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- [00:00]
A
Welcome back to the hurdle rate episode 49 for the week of March 2, 2026. I'm Tim Kotsman. I'm joined by Ben Workman, Jeff Walton and Matt Cole in the True North. This past week was the second annual conference within a conference within a conference, also known as the True North World event. Inside the Bitcoin for Corporations conference, Inside Strategy World 2026, which was live in Las Vegas, you had TD bank on stage talking about Canada's increase of digital asset capital limits from 1 to 5% of tier 1 capital. That's a mouthful. You had Morgan Stanley confirming on stage that the bank plans to offer bitcoin trading, lending yield and custody. And you had Michael Saylor's keynote focused on digital credit and the opportunity to create digital money and digital yield, backed by strc. And Bloomberg reported that Morgan Stanley has applied for a National Trust bank charter to allow it to custody bitcoin and crypto assets. Within the past week, Block announced it acquired 340 Bitcoin in Q4 of 2025 for about $22 million. And DDC announced their seventh consecutive week of stacking with an additional 50 Bitcoin purchase. I'm curious to hear everybody's takeaways from the conference because obviously you have what's on stage, but then you have all the private conversations and networking and dinners, I guess. A quick note, it's been known but eight out of 10 major banks have flipped their stance on Bitcoin in the past six months. That was a good reminder for me as I was flipping through social media over the past few days. And my biggest takeaway was during the Q and A session, the last session of the conference, SEO. We're talking about teams going from teams of five to teams of two, plus an AI. So I don't know. Matt, Jeff, Ben, where should we start?
- [02:04]
B
A lot to unpack here. You also got what's going on in Iran with taking out the Supreme Leader there. And I think since the last hurdle rate, you also had the head of the cartel being taken out. It wasn't long ago that we took out the head of the Venezuelan government. And I just kind of come back to a lot of the reasons why a lot of people invested in bitcoin as digital freedom money and opt out from the system. A belief in the fourth turning kind of playing out a belief in the debasement trade. And I just think that we're seeing things move so quickly that it's really hard to even get a grasp of everything that's going on I mean you had block by Bitcoin and they also laid off about 40% of their staff as well. Right. And so Bitcoin holdings up, employees down. Fascinating. Right. And I think that, you know, kind of unpacking the totality of everything is simpler than zooming into any one thing. Like what's going to happen in Iran? We don't know. I mean we're recording this on Sunday. Looks like another attack happened, A few service members have been killed. But I tend to think, and this is something that may be less discussed, that it all actually like all these regime change wars might actually tie back to AI itself, that if you think about all these dictators around the globe, a fourth turning moment. And what does AI do? It gives power back to the individual. Well, AI will also give power to all these dictatorships around the world. And so whether you agree with it or not, if you think about the United States, it seems like we are in attack mode, that we are going to take out perceived threats. And my belief is it's probably because we view these perceived threats to become bigger threats in the future. Just you put AI in the hands of anyone and it's going to be a force multiplier, it's going to be force multipliers for individuals, for creating, you know, one person billion dollar companies to be able to lay off 40% of your staff. But that, that, that power, that increase of intelligence is going to circulate around the globe exponentially quick. And I think we're going to see chaos continue. And it may not be one, one way chaos. We, we don't know, I can't, we can't predict that. But all of these things, this, this compression of time into very short times where it feels like every time we record this, this has felt like this since we started the hurdle rate, that every week we're basically like covering a year's worth of topics that, that's not going to slow down. And so things are not becoming scarce that's going to go throughout the world. Bitcoin is the one thing that's scarce, that continues, I think, to benefit from all this global chaos. And I think it's interesting that amidst the global chaos you saw, bitcoin actually is up right now. Gold is up, silver's up. Historically in war times, war times have actually been good for risk assets. But generally speaking, you get a down move first before you get the up move. Here we've just seen an up move. So I think that's interesting and I kind of wanted to start there, but do want to cover the conference, the non bitcoin conference that we went to as well, because there's a lot to unpack. But just, you know, I think with what's going on in the world, I couldn't get my mind off of that first. So curious other people's perspectives on what we're witnessing right now and implications to bitcoin, Bitcoin, treasury companies, digital credit, all, all of that.
- [05:53]
C
I mean, the one theme that you constantly see is that chaos isn't slowing down, it's speeding up, right? I mean, think about it just since the last hurdle, right? You mentioned that we'd, we were talking about topics we'd basically forgotten about, all the cartel activity in Mexico, which in and of itself would be massive. Right. How many people from the US are going down to Mexico and particularly Puerto Vallarta? I've been there several times and they're in like a all out war inside of Mexico at the moment. And we completely forgot about it because so many things have happened just in that amount of time. It tells you that what's happening globally is the pace of change isn't going to stall out. The pace of change is going to speed up. And this is a reminder of that. This war with Iran or these attacks, at least we all kind of felt that it was coming. You started to see the activity spinning up a couple of weeks ago. We started repositioning assets over there into the Middle east again. And it's just a reminder that you've got to be constantly preparing yourself for the fact that the world is going to change around you. And you don't know when, you don't know how, you don't know why. So you get into this position where as an individual, as a company, as a nation, like you've got to be ready to pivot on a dime and you've got to prepare yourself to be able to weather whatever changes it is that comes your way. You know, we feel like we're doing that. We're building a business based on digital capital with no issuer, that's not tied to any one nation anywhere in the world. And I think that's becoming critically important. Think if you're an Iranian citizen, I don't know if you saw some of the charts around the Iranian currency, but it basically flash crashed the minute this happened. So you're seeing how unstable it is for a country to have its own currency. That currency is really only good as long as there's a country. And then the question arises, well, who's in charge of that country, and is that country stable? Is this currency good for anything at this point? And you start to realize that as this happens more and more around the world, everybody needs to prepare themselves for the potential outcome that this could happen in your backyard. We don't know.
- [08:10]
B
Right.
