← The Bitcoin Treasuries Podcast with Tim Kotzman
The Bitcoin Treasuries Podcast with Tim Kotzman
Why Every Country Will Soon Have a Massive Bitcoin Treasury Company with Marc Syz
00:11:21
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- [00:00]
A
Tim, welcome back to the Bitcoin Treasuries podcast. I'm Tim Kotsman. I'm here with Mark Seats. Mark, thanks for joining us today.
- [00:07]
B
Thanks for being here, Tim. Appreciate it.
- [00:10]
A
Can you tell us a little bit about your background and maybe your journey to bitcoin And I'm sure we'll hit on Seas Capital as well. That kind of caught my eye. You're the managing partner at Byz Capital, correct?
- [00:30]
B
Yeah, Byz partner, absolutely, Tim. Yeah. Yeah. So I come from a, I would say long dynasty of traditional finance people. Bit unusual for me to to be falling to bitcoin. My ancestors created some better known companies like one of the leading Swiss banks, which was Credit Suisse, as well as one of the largest insurance companies, which is Zurich Insurance, which was innovative back in the day. 170 years ago and I spent all my years of professional experience in finance. Started as a trader, then moved into alternative investments and mainly private equity. And back in 2014, actually now almost 12 years ago, was the first time I've encountered bitcoin because one of the investments I did, which was a fintech investments when I was living in Asia, back in Hong Kong, my cfo, which I had hired after a year left because he wanted to become a bitcoin miner. He had no idea about what bitcoin was but found it extremely interesting and asked me to back him at the time, which I eventually did. And that's how my journey into bitcoin started. Originally I bought a bunch of bitcoins which as a good trader as I was sold about six months later after tripling my money and never looked back and then got back into it in 2017 when I finally understood as the mathematician I am, after reading the white paper properly, the opportunity to actually present it. So that was my journey into bitcoin. Today, together with my partner Richard Byworth, I manage Peace Partners, which is an alternative investment firm focused on growth of capital as well as preservation of capital. And we do that in traditional fiat currencies as well as in Bitcoin.
- [02:23]
A
Can you walk us through how you and Richard work together? Are you backing some of these Bitcoin treasury companies? Have you had conversations with them? What's kind of your view, especially coming off of the strategy Q1 earnings call where they just said that they are prepared to sell Bitcoin in order to buy more Bitcoin and just have maximum optionality?
- [02:48]
B
Sure. There's two things we do on. On one hand we look at private equity investments where we take majority stakes into Privately held companies which we then try to infuse with Bitcoin where we transform, you know, traditional cash into kind of a bitcoin treasury reserve. So that's one aspect where we're working with Bitcoin and helping companies adopt Bitcoin as a Treasury asset. The other is what we try to do on the liquid alternative side is basically generate yield on Bitcoin. So a couple of years ago, we created a fund allocating to special managers. Think of it as hedge fund managers, which spun out of traditional hedge funds to go into crypto hedge funds and generate basically a return in bitcoin on arbitrage type strategies. And that enabled us to come closer and closer to Bitcoin treasury companies who said, well, we're looking to generate a yield and you know, can you help us actually achieve that? And that's how we started, you know, advising a number of Bitcoin treasury companies all over the world, you know, all the way from Japan to, to Europe and us in terms of helping them basically generate more bitcoins for the Treasury. And more recently have looked at how we could unfold our own Bitcoin treasury strategy also in Switzerland, taking advantage of the zero yield environment we find here back home where we're based.
- [04:21]
A
How do you view Bitcoin treasury companies from both the operating company side and then the treasury side and, and how important is maybe each. Does it create a flywheel? Do you view them separately or what's kind of your overall macro view on this emerging sector?
- [04:42]
B
Yeah, it's a very good question. I think, you know, originally why did Bitcoin Treasuries even, you know, come to be was because it was very difficult in a number of jurisdictions for people to get even access to Bitcoin or they didn't even know how, how to get access either because there was reg. Regulatory constraints or it was just difficult to buy Bitcoin and people didn't know. And so there was a need for some kind of, you know, firms accumulating Bitcoin to be viewed as, you know, an alternative. This has now, you know, been extrapolated where a lot of people think, well, why do we need them? Why is the kind of 1.0 model even necessary when you have ETS and all kind of derivatives and possible access, you know, to, to the actual asset? And so a lot of these treasury companies have evolved to kind of a 2.0 model where they say, well, actually we're trying to do more with our Bitcoin. So the better firms like Strategy or Meta Planet have really implemented kind of a new model where they are generating yield on those Bitcoins. So think of it as almost a levered play on Bitcoin, which also comes with more volatility, but that means there's also more potential for the actual investors or shareholders of such said company. Now the big question obviously is, well, if you're only accumulating the asset, you know, and how do you make up for any kind of, you know, obligations, especially when you have any kind of liabilities on the balance sheet? And that's where it becomes quite crucial to have some kind of, you know, operations other than just managing a Treasury asset. And this is why we are strong believers that you can take great business models which are generating cash, which is what we're trying to do at bizpartners, and then transform them with time into treasury assets, so taking part of that cash generated and basically invested into Bitcoin as an asset. And that enables you more and more to also be valued from, I would say, traditional finance as not only just a, you know, treasury kind of digital asset firm, which is hard to value, but more from a traditional standpoint of actually generating cash, which makes it much easier to get any kind of new liabilities, create new leverage, and then really put this, you know, flywheel model to
- [07:13]
A
work with Bitcoin being this global asset. I know you mentioned Switzerland. Are you operating in Switzerland and Europe or when you talk about working with companies, are you able to work with companies, you know, in lots of different jurisdictions, or can you kind of walk us through that a little bit and also, you know, let people know how they can reach out to you?
- [07:40]
B
Yeah, absolutely. So Richard and myself are quite selective and obviously because we have time constraints as well in terms of who we work with, we work with, you know, less than a handful of, of treasury companies, which we either sit on the board or, or advise. Obviously in Switzerland, we're best suited to, to run our, our own model. So we, we launched Future, you know, last year with the objective eventually to list it on the, on the sixth exchange, which is not that easy because there's still some regulatory hurdles to go through. But we're quite confident that that will happen eventually. Why the Swiss market? I mean, it's pretty obvious, obviously with the, you know, zero interest rate environment makes it as one of the most prone markets for kind of the fly, you know, wheel model to really work and take, take advantage of. So this is definitely something we're looking into. I also think Europe in general offers, you know, a very nice environment. And I think we will see, you know, more of these, of these treasury companies, you know, come, come to market. It's been kind of, you know, a bit more tempered recently simply because of the market environment. But I do believe that kind of every country or continent will have, I would say, a very successful treasury company which will extrapolate the model to kind of a 3.0 model of saying, well, not only do we hold Bitcoin as a Treasury asset, we actually generate yield on it, but we also have, you know, an operating model where we generate cash in order to continuously fuel the model of the future. And we think all those who will basically take that into consideration will be highly successful in the various jurisdictions.
- [09:28]
A
Awesome. Well, I hope to follow up with you from time to time as you guys continue on this journey and all of us together. Mark, really appreciate your time today. Thanks for joining us.
- [09:40]
B
With pleasure and thanks for having me.
- [09:42]
A
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