you would have to go through some type of investment regime or a relocation regime, maybe a nomad visa or something like that. And then places like Italy are very popular right now. Places like Portugal are very popular right now. Malta is to a certain degree somewhat popular. Cyprus is still on the table. But that's a constantly shifting landscape as well. Those countries are constantly jockeying with each other to figure out, okay, well, what are we trying to attract? Do we want people to buy real estate? Then maybe we'll have a real estate purchase option. Do we want them to invest in our stock market? Then maybe we'll have a public equities option. Do we want them to contribute to our culture and to our nonprofit space? Then maybe like a donor contribution would be there. Do we, we want to build up venture capital companies here, like portfolio companies here in our country? Then you can do like a private investment type of option. Those things constantly shift around. And so for a lot of our clients, we help them kind of figure out, okay, well, what jurisdictions make sense, what's going to give you the greatest level of flexibility and then helps them kind of pair up the right opportunity with what they're trying to accomplish.
- [47:41]
A
Yeah, I imagine with the geopolitical situation where it stands now, the push towards this more multi polar world, trying to stay on top of all this. Imagine these smaller areas too. I mean, Switzerland most famously historically has been neutral, but I imagine like the Bahamas and Portugal maybe even. And some of these other jurisdictions will try to stay neutral as the world gets more multipolar. But it's probably something that this is your job that everybody needs to stay on top of as things evolve.
- [48:19]
B
Yeah, I mean, and that's really what we do. I mean we're like strategic air traffic control for these clients. It's like, okay, you got some concerns, whatever those concerns are, we'll help you think through them, help you spot the issues, help you try to apply some second order thinking. If you get this, then what? And then try to bring the right solutions to them. But it's, it's a constantly. It's always, it's always changing. Just like we talked about the cyclicality of the US Political cycle, we talked about the temporal nature of tax laws. All the states in the United States are constantly jockeying with each other to be, you know, some of them are trying to be more protective, more favorable from an asset protection perspective, from a privacy perspective. Some don't care about that. And that's a constantly shifting landscape. There are income tax opportunities that open and close within the United States. And then you have to think about the broader world. And once you have a total wealth of, call it 50 million plus, maybe even below that, you better start looking at having a foot outside your home country, wherever that is, just because, you know, when the cycle turns you, you want to be prepared for that.
- [49:41]
A
Yeah, and I guess I'm curious to touch on this topic, too. You mentioned in 2017, you really dove into bitcoin and built this special specialty and the special practice and bespoke to cater to the needs of bitcoiners who had accumulated a lot of bitcoin, watched a price go up and wake up to an extreme amount of wealth. But obviously, with this current administration, with Bitcoin turning 16, being at a trillion dollar assets and above, close to a $2 trillion asset now for a period of time, it looks like the floor is above a trillion dollars for bitcoin's market cap for the foreseeable future, likely forever. Are you seeing in terms of new clients or existing clients that weren't bitcoiners? What's the appetite for wealth that was built outside of bitcoin to get exposure to the bitcoin market?
- [50:41]
B
Yeah, it's interesting. The clients, I think, because of the fact that we built in this space, I can't think of a single client we have right now that doesn't have a significant position in bitcoin already. Now, they didn't necessarily make their wealth in bitcoin. They might have made their wealth through like a tech exit or whatever. But by the time they come to us, a lot of what they're coming, a lot of the way they find us is they say, I've got $25 million worth of Bitcoin on a $150 million estate. You know, none of my wealth managers, none of my strategists even think about bitcoin. At least these guys are thinking about it. Maybe I'll talk to them. So that's, you know, we're seeing people who have already made a significant investment decision in favor of bitcoin. But that said, we also see a growing number of, we don't have them as clients yet, but a growing number of inquiries to bespoke for people who don't have any bitcoin at all. And they just like the way we see the world. And so those clients, they know that we're in bitcoin. It's all over our website and I'm all over podcasts like yours. They figure out pretty quickly that we're pro bitcoin. I mean, I've got bitcoin posters on my wall, so it's pretty unapologetic as far as that goes. We have been working with a couple right now they've got, I want to say it's like 35 million maybe in one of the Bitcoin ETFs and they want, they want to own the underlying. And so we're helping them think about how should you own the underlying? Because you're long bitcoin, you're not just short the price exposure, you want the bitcoin. So then how do you accumulate it strategically, how do you possess that strategically? How do you wrap the ownership of that from a tax perspective and from a long term perspective, governance perspective? And so we're helping them with that because I think they kind of got curious about Bitcoin around the time the ETPs came out and made a pretty significant allocation there. They enjoyed the economic run up and then along the way they became orange pilled. I said, yeah, this is not just a short term opportunistic investment. This is a fundamentally different way to think about money. We want to own the underlying. Can you guys help us do that?
