TFTC: A Bitcoin Podcast - #539: Planning For The Future With Bitcoin with Jessy Gilger

Episode Date: September 23, 2024

Marty sits down with Jessy Gilger from Unchained's Sound Advisory to discuss long-term financial planning for bitcoiners. Jessy on Twitter: https://x.com/idahohodl Sound Advisory: https://www.thesoundadvisory.com/ 0:00 - Intro 1:36 - The need for Sound Advisory 9:27 - Traditional assets lose to bitcoin 11:52 - Volatility 13:44 - River & Unchained 14:59 - Tax strategy for bitcoiners 21:55 - Donor-advised funds 24:43 - Gradually, Then Suddenly & Zaprite 26:20 - Trump’s tariff plan 28:45 - Bitcoin fixes charity 34:18 - Tax planning with clients 36:29 - Common mistakes 40:35 - Fixing mistakes 44:56 - Coinbase 53:48 - Tether 56:55 - Orange pilling skeptical clients and other RIAs Shoutout to our sponsors: River https://river.com/tftc Unchained https://unchained.com/concierge/ Zaprite https://zaprite.com/tftc Gradually, Then Suddenly https://thesaifhouse.com/gradually TFTC Merch is Available Shop Now: https://merch.tftc.io Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Follow Marty Bent: Twitter https://twitter.com/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://tftc.io/podcasts/

I get emails from Coinbase all the time. XYZ garbage token is a top mover today. You guys are lost on what really matters here. Coinbase specifically running majority of those ETF funds. I see that as a huge honeypot. There's far more Bitcoin in ETFs than there are in the Lightning Network. The fact that they only have like 2000 Bitcoin on their balance sheet. As long as all coins do exist, they're kind of like leeches on Bitcoin success. And the stablecoin success is showing you that the dollar is not done. I don't think volatility goes away. I think we have cycles. so protect yourselves maybe maybe sell bitcoin if we make this move you're probably saving tens if

not hundreds of thousands of dollars just from a tax perspective how do i orange pill this hospital that church this school what are some of the biggest mistakes that people make oh geez this rip of tftc was brought to you by river it's the best place to buy bitcoin go to river.com tftc and enjoy this episode You've had a dynamic where money has become freer than free. You talk about a Fed just gone nuts. 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. Jesse, welcome to the studio, sir. Thank you. Thanks for having me. How's your day? How's your week been? You got Terry Blacks last night? You saw me there?

I didn't see you. Phil saw you. Oh, Phil saw me? Yeah, and he told me he saw you. So, it's good enough. The move at Terry Blacks, if you don't want to wait in line, and you're in Austin, Texas, and you want some barbecue, you uh you get takeout you order ahead takes about 30 minutes to an hour call it in then you skip the long line and you pick it up and you go eat it at your house you can't eat it there so you don't get that experience but how's it compared to franklin's i haven't had that one yet

i haven't had franklin's either yet so i can't i can't talk i'm a one track mind as soon as i find my spot i anchor to it i have two spots here cooper's down on congress and then terry blacks my wife was craving terry blacks last night so we ordered it okay keep her happy gotta keep her happy is that how you would describe your job at sound advisory keeping people happy it's a big part of it yeah um so jumping into that i guess i i lead sound advisory and we do financial planning for bitcoiners so yeah people want their financial plans uh secure and prosperous it's a happiness big component of that well before we get into like the nitty-gritty of what sound of that advisory does i think zooming out at the ria space more generally

and historically i mean very short history but how it's treated bitcoin yeah and why something like sound advisory that is dedicated to bitcoin needs to exist in the first place what are some of the hurdles that individuals run into um with rias when they go to them and they're like hey i'd like some bitcoin exposure and alternatively what are the hurdles the rias that would like to do that run into that may not be able to yeah so a bit of my history in a prior life i was a regular traditional financial advisor over a decade ago started in that and then gradually became disillusioned with um the gaps there and was on the doorstep of partnership at this firm and they weren't seeing bitcoin and ended up just leaving that that would be partner at the altar

and making a jump so that's a big jump yeah partners the holy grail yeah that's uh it's like business married kind of so um left left that started my own thing i was like i got to give this bitcoin thing a try and so i started my own ria and then worked at unchained as well like hey i want to want to get into the bitcoin side of things so worked at unchained on their technical teams as well as the retirement and inheritance products and through enough of those clients conversations we saw a gap right because you hear it on lots of podcasts this is not financial advice you know go talk to your guy and then the big the big problem you're alluding to is the guys that you should be talking to don't know anything you know about bitcoin generally

like macro economically or you pull on that a little further things like key control what are the best ways to get exposure like how are you going to assist someone with in many cases it's the majority asset from a net worth perspective in their life so our average sound advisory client has over a million dollars in bitcoin they're typically already using like multi-sig key control when they come in the door and they're just looking for things like tax planning or hey if something happens to me how's how my wife gonna be okay how are my kids gonna be okay right yeah so rounding out the bitcoin picture with financial advice that's why we launched uh sound advisory so disclaimer there that it is 100 owned by unchained capital inc but separately regulated

companies so unchained does not give financial advice sound advisory can yeah and when it comes to an ria giving financial advice from bitcoin what does that advice typically sound like it varies from person to person really situation to situation in the same day i can be be telling someone to buy Bitcoin very next call. Yeah, you should probably sell some Bitcoin for that reason, you know, because they're approaching just a different set of circumstances. So we have clients in their 30s running a business tiger by the tail, all the way up to 82, you know, the dementia, some end of life is starting to kick in and they're just thinking through their situation differently. So having a good understanding of Bitcoin as a tool lets you