- [08:10]
C
You never know. Nobody plans for this to happen in their country. I think if they knew these things were going to happen, they'd probably do everything they could to be out of that country. But it's a reminder that not everything's up to you. You don't get to pick the course of events. You don't get to pick when they happen. You don't get to pick why they happen. All you can do is prepare. And it's a reminder that we talk about bitcoin a lot in the context of the US and of the US markets and within the US Banking system, within the US Financial system. But bitcoin's for everybody. And I think that these are the moments that truly highlight that. You saw the same thing with Ukraine. Right. There was another use case where you're saying preparation matters. I remember one of the company executives I used to work with, his family had to free Ukraine a long time ago, but they had to leave all the assets behind. Couldn't take anything with them. Well, this is something you could take with them. You hate to take world events and particularly wars and these things you don't want to see globally and turn them all to bitcoin. But it's such a constant reminder that you have to be vigilant. You have to prepare yourself. You have to make sure, as a company executive, you're building resiliency into your business. Make sure you can survive disruption, whether it's AI disruption, whether it's global economic disruption. The theme is you always have to be prepared. You can't sit idle. You can't wait for things to happen. By the time things happen, you're too late. So you have to constantly take the opportunity to evaluate for yourself. And if I was in one of these regions, I wouldn't be able to get out. Filling a truck bed full of gold and trying to drive across the border, I don't think that would go very well. You'd be able to take bitcoin with you, and at least you're able to take that value with you anywhere you go in the world. So I think it's an important reminder of what it is that makes bitcoin so incredibly unique relative to any other asset in the world.
- [10:08]
B
Yeah. Before we pop it over to you, Jeff, I'm sure you have some comments here when you were talking, Ben, about you hate to bring war or whatever back to bitcoin. I did too. You hate to do that. In the midst of this, I was reminded my time at CalPERS and I think this is just classic. Our jobs are to manage a bitcoin treasury and to grow a bitcoin treasury. Right. Like my job at CalPERS was to protect the retirements of those who served California. And so when you're in those positions, you have to deeply follow the economic events, not only the economic events, the geopolitical events, and immediately bring them back to your job. Right. And so it's really important. It doesn't mean that you don't care about the actual impacts of the citizens, the globe, Americans, all those different things. You care about them deeply. But that's not our job. Right. Our job is to understand the events of the world, bring them back. And I think that's what this show is, I think particularly good at is, you know, we're not, you know, I think, I think in the bitcoin community, it's actually, you know, we all have different opinions of, you know, if this should have even happened or whatever. And, you know, I'll, I'll, I'll engage in some of that on X, on a personal capacity. But for, for this show, it's about how does this impact Bitcoin and bitcoin treasury companies and immediately bringing out, bringing it into that with what we know and also with the acknowledgment that we don't know everything and that next week we're going to get a bunch of new information in. But hey, that's the investment world. It's never been different. The only thing that's different is how quickly it evolves from week to week.
- [11:51]
C
Right now, well, and we have an obligation. And your point about CalPERS and all the retirees and all that there is that heavy burden that comes when you are in the investment world, which is that you have to structure yourself in a way that can protect and can shield your investors from this type of uncertainty in the world. Recognizing that it's a reality. And it's a reality you have to monitor. It's a reality you have to be ready for and you have to position yourself in such a way that anyone who's putting their money or putting their trust with you, that you're coming up with the best way you possibly can to shield them from all this. Because we've seen it time and time again, whether it's within Bitcoin or whether it's within any other industry, all this change that's happening across the board, it seems like a lot of people have been caught completely unprepared for it.
- [12:38]
D
Right.
- [12:39]
C
You're seeing entire sectors effectively get chopped at the knees here. Every time a new announcement comes out within the AI realm, you get this uncertainty that happens globally. That certainly destabilizes any of the investments in the companies in the region. You're 100% right. I mean, it is what you end up having to focus on when you're in these seats. And you have to be ready to adjust to the reality of how the world is not the way that everyone wishes it was.
- [13:04]
D
The pace of change is incredible, and the world's risks are changing so fast. And I've got so many things on my mind right now, and I have to write them all down because it's all moving so quickly. But I just want to think about the timing here over the last couple of days. Very interesting that President Trump announced war on Friday at midnight. That's a guy that is very in tune and focused on financial markets. That's very strategic. They came in on Friday night at midnight and announced the war with Iran and then killed the Supreme Leader within, I guess, 12 hours of announcing that. Ideally, that happens over the weekend when there's massive uncertainty and confusion about what's happening. And the markets are technically closed. Except for bitcoin. Bitcoin's open. What did we see with the announcement while I was asleep? Bitcoin drops 5%. It goes from 65,000 down to 63. I think 62,000. And then by the time I woke up, it was back up to where it was before I went to sleep. And now it's even up over the same horizon, I think, relative to when I guess war was declared. That's a very interesting timeline. It was very strategic decision. A couple other things that were very fascinating to me. Okay, so the Pentagon used Claude to capture the Venezuelan president. Over the last week, the Pentagon demanded Anthropic to give them access to Claude for mass surveillance. Anthropic says no. The Pentagon immediately says that. I think Pete Haggisath said that anthropic is a supply chain risk. And then they give the the bid over to OpenAI. And now OpenAI is working with the government for, I guess, mass surveillance. Five hours later, the Supreme Leader of Iran is killed. Likely used critical intelligence for surveillance. Very fascinating development. All of these companies are competing and moving against each other. Other observations I've Noticed is the war has completely changed, completely changed. Drones are used, mass intelligence is used. Low earth orbit satellites are tracking missiles down like a technology that's never been used before. And things are just completely different than they were 10, 15 years ago. And we're entering in a, in a whole new type of warfare. And I think you guys hit. Matt, you hit it on the head. The world's intelligence is going to scale incredibly quickly with these tools. And managing who has these tools is probably very critical to who's in power in the, in the U.S. yeah.
- [15:54]
B
Just to hit on, on one point you mentioned there, on, on the speed of technological adoption in war, which has just been. You, you look at how the Venezuelan attack happened and the discombobulators and kind of the on the ground kind of what that was like. And it makes me think that, I mean this is all relatively breaking. But maybe my view for, for quite a while was that the US as a global superpower was kind of compressing versus the rest of the world. When I saw kind of some of the forever wars and how they were playing out, maybe right now it's actually expanding because of the adoption. And that's just interesting if that's, if that's true. I mean, you could think about what that, what that means, if you like it, if you don't like it. But I mean, they've gone in there and I think the fact that, you know, Anthropic and OpenAI and Grok Xai, all US companies and pretty much have, you know, access, you know, the Department of War to, to use those things and then you're in a, you know, country that does not have access, your ability to compete with that information right now, it's, it's like, I mean, you hear reports like they can't even comprehend what could be done. And it's just, it's just interesting. And it's just interesting as we're moving in this exponential era, maybe we move to. Anyone else have any thoughts on that? Should we move to Strategy World?