- [53:11]
A
It's a validation of a thesis that many of us had with the ETFs. Many people are like, ETFs are bad, you don't own it. But as a top of funnel marketing tool, get people into the ETFs, they do their research, become orange peeled, recognize that holding the underlying is preferable to holding shares in an ETF and ultimately look to move that direction. So that's a great validation of that thesis.
- [53:37]
B
Yeah. And we, and we tell people that it's like, you know, if you, if you don't own the ETPs or ETFs, you don't own bitcoin. I mean it's, you got price exposure which if that's all you want, that's fine, it's great, it's liquid. You can be non emotional. I mean I'm, I'm clearly non, I'm clearly emotional and non objective when it comes to my bitcoin. But when I have a cash position that I just don't, don't know what to do with, I park that in an etf. It's like, because I'm still going to ride the volume of bitcoin. But I'm not emotional about that. I don't get emotional about selling my ETP positions. I would get emotional about selling my bitcoin positions.
- [54:16]
A
And I think this was a pleasant surprise for everybody. It looks like IBIT filed to enable in kind redemptions of their shares and to spot bitcoin. Does that make your job easier because there's a qualified or what's it called, qps, Qualified participants or.
- [54:33]
B
Yeah, it makes it a lot easier. I think, I think it's a great move. It'll be interesting to see who follows suit. Although like in the case of these clients that we're talking to who hold the ETF right now and want to hold the underlying, it would make their transition very, very easy. Theoretically. It's going to be interesting to see how many people take them up on that redemption offer and actually will redeem for the underlying.
- [55:03]
A
And how would that work? Because there's I think qualified participants. The wrong term, but there's a par. Whatever. But the people that can redeem are like the fidelities. Who knows with SAB122 now maybe it's Morgan Stanley or whoever. Would they have to redeem it and then send it along?
- [55:23]
B
I would guess so, yeah. I don't know. I've not done the, I've not done the homework to, to figure out the mechanics of that.
- [55:28]
A
Yeah, let's stay on top of that. It's always great catching up with you. I hate that we only have an hour here, but I think it's important, as I, as I said, this is a topic that fascinates me. I think we do at least one episode a month now at this point on wealth management as it pertains to bitcoin. And just thinking about outside of bitcoin externally that's something that I think the world needs to get back to is this idea of building wealth, hopefully growing that wealth, at the very least maintaining that wealth and passing it, passing it down as the normalization of the high velocity trash economy has engulfed the world over the last five decades. I think getting back to this low time preference, wealth accumulation, wealth preservation mindset is extremely important for bringing quality of life and productivity back to the world.
- [56:28]
B
Yeah, I think that's right. I think there's a bit More complication to it, I think, because you're at a point right now where you've got economic success, you've been in Bitcoin for a long time, you got your own family now, and you're thinking about your family and what this wealth will mean to them at some point down the road. And I think that's really important. But kind of back to the Gilded Age for a second and even back even farther. Andrew Carnegie in 1889 wrote a fascinating article, just simply titled wealth in the North American Review. It was published in June of 1889. And Carnegie was one of the great wealth builders of the Gilded Age. And during his lifetime in this article, he wrote that the man who dies rich dies disgraced. And his point was that it becomes the responsibility of those who build great wealth. Once they have provided for a certain level of sustenance for their family, it then becomes incumbent on them to think beyond themselves. And so Andrew Carnegie, the way he lived that forward was during his lifetime he gave away like 80 plus percent of his total wealth to fund libraries around the English speaking world. And so he took that on as his mantle and he did not want to leave his family with all of the wealth that went along with that. And the great grandson of Cornelius, the Commodore Vanderbilt, said that inheriting wealth was the single greatest failure in his life because it robbed from him all sense of ambition and he had nothing to strive for. So I think the next phase of human flourishing, I think beyond, once we reach a certain level of economic satisfaction and we've provided for our families, I think we then have to start thinking about what is beyond ourselves, that we should make the world a better place. And our clients are to the point where they think a lot of the inheritance I want to leave my children is a better world to grow up in and in a better world to raise my grandchildren in. And so absolutely providing for their needs, but beyond providing for their needs, being careful to not rob them of a sense of ambition and a sense of drive and a sense of desire to grow. That can be the dark side of inheriting a significant amount of wealth. So that's a lot of the conversation that we have with clients. Okay, great. How much is enough? And then beyond that, what is it?
- [59:31]
A
That's funny you mentioned that, because yesterday I recorded an episode with Kevin Dolan, who's throwing a natalism conference here in Austin next month. And part of at one point in the conversation, funnily enough, as I said, we've been talking about a lot on the show. We Got on wealth preservation and passing it on. And he brought up an interesting point that I never heard, is that I forget. I think it was at one of the meetups that he had up in Dallas a couple of weeks ago. They had an estate planner come and he was asked the question, like, what are the most successful. What are the most successful families who have generated and passed down wealth throughout generations? What is the common thread between all of them? And he mentioned that there's a sense of vocation. So he tied it into a family in Dallas that has had multi generations of wealth passed down and maintained. And they have a vocation in Dallas where they manage some of the river. And that is like their family vocation is we are responsible for the river in the Dallas area, this part of Dallas, and we are tasked with maintaining and making sure that it thrives for not only us, but our community as well. And I thought that was just a really interesting point to pull out. Is as you generate this wealth, similar to Carnegie, maybe he didn't do a good job of instilling that thought of vocation as it pertains to public education and libraries to his heirs. But something to think about in your local area. Is there something that you could help build up, maintain, and then pass that vocation down to your kids? Grandkids. Great grandkids.
- [61:19]
B
Yeah. I mean, do you want your children and grandchildren to be the wealthiest people in a world that's burning and rotten, or do you want them to be really well prepared and really well provided for in a world that flourishes? And so those are a lot of the conversations that we can have with our clients. And again, we're kind of agnostic as to what their causes are. We just want it to be important to them. So those are in each of our very large client cohorts. In each case, they're giving away the vast majority of their wealth during their lifetimes because they just. They've got hundreds of millions of dollars. And they said, our kids don't need that. Their kids are going to be fine. So then what?
- [62:02]
A
Michael Saylor, don't just burn your bitcoin. Think about it, sir. Think about it.
- [62:05]
B
Yeah, I think that's right, Mr. Saylor, seriously. I mean, if you burn your bitcoin, that's great. Marty's stack becomes more valuable, my stack becomes more valuable. And I will thank you, my kids will thank you. But do something meaningful and philanthropic with it instead. Make the world a better place as a result of it.
- [62:24]
A
Make the world a better place, Mr. McClintock. Thank you for doing your part to help advise people and manage their wealth as they try to do this. That's the one thing over the many conversations we've had over the last couple of years I really appreciate and admire about your work is really getting into the details with your clients of how, what is your goal and how can I help you achieve that? And from what you've described, a lot of your client base is I want to make the world a better place in this particular way, this particular industry, this particular nonprofit area. And it's like, all right, let's get to work. Let's make it happen.
- [63:02]
B
Yeah. I mean, we strive for authenticity in all that we do. I mean, we try to be pretty much what you see is what you get type of thing. And we're going to ask people uncomfortable questions. That doesn't mean we like to watch people squirm, but we want to help them think. And you know, it's like, well, we will ask them questions and if they don't want to deal with those, that's okay. But we're, you know, we only want to work with people who are ready for some level of authenticity. We believe in curiosity, creativity, authenticity and resilience. Those are our fundamental tenets and that's what we try to measure everything else by.
- [63:43]
A
Awesome. Where can everybody find out more about.
- [63:45]
B
Bespoke Website's probably the easiest. It's just bespokegroup IO. I'm on Twitter somewhat episodically. I'm just. McClintockm is my handle there also on LinkedIn because that's where a lot of people still hang out. So yeah, that side people can find what I do and learn more about our work.
- [64:09]
A
Hell yeah. Well, thank you. I hope you enjoy the rest of your cold afternoon.
- [64:15]
B
You too. In these sub freezing Austin climes down there. So luckily we had. Always great to chat with you and I love, I love the work that you do. So keep up the good work.
- [64:27]
A
Thank you. You too. Preserve your wealth, freaks. Think about it. Peace and love. Okay.