- [17:25]
C
Just one last thing that I found incredibly interesting is that war is fought on two fronts now and it got highlighted. I don't know if you guys saw the post that came out from Nikita Beer, who's the head of product at X. But the minute that the attack started, there was a surge in bots out of Iran coming onto the platform and starting to post about it. And so what, you know, everyone, they always say all these companies are competing for your attention. But the same thing happens with geopolitics as well, right. It's a constant war for sentiment and for alignment and to spin up outrage. And I thought it was really interesting to finally see the stats pop up that he showed kind of the chart of the spin up of all of the Iranian bots that they were having to shut down on the platform there. And it was just such a clear reminder at how all these tools that we use every single day are constantly used as a way to try to manipulate your thought process around events and to try to change your sentiment around events. And obviously it goes for war, but if you think the same thing isn't being done in investing, you'd be out of your mind. These are very powerful tools and they're able to be utilized. And it's the age old saying, you can't tell people what to think, but you can sure try to tell them what to think about. And I think this was one of the first times where I actually saw data put to that showing its spin up in action. And I thought that was rather fascinating.
- [19:00]
B
Yeah, just one other thought on that is the global square of X. You had the Iranian, you know, now deceased supreme leader talking to Trump on that, making, making threats on X that, you know, now you have memes being made about them not aging well. You have the Claude fight with the US government on X. Public crazy, right? Like just you. And then you have the bots being spun out trying to get people, you know, to control what's being talked about on X. It's, it's truly the global square for communications of all of these things. There's, there's nothing else like it. And it's, it's interesting. That's also never existed like that in kid.
- [19:51]
C
I was delivering newspapers, right? That used to be the method of bringing people their information. You had to wait for your newspaper to come in the morning to go try to, you know, catch up on what was going on. I mean it's, the way that the world operates is unrecognizable from 20 years ago. And it's incredible, right? It is that pace of innovation, it's the speed to information and now it's not even being done in the back rooms. To your point, all these conversations and amongst these world leaders they're taking to the social media sites to have their own arguments. I mean what an incredible. If we're in a simulation, what a timeline we're on. I mean this has been just incredible the way this has all evolved. Who would have guessed it?
- [20:31]
A
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- [21:17]
B
Let's go to Strategy World.
- [21:19]
D
Let's shift gears. Where do we start? Strategy World. It was an incredible event, very fast paced first day started with True North World. We had the private event that we held. We had members from Barclays, Anchorage, Bitgo, Bitwise, Strive, Bitcoin Opportunity Fund, Bitcoin Bond Fund and providing alpha about what's actually happening behind the scenes within the industry. Very fascinating perspectives. It's very clear that there are people that are not even on X or maybe they're on X but have anon profiles with following eight people that are using X for information but continuing to operate in their traditional capacity within traditional financial markets. That that was fascinating. A couple other takeaways that that should be mentioned. Multiple companies now have come out and announced that they have Stretch on their balance sheet for like a long term cash position, more liquid bitcoin type exposure. I think that was Anchorage. There was a power company, I think Orange BTC down in Brazil also added Stretch to their balance sheet. Very interesting. It was very clear that Stretch was the biggest focus of the entire conference. Obviously Bitcoin, you know, bitcoin for corporations was the underlying theme. But Stretch, how companies were utilizing Stretch, how preferred equity was getting integrated in traditional finance. Thinking about digital credit, I mean Saylor's entire keynote talking about how they strip off the volatility like what what is digital capital thinking about a capital asset over time, timeline and time horizon. And yeah, the stretchization, the preferred equity digital creditization of the future is here and that world is moving very quickly.
- [23:14]
C
A sailor even he made the comment where he said what I realized or the epiphany I had was that stretches for corporations, I think it wasn't something you could think about all that long ago because these digital credit products haven't been around for very long. And in the early days I kind of thought that it would be the ETFs or the equities that would be the on ramp where exposure would start to happen for most individuals, corporations, funds, whatever it May be, but when you have a product like Stretch and you're in one of the positions where you're managing the treasury for one of these companies, it's a far easier and a far lower friction sell to come to the table with the opportunity to buy a credit instrument that's providing three times the yield of what you're getting out of your U.S. treasuries. That's an easier position to take as a corporate executive and something to propose relative to going and saying, let's put this high voltage asset on the balance sheet and have some timing risk for when we're going to need our capital.
- [24:26]
B
Right.
- [24:26]
C
If you end up in a bear market where bitcoins draw down and you were allocating at the top and now you had less capital at that time, that might be untenable for a lot of companies. You've got to have a really long time horizon to feel comfortable in that position as a corporate executive. And so I think stretch becomes such an easy answer for a lot of these companies. And while it was surprising to see multiple companies make that announcement already. Right. It's only been six or seven months of Stretch being in existence. It makes complete logical sense because it fits into their framework. It fits the way that they've traditionally managed their Treasuries. It's a far lower volatility instrument. And with that lower volatility, they're getting a yield that beats the S&P 500. And I think that that makes it an incredibly powerful tool and an incredibly easy on ramp for corporate Treasuries. And so I think that you do start to see that really accelerate. And it was clear that that became the entire theme around this was that the iPhone moment here might be that they've created the product that becomes so applicable to corporations that it's actually hard to fight against. Why you would put it in there, right? Yes, you could say that it's because of the bitcoin, but because of the way that they're building the balance sheet and they're over collateralizing the position, they're stripping out the volatility and they're providing you years of buffer and cash reserves around these dividends, it becomes an instrument that's completely defensible to any committee. And I think this is going to get highlighted over and over. The other theme that I really liked was around how digital credit is really building the infrastructure for what they kept referring to as layer three. You're creating products that are going to allow others to build on top of them and create a Lot of the different flavors. Jeff, I remember one of the conversations that was had, I believe it was at the Bitwise event in New York a little while ago. I can't remember when. And I think you actually asked the question where you said, why don't you guys create a product that sells the volatility and monetizes on that. And Saylor's immediate reaction was, well, because I'd be taking an opportunity away from somebody else. And the view that that strategy has taken is that they're effectively providing the foundation that lets innovation happen in the space. It lets other participants come into the space, it lets them build. It's going to let them make money. It's also going to let them help distribute the message out there. And I think that's really powerful when you do that. And, you know, for these products, it's a big enough job to manage that foundation, right? You have to manage the balance sheet, you have to manage the risk. You have to be able to absorb the volatility. And because you're doing that and creating and delivering a more stable instrument out there to the market, it makes it really appealing for these other innovators and entrepreneurs out there to start building and chopping that up and creating all these different flavors that can come out of the market that's going to meet somebody's needs somewhere. You can get far more creative on a layer three than you can on a layer two. And so there was a big push around that as well. Encouraging people to look at these products even was encouraging treasury companies that were stuck to start looking at. Look, if you can't get to the market with your own digital credit products, maybe what you need to look at is, can you build products on top of the digital credit products that already exist out there in the market? And so it was a fascinating shift. You know, it was far less about the conversation, trying to communicate the message that bitcoin's good. I feel like he's done a great job on that already. We've talked about all the characteristics that make Bitcoin such a unique and such a valuable asset out there. And this pivoted that conversation to what's the next evolution here in the financial markets? And it was incredibly clear that in their mind, you heard very little conversation about any of the other digital credit products. The innovation here is stretch, and that's how they viewed it.
- [28:43]
D
Stretch is now the hurdle rate for most corporations. For us, it's bitcoin. Yes, we have a high capital bar being bitcoin. We're thinking Long term. But for most other companies now the hurdle rate becomes stretch. But can you beat 11.5% paid monthly liquid? Good question.
- [29:05]
B
So my mind goes on this to the overall securitized finance company because I think the iPhone moment and stretch being the focus and you just see how easy it is to click whether it's for corporations on a corporate finance balance sheet or which we'll get into like a non bitcoin conference and talking about digital credit versus Bitcoin or amplified bitcoin. Right. That there's a reason that securitized finance is about a $25 trillion industry. Why does it exist? It exists because you take people that have an interest or usually some conviction in the asset. So buyers of digital credit typically will have at least some like yeah, I think bitcoin probably does okay, but I don't really understand it. I don't like the volatility. That's, that's exactly what you would see in all of securitized finance. You'd be like, oh like if you're buying a commercial mortgage backed security and you want to buy the top tranche, like oh like you know, I think maybe commercial mortgages or commercial, you know, businesses are going to do well, offices are going to do well or apartments are going to do or whatever. But I'm not an expert in that, that sphere. I don't really understand it. And so I'm going to partner with someone that deeply understands it, that has deep conviction and I'm going to buy the least risky part of that equation. Right? The equation has three parts. It has digital credit, it has Bitcoin and it has amplified bitcoin. And you could say like, okay, like Michael Saylor, that guy has conviction in Bitcoin. Like I know he has conviction in bitcoin. He's underwriting this thing that strips off the volatility of the bitcoin. I can rely on his understanding of it, take less volatility and get now an 11 1/2% yield. That's interesting, right? And that's such an easy sell because people are super happy with 11 and a half percent yield. And you could take that to a corporation. Just makes so much sense. It makes sense. Why even Bitcoin treasury company, some of them would be buying it for a portion of their assets. Why? And then the opportunity for them to build on top of it might be their best unlock. If that is the big idea in the sense that the big idea being if the world, meaning the average person, the average corporation is never going to do the Diligence to have the conviction in bitcoin. You can wish the world, all you want was the world that every single person, every single corporation is going to buy bitcoin. But the reality is, is that if they don't have that conviction, it goes to. What we've talked about before is what happens is that if you borrow someone else's conviction and actually buy the base asset and can't handle the volatility you're gonna sell when it goes down because you don't fully understand it, you don't believe in it. You thought you could get rich quick, you didn't get rich quick. And so you end up having a really bad experience with a great asset. Right. And so it's why it's like, you know, I actually don't like it now. I used to like it because I didn't understand it, but I don't like it now when a friend or a family member doesn't understand bitcoin. And like, well, Matt understands it. So I buy it because when that happens, like they also sell it when it goes down typically. Right. And that's just not, that's not good. I mean, would I recommend a corporation to buy bitcoin in with it without an understanding of it if they were likely to be sellers if it dropped 30% or 50%? No, that would be a horrible asset to invest in. A volatile asset that you would likely sell if it goes down 30 or 50%. So what's a better asset? Digital credit. Simple. You get the great yield, you get to invest with bitcoin exposure, you get a stripped down volatility profile. And it just makes so much sense. And you're seeing that click. And we're still seeing it click in the early days. And one of the things that I thought was nice to hear kind of strive and strategy talk about together multiple times is the process of building a track record. How you can think about track records in traditional asset management space is that the first three years of a new product, you typically see linear growth. And so linear growth doesn't mean low growth. Just to be clear, it could be very high growth. Right. Like you'll see it get off the ground. And that kind of gives you a sense of. For how big is the idea? And so think about the success of digital credit in year one. That is how big the idea is. It's massive. It blew away. It's blowing away other preferred equity. It's, you know, Jeff, you've thrown all sorts of statistics of how much on every metric. It's blowing it away right in year one. This is the linear growth era. And so we're thinking about how big it is right now in the linear growth area. So what does this typically look like for the next three to five years? And you never can in traditional asset management space pick the moment that you see the exponential up hockey stick growth. But it almost always occurs somewhere between years three to five. So the first three years you see linear growth. So we saw massive scale year one. My view is we likely see similar but increasing levels of linear. It's kind of funny to call this linear scale up for the first next three years. But then with where we started, this is like a multi hundred billion to multi trillion dollar opportunity. That's what we're talking about here. That's where I think, where I think you see how this is the iPhone moment. So if that is the opportunity, if this is going to be, let's say it's a trillion dollar opportunity in digital credit. We don't know how big, but it's going to be up in that magnitude, maybe a little smaller, maybe maybe multiple times bigger. What is that opportunity? How should you think about it? You should be building everything you can on top of it. You should be trying to get things right now that also start building track records because this concept of a track record, right, and we're going to be needing to talk about this a lot over the next three years. You build on top of digital credit. If you're in tradfi space when you start that product, that is day one of your three year track record building process, right? You don't get to pull down to stretch. Right. And so the importance of kind of getting off the ground now and seeing innovation in the space I think is super important. I think it is a big opportunity for anyone whether you're a bitcoin treasury or not. But I think the point of is that say that we're talking about is like, hey, if you're kind of struggling on what to do next as a company, if you can't issue a digital credit product, you might consider building on this because it is such a massive idea. Don't just sit around and do nothing. There's work to be done. I think is actually really, really good advice.
- [36:04]
C
Yeah, I think so too. I also think one of the things you start to see here as these emerge is it might change the on ramp to bitcoin for people. You know, I got the question a lot of times at strategy World, you know, how do you recommend people first get into bitcoin you know, and there's a problem with it, which is most people are out, you know, evangelizing for bitcoin during the periods when bitcoin's been absolutely ripping, right? When you're seeing it in all the headlines, when it's been performing incredibly well and they're out telling everybody they can about it. And to your point, Matt, if they haven't built that conviction yet and they buy during one of those periods and then you get one of these drawdowns like we're in right now, that becomes incredibly uncomfortable and it can permanently damage the way that individual is going to think about bitcoin from that point forward. And so while originally, you know, it was, well, maybe being in the equities market or being in the ETFs is, is an easier sell, right? It's something that's familiar to them. They can buy it very simply. They don't have to get into the self custody aspects of it. But if you go into the common equities, you're actually going higher voltage than bitcoin itself. IBIT gives you the same ride that you're going to get with a bitcoin. But the reality is probably that for most people, the first exposure to something around Bitcoin should probably be the digital credit products. Give them an on ramp that doesn't take them on a wild ride right out of the gate, right? Let them hold an asset that's going to perform, that's going to provide them outsized returns from what they're seeing anywhere else that feels stable to them, that feels comfortable where you're not seeing the wild drawdowns. And over time it still forces you into the question of what is making all of this possible, right? Why does this work? Why is this company able to give me something that's so superior to anything else that I have access to, you know, through my banks or my money market accounts or my CDs I'm holding or whatever it is, right? What's making this possible? And I think that going that direction from low volatility and then stepping up the volatility and going, okay, well now I've got capital that I need out beyond four years. And I liked that Saylor putt that chart in his keynote where he showed what's kind of the timelines that you should be looking at if you're going to consider any of these instruments. And he had kind of sub four years, he said you should be thinking about the digital credit instrument if you're going to need that money. Here within four years. That's probably the instrument for you. If you have long term capital that's beyond that, then you should be looking at Bitcoin. If you have longer term capital where you really want to be outperforming bitcoin, then you start looking at the common equities that are amplified to bitcoin. And I think that mindset shift changes a little bit. It's given us a new tool to bring awareness of bitcoin to people who have not spent the time to study it or who might not have the time to go deep in studying it right away. Because these are products you can plug into your life right away and it makes a meaningful difference. After month one. These are far superior yields to what people are getting when they're parking their money in a bank account and earning 0.1% or maybe if you're lucky, 3 or 4%. This is one of those products that's easy to talk about. It's an easy value proposition. And I think that we should probably talk about the other conference that we went and spoke at, because that is really the first testing ground for that. Go into a room filled with people that are not living in the bitcoin world at all and see if you can talk them through these products and then see what the response is. I'd be curious to hear your guys debrief on that conversation because to me it was completely eye opening because you don't know what to expect when you go in and have that first conversation in a room of people who have not typically been your target audience for any of these conversations.
- [40:01]
B
I want to set the backdrop and then I'm going to kick it to you guys for the reaction to the backdrop. So this is a conference that is a traditional finance conference. Probably the average age of the participant is somewhere between 50 to 90 years old and probably skewed towards the middle. So kind of the baby boomer type investor audience deep in traditional finance, and they go to these conferences for their alpha. They're probably the people that, you know that will be in, you know, 30 to 50 years, right? Like the people that, you know, went to the digital credit strategy world conferences and you know, we were on the groundbreaking. This is the same people for the previous era. And those people loved the original message of strive, the ETF shop, the traditional finance shop, the one that stood against the ESG movement. They loved it. And so I've spoken at these conferences a handful of times, never about bitcoin, only about what traditional STRIVE was doing with regards to fighting back against ESG and the opportunity in our ETFs to invest with an asset manager that loves capitalism. And so I did not know how speaking about bitcoin was going to go to this crowd. I thought that they do like income investing, they like real estate, they like investing in energy assets. And so they, they. And they love strive. So, like, hey, can you come speak at this conference? I said, yeah, you know, but we'd probably want to talk about digital credit. And so I, I told, you know, Ben and Jeff, we were going to go do a panel, the three of us together, on digital credit. I said, this is kind of the backdrop to this audience. This is what to expect. I don't know how it's going to go, but I know these guys like income, so let's just go blast it and see and introduce this to someone that. That, you know, probably has heard about bitcoin, probably not invested in bitcoin. And that's it. So kick it over to you guys. How you think it went?
- [41:55]
D
As soon as we walked in the door, they were asking questions on the prior panel. And the guy that got up to the. To the microphone said, when you answer this question, can you speak slower? Matt peers over to me, you know, eyes wide open. It's like, okay, here we go. This is. This is the audience that we have here. There's about 150 people there, maybe 200 people there. And the prior panel was talking about oil and some oil volatility. And the energy in the room was very flat. You could walk into the room, and it just kind of felt drab compared to walking at the bitcoin conference, the bitcoin strategy conference. And then coming in here, it was just a completely different vibe. And so Matt, myself, and Ben walk up on the stage and start talking about bitcoin. And we try to, like, jolt, you know, jolt some energy into the audience and talking about these instruments. And there was some interest. I think we were up there, we had about 20, 25 minutes, and we kind of did the speech, walked through the landscape of where we're at. What is digital credit? How does it work? And there were a couple questions that were asked after the panel, but the most interesting part to me was after we were done, there were several people that came up to us and asked this question separately, individually. Afterwards, one person rolled up on their wheelchair, another person comes up with a cane, and then there were a couple other people as well. And the questions were fascinating. And it was. So you're telling me that I could get paid on the 1st and the 15th. If I have two of these digital credit instruments. Did you say 12%? Did you say 11 and a half percent? Hold on, tell me, tell me how this works again. Another person came up and said, wait, Strategy has 700,000 bitcoins. Their market cap is worth less than their bitcoin that they hold on the balance sheet. That was another one. And there was just complete fascination with these instruments. Now not everybody, not everybody got it. I mean, there were five or six people that came up to us individually. But these little seeds are going to get planted all over the place. And as soon as there's some success with some of these people, they're going to go tell their buddies about this. Like, hey, I got 11 and a half percent here on this new thing that I added to my portfolio. It's beating everything else that I have in my portfolio and it's stable. That's interesting. So it completely, it was so great to go cross pollinate in a different ecosystem and I'm so excited to do that all of 2026. Insurance conferences, 401k conferences, wealth conferences, money shows all over the place. And this is really the next frontier. Most of the people we talk to at a bitcoin conference, they know kind of what's going on. They either hold bitcoin, want amplified bitcoin, or trying to get leveraged exposure in as high a possible manner to the underlying asset. They're a little bit less interested in the digital credit instruments. So that's the new frontier is how do you pull in this new capital environment?
- [45:06]
C
I'll echo what Jeff was saying. It is interesting anytime you get in that room because quite frankly, that is a big portion of the demographic that I think these products are incredibly appealing to. You think about what people tend to do when they're retired. One of the things is they're always talking about money. You always hear people talking about their Social Security checks were coming in. And I think this is one of those topics that becomes very fascinating because you have something new that you can bring your friends. It becomes a social aspect of your life when you find something new. I've got a friend that I made on years of vacation that I always take. And you know, this past year I was talking to him about the digital credit products and he was just completely enamored with it. You know, he's in his 80s and he loves fixed income products. He loves dividend stocks, right? Like that was his whole focus. And he found these and the number of phone calls I've got. Because, you know, he wants to talk to his friends about it, Right. He's educating people on digital credit at that point in his life, and he just absolutely loves the products. And I think that that was what was fascinating about this particular conference, was that you did see when you look out in the crowd, they certainly understood the debasement trade. That didn't seem to be anything that was new to them. I think they've always taken a different approach to that. The questions that we got were around what you would expect them to be around. It was around the volatility in Bitcoin itself, and it was around, how does the company manage that volatility? And I think that those are the right questions. And then once you get comfortable with that, the next question was, well, where do we buy these? How do we get them? Buy them just like you buy any other stock at your brokerage, right? And for this crowd, it's okay. So I call my guy and I tell him, this is what I want and I can get it there.
- [47:04]
A
Yes.
- [47:05]
D
What's the ticker?
- [47:06]
C
Yeah. What's the ticker again? Yeah. And so when they. When they hear about these types of products in their own mind, what they're doing is plugging that into their portfolio and going, this is incredibly beneficial to me. Right. This is way better than what I have today. I've been hearing about all these other products that give you a 5% yield or a 6% yield at the time, you're like 11 and a quarter or 12 and a half. That's a mature material difference. And so it is one of those topics that starts to excite people because they can start to immediately run the math on what difference would this product make in my own portfolio. It's not conceptual. Right. For them, it's real, because this is how they're living their life. They're at the stage of life where they've retired, you've left the workforce, you're not bringing in a paycheck every week, and it's, you know, Social Security and the money that you saved for retirement, and that's what you're living on, and that's what establishes your quality of life. And these are those types of products that can average that up and improve that quality of life. So it actually makes me excited to go do more of these. You know, we talk to a crowd a lot of times that's already, you know, they've. They've seen these products since inception. They've been aware of strategy and the creation of digital Credit and they've started to watch these products perform, you know, and in the bitcoin community, you know, where we're all involved, the people that have heard about these products likely either own them or have made the decision that they're not going to own them. They might already be in the camp where they understand bitcoin well enough to go, what I want is full on bitcoin exposure and I'm willing to sit here for a decade and get that huge performance over that time. But these are the crowds where you're battle testing the new ideas. These are the new on ramps. This is the new exposure to bitcoin for quite frankly the generation out there that holds the vast majority of the wealth at the moment. And so I think that these are the conversations that are going to be very interesting and these are the conversations that are personal to those individuals because it's immediately applicable today. And they're not going to be willing to take the volatility of an asset like bitcoin in their portfolio at this stage.
- [49:16]
B
The most common question I got second was what is the ticker which is S A T A S D R C. But, but the first one, these trade on these trade publicly. And what I think that was coming at is these people, to your point Ben, they do call their guy, they have advisors and they're typically looking for these double digit yield opportunities and they're not available in the public markets. Right. So it's private credit, which you know, we can bash another day, we will. But you know, that's what they're looking for and kind of access to something that they, because they can't find that in the public markets. And so they were shocked to see that that was available, wasn't a bad thing. They're just shocked that these were publicly traded instruments. And I think they'll be further shocked when they actually see the liquidity of these, of these publicly traded instruments and how good that liquidity profile is. But you know, that was I think kind of an eye opening moment for I think all of us that we need to go tell the world. And so I think a little bit of homework for this crowd, right? The crowd that if you're listening to the hurdle, right, you're probably a nerd on all things bitcoin and digital credit and amplified bitcoin and math, right. Otherwise I don't know why you listen unless you just can't get enough of Ben Workman's voice or something. But I think some homework for this crowd is probably most of us have talked about Bitcoin or MSTR or something to a friend and kind of got blank stares or like I just can't get it or I can't understand bitcoin. Try the digital credit story. Just try it. Someone that does not own bitcoin. And I think you'll try it a few times and I think you'll see the conviction that Saylor has in this being the iPhone moment that I think all of us have as well. When you start engaging in those conversations, especially if you've tried the bitcoin conversation conversation before and you contrast the difference in reaction between those two, I think that that is, that'll get your conviction how big this idea is.
- [51:27]
D
Yeah. And I completely agree. It's a much easier sell. And I wanted to chat through this kind of liquidity component because I've been spending a lot of time thinking about this. This is one of my biggest takeaways from, from the event. And I, I had like a 45 minute conversation with Saylor at one of the drinks of drink events afterwards. And we were having good, really good conversation and kind of thinking through like, why somebody is buying these things. So you think about why somebody's buying these things and why somebody's selling these instruments, which I think is fascinating. You got to see both sides, like, who's buying it, who's selling it, why are they buying it, why are they selling it? And thinking about the liquidity profile, to your point, Matt, historically, if you wanted high yield, you had illiquidity, right? So if, if you wanted high liquidity, you had low yield. And now you have these new digital credit instruments that do both. You've got high yield and you've got high liquidity. And I think I asked the question, would strategy ever be interested in putting digital credit on their balance sheet, right? Thinking, hey, we have a digital credit instrument, what would it take? What would it take? And he said, as a capital manager, if you have one month money, you shouldn't take an allocation bigger than the average daily trading volume. So it's providing perspective on like, how would you manage capital and what, like, how would these things scale? So if you have large capital, if you have $100 million, $200 million, a billion dollars, and you wanted to deploy it somewhere, you would need some sense of liquidity. And so looking at an instrument like STRC, its average 30 day trading volume is 122 million. So you'd think, if you're a large institutional capital manager, Matt, I'd be curious to get your perspective as well, you wouldn't be, you wouldn't be willing to put maybe more than $100 million into that specific instrument if you had one month money because you would want to know or have some confidence that you'd be able to get that $100 million back out when you needed it. So it's kind of reframing how, how a capital manager may look at their specific short term capital allocation. Now look at the other instruments out there. And I did a comparison. I posted this on my X looking at traditional credit versus digital credit and looking at the preferred instruments provided by most of the banks. So I looked at J.P. morgan, PNC, bank of America and Wells Fargo. All of these instruments had significantly lower yields. We're talking 6 to 7% effective yields. And the 30 day average trading volume is in the single digit millions, like 2 million, 4 million. So theoretically those instruments, you wouldn't, if you had short term money, if you wanted that yield and you had short term money, you wouldn't be buying these instruments because you would be buying them and holding them through the duration of the instrument to get that yield, knowing that it's illiquid. So you would know that I need to park and hold this capital for 10, 15, 20 years to get that yield on the initial principle because it's very illiquid. Now these new digital credit instruments completely flip that perspective upside down. Now you can get the yield and they're liquid. And so you know, this is, this is the biggest innovation here. And Saylor also provided more perspective because I asked him who's selling these things like at 99, 98. And his biggest advice to me is like, watch your instrument trade all day, every day and watch the candles, watch who's trading it, watch the size, watch the volume, when's it happening, what's happening after there's movement. And he, he was fascinated by this one trade that happened on STRC. Somebody, somebody market sold $40 million of STRC at 99, 98 and the price went down to like 99, 40 and within 10 minutes the price is back up to 99, 94 or something like that. And he was, he was confused by it. It's like $40 million market sell. Like why, why would you market sell $40 million of this stuff as opposed to kind of sell it over time if it's decently liquid. And I think what he's starting to figure out is people are starting to use this as collateral in defi. So having a stretch position parked as collateral in defi and there was a Liquidation that happened in defi and that resulted in a $40 million market sell of SDRC. But the interesting thing is that there was somebody on the other side of that trade that gobbled it up and brought it right back up to 99, 98. And so why does that happen? That happens because he's incredibly transparent with how the instrument's going to trade. I'm not selling this instrument below $100. I'm going to increase the interest rate. If the VWAP, the 30 day VWAP is below $99, I'm going to keep increasing the interest rate until it gets there. To provide a low volatility instrument with high yield. So it's just fascinating. This is a, this is structured finance. But the design is very tactical. The decisions that have been made are very tactical. They're looking to increase liquidity, increase the volume. You want people to have the incentive to buy that instrument knowing that you're not going to be selling it down at 9960, 9940 or whatever that number may be. So I expect this is going to grow, especially if people are using this in defi. We've now seen tokenization of these types of instruments. These are going to be utilized in different locations in the crypto market, these L3s, and that there's going to be consistent incentive to arbitrage any dips. Like there's going to be buyers on any dips because they know there's people coming back in to drive it back to 100. So this is a fascinating development.
- [57:10]
C
It's interesting too because it's an odd instrument when you first think about it, because you know you've got the ability to buy it in size very easily because as soon as that price hits 100, strategy will provide the supply to you. They're there to provide you the ability to buy it on the other side. What they're fostering now is the liquidity on the other side. It's on the exit side of that trade. Over time, I do think you start to get a lot of these arbitrageurs that come in and start to see the track record of this product coming down, moving back to par, coming down, moving back to par. And over time, people are going to start taking advantage of that. So you'll actually even get traders in the space. You know, you look at these products and you go, these are things you just buy and you hold in your portfolio forever. I mean, what an awesome yield to get, just sticking a security in your portfolio. But there's a lot of these people that will trade this, you know, for a half percent, 1% and they'll just do it over and over and over again. And that'll slowly, as more and more people start doing that, it'll start to close the gap and those dips will start getting really shallow and they'll be willing to eat it up in size because they see that consistent performance over time and they'll become a part of that ecosystem that makes that happen. And I think that's just a part of the maturing process or the seasoning process for these types of securities is they have to trade for a little while. People have to start spotting those patterns over and over. And I think even in the investing world, these products are still relatively unknown. And so there will be more people that are coming in here because some of their businesses is capturing half percent moves over and over and over again. And that'll provide the liquidity on the other side. So now people are able to exit positions in large size, they're able to buy positions in large size. And I think that's when these products can just start to scale like crazy.
- [59:03]
B
Yeah, yeah. And I just want to say one thing that I think my viewpoint starting to evolve on, which is what will the liquidity profile of these things be over time? Like, frankly like we're all learning, right? And we have to look at data, right? Like we're going to be data focused. And what's so interesting about this is that my starting assumption was you're taking an instrument with a double digit yield now 11 and a half for stretch and in the 12s for SATA and which is like basically double high yield. It's a private credit type sort of a yield profile. How much volatility will that strip off of bitcoin? Well, we're now in a bitcoin bear market. Bitcoin's 50% off the top and stretches right at 100 Seita's in its range. And you think about that and you say, okay, these things, the market is seeming to digest this better than I would have anticipated and having a lower yield profile than I would have anticipated. And with that size of issuance, to me that means the idea is a bigger idea than even I thought it was, which was already a big enough idea to put our entire business model and capital structure behind. But even bigger than that. Right. And I think that's a good thing. And as the market starts to believe that and see the data back tested in a bitcoin, Bear to your point, Ben, People are going to start trading that and arbitraging that more actively because. And then that will push it to itself. Right. Like if the market believes something, they will defend the thing because they'll see the opportunity if it, if anything slips outside of that. And so it's really been a, an exciting. I mean, I'm just fascinated with the data and how well they've traded. But then you go to the, you know, the non bitcoin conferences and you see the enthusiasm for you. Like, okay, like kind of makes sense.
- [60:55]
A
Yeah.
- [60:56]
C
I used to always talk about it on our true north streams, you know, in the early days of stretch, because I was the one running the bot, doing the arbitrage, and I couldn't understand why everyone else wasn't doing it. Right. It would come down. And at the time it was coming down to like 92, 93. Right. It was coming deep. Now they haven't fired in a while because it's not coming down as deep. And I just kept looking at it going. I don't understand why people wouldn't come in and arbitrage this. And it's the same reason, I think, why the yields are so good, right. They're still just relatively unknown. The one thing that we certainly agree on with strategy is that the current spreads on these products are crazy for how good the products are. And that means over time, as that awareness comes in and as that liquidity on both sides of the equation ramps up and these scale and the demand comes in, right, you would expect that those spreads are going to compress, right. There's going to be demand at a certain point for products that are this good. That means that there's probably a point in time where those yields will come down a bit. Because if you look at the risk profile on these relative to everything out there, you know, I mean, Jeff will speak to this all day long. I don't know if anyone's ever heard him talk about risk. But the risk here is incredibly mispriced for what these products are. But it's early and you're fostering a new segment to the market. You're bringing a new product into the market. And because of that, because you're building that demand profile and you're building that liquidity profile, the yields are incredibly attractive. And that's an opportunity. When you have these mispricings in the market, you know, these are the opportunities people always talk about finding, right? You've got to find something that's mispriced, but you've got to be able to understand why it's mispriced. And I think right now that's the key point. I don't think most of the market understands why they're mispriced. If you don't have that fundamental understanding of Bitcoin, and because of that, you dismiss and don't even want to go look into the capital structures of these companies and understand the positions, your base thesis is, well, it's risky and Bitcoin's volatile. So therefore there's an outsized amount of risk on these products. But as soon as you have that understanding, the light bulb goes off and you go, oh, maybe these aren't as risky as I thought they were. These companies are starting to manage these in an institutional manner. This isn't just a YOLO play. This is something that's being managed very meticulously on the corporate balance sheet. You're constantly assessing the risk, you're constantly watching the market. You're putting a structure in place that people can really understand and become comfortable with. And as soon as that awareness ramps up, that changes the conversation, it changes the way people view these products. And they're going to see an opportunity for themselves in terms of how this is going to make them better, how it's going to make their fund performance better, how it's going to make their company perform better, how it's going to make their individual portfolios perform better. And that's going to be that awakening moment. And to your point, Matt, that just takes time, right? It's that year three to five where you see the exponential growth. But with these, I won't be surprised to see us start that curve even slightly earlier. Because if individuals that are in that retirement range, like the ones we talked to at that conference, find these products and realize what a material difference it can make, you can start seeing that demand ramp up a lot faster than any of us initially anticipated.
- [64:26]
D
It is infinitely scalable and it is completely resetting the cost of capital for all of traditional finance. Anybody with this historical credit instruments, and these things are incredibly fascinating because that risk can be priced in real time. You think back to how the equity market evolved over the last 20 years. High frequency trading became very popular. Instead of calling your broker and capital moving via a phone call or an email, it's now moving via computers. And it's all about speed. Faster, faster, faster. How can I arb the little bits and pieces here and there? I want a half a penny on every single trade. And the credit market never evolved. It's still just incredibly Liquid. The whole credit market still just incredibly illiquid. It's evolved a little bit now. There's some ETFs like HYG where you can have bundles of these things and companies that are taking risk on top of it. But the really huge unlock here is inviting all of that computer ecosystem into the credit market with these digital products with liquidity and arbitrage opportunity and that is infinitely scalable, backed by Bitcoin traditional capital. This world is going to explode.
- [65:37]
C
One last comment. So when we left that conference and we went out the doors and we all kind of got separated off into our stories, small groups by people that grabbed us to talk about this, the first two people that came up to me actually asked me the same two questions. It was, is this a front loaded fee or a backload? Well, there's, there's no fee on these. And then the second one is, well, what's the lockup period? There's no lockup period. And they looked at you like you're insane, like that can't possibly be. And I think when you think about the products they're used to interacting with, that's just an accepted reality of those that they've gotten used to and they've gotten comfortable with. And it just shows you how materially better these products are than most of what's comprising these portfolios out there. So that just made me laugh because it was the first two people in a row and it was the same questions, is there a front loaded fee on this product? And what's my lockup period?
- [66:34]
B
My closing thought here is tying it back to the common. And I've never been more bullish on strategy and then obviously on strive, which we run is, you know, having even more amplification. But the focal point of a structured finance company that the product is digital credit. So you think about any company, they're going to always be talking about the product, the product, digital credit, the product, stretch the product, SATA, right? Go out there and sell the world on the product. What is that ultimately going to benefit the common? Right, But I think how this is evolving is that in the early days people didn't even understand the common. So we're just talking about the common, talking about amplified Bitcoin. Now there's a iPhone moment for a product that is going to scale, I think 100x plus over the next few years. And that product will ultimately drive value to the common equity. But, but you don't drive value to the common equity by talking about the common equity. We got to go tell the world about the product. Because. And I think that's clearly Saylor has a 100% clear mind in that. And you saw that shift in a strict focus on the product, that if it's as successful as we think it could be, strategy is going to be the biggest company in the world. Like, actually never had less doubt in that, because the scalability problem, I think is. Is solved. Solved doesn't mean it's done. But this initial year's worth of success shows how big this idea could be and what that could ultimately mean for their company. And then I think similar with SATA and Strive.
- [68:13]
A
Jeff, any closing thoughts, or did I? You already went.
- [68:17]
D
Risk is mispriced. That's it. Risk is completely mispriced.
- [68:21]
A
Awesome. Yeah. My closing thoughts are the iPhone moment is such a great way to describe it because I remember a grain of salt telling me, hey, years ago, people would be talking to their neighbor and saying, how did you get a new kitchen or get a new pool? And they're like, oh, I bought Bitcoin and then I sold it. So if that's impactful for something that's just upgrading your life, maybe during your working years, how much more impactful will the conversations be person to person? And when you're talking about a yield that can help you in retirement, you would think that those conversations are going to become fast and furious as a flywheel on their own. So thanks everyone for watching the hurdle rate. Episode 49, STRC is for corporations. For Matt Cole, Jeff Walton, and Ben Workman, I'm Tim Kotsman. We will see you next week.