take that tool into really like view the client through their own shoes right like i'm gonna i'm gonna get into your situation and figure out well how would i help you know give advice if i were in your situation and bitcoin can look different uh depending on where you're at yeah and what do you like do you think there's going to be like everything that's happened this year ETFs launched. It seems like the Trump administration is pretty dead set on supporting the industry and basically giving it the green light. We're comfortable with this very stark difference from when he was actually president in his first administration. Micro strategy is obviously changing the game in terms of Bitcoin as a corporate treasury asset. And we're beginning to

see uh tag alongs to that strategy in public equity markets and so um between the etfs spot bitcoin equities proxy exposure with companies like micro strategy it seems like bitcoin is part of a portfolio um it's becoming more reasonable more reasonable yeah our rias the world that you came from? I think the big, like the Ameriprises, the big warehouses that Morgan Stanley even, are they beginning to wake up to this? Beginning. I think that's the key word is that it wasn't there. And part of that is fee models are just kind of broken, right? Typical advisor charges an assets under management model where they charge 1% on whatever they can stick in the portfolio. So they can't stick it in the portfolio. How do they charge 1%? They're incentivized not to learn

about it so real estate often doesn't end up in a portfolio gold doesn't bitcoin doesn't but now bitcoin can't because of the etf and so like oh hey i can still get my one percent whatever sell some apple buy some ibit buy some fbtc right that they can still get their one percent and so now fees are a little more aligned but they're just going to take that that wall street layer too right they're just that's as deep as they're going to go they're going to learn about the etf because that's what they can stick in the account so beginning right everyone starts at a certain point but it's encouraging to see it being treated more reasonably yeah on a big stage so but even so like do you think we're still far away from traditional ras allowing their clients to hold

keys hold keys uh yeah it's harder to the there's some sort of rhyme there you know fees and the keys like that if i let the client hold the keys how am i going to get fees from that right so aligning those incentives we saw that pretty early on sound advisory so the structure was hey let's just charge a flat monthly fee right doesn't matter you keep your keys you run multi-sig you do whatever you need to do it's just a flat monthly cost so we don't do often don't do the the aum model unless it really makes sense for a client do you think bitcoin the asset's going to disrupt wealth management more generally yeah it should for right about you know if it's truly a uh a tool that no one's in control of and it honors its uh promises then it's going

to shake up a lot of the lies that exist in the existing system what are some of the lies in your opinion uh that the dollar is reliable you know the best currency in the world process is a lot of trade currently but it's not uh reliable from a store value standpoint i mean listeners of your show known this for years well that but like also like the proxy dollar exposure in a lot of portfolios is treasuries right and like how how at risk is the traditional 60 40 portfolio because of bitcoin from an inflation adjusted standpoint it's pretty at risk right it's that that 40 on the bond side it's like they're not going to hold purchasing power over any reasonably long time period and so yeah you have a you know every million dollar portfolio you got 400k in the

bond side like you'd likely get those treasuries back but what's 400k gonna buy you in 10 years yeah not as much as it does today so yeah do you have like numbers behind this like bitcoin going up and over 10 any 10-year period like yeah like how much money like in real terms right because are people losing over that 10-year period if you compound the interest depends how much they print yeah right uh historically you know you could you could dig up those numbers i don't have them memorized but yeah 10-year chunk of inflation and people live you know even if you're retiring today you probably live through like two three 10-year chunks right you make it to 80 90 years old 60 today like just because you're retiring doesn't

mean like oh i don't have to worry about inflation i'm retired i gotta get like you typically have grow assets through retirement to keep up with just life cost of life going up so yeah bitcoin's uh in my opinion the clear winner historically and has the best prospects going forward to do that job you think we can keep it keep this up 50 kegger 65 50 kegger whatever yeah with the with the volatility right so 50 kagger with a 80 ball it's a beast uh i have several clients retiring this year and we look at well how do you stay retired right we don't want to go these clients don't have a goal to go back to work and if cycles continue you want to ride 70 80 down again so it becomes a discussion how do you balance this because you might have the 50

percent cagger but you might have the 80 vol yeah associated with that both those might compress you know i think as adoption grows and if bitcoin is money then in a future state it should be stable you can imagine very little volatility yeah but that means a little return too so yeah do you want to tell me the price you pay for return that's a trope from the old financial system yeah do you uh do you guys leverage like puts or anything to manage that downside volatility typically not they're more time-based contracts you kind of got to get the timing right and then you've got things like derivative decay to worry about but tactically you could use it um sometimes we'll use like structured etf products that are using derivatives underneath the hood so not very

common but uh sometimes you'll do what's called like a synthetic dollar position where you're up on your bitcoin you got a big chunk of bitcoin you don't want to sell it but you can create a synthetic dollar by having like the opposite side yeah a short you know use a short etf and it's like okay i can kind of neutralize some of the volatility without locking in the gain of that that larger bitcoin position so that was a big bitmex strategy for people back in the day they were on the bitcoin standard and didn't want to stomach the volatility this episode was presented and buy river river is the best most secure place to buy bitcoin in the united states go to river.com slash tftc set up an account today you'll be able to dca into bitcoin without paying any fees you'll

be able to give people bitcoin via river links you'll be able to send and receive bitcoin over the lightning network and you'll be able to set limit orders if you want to buy bitcoin at a particular price below or above where it is now you can set orders to buy bitcoin when it hits that price. Go to river.com slash TFTC and set up your account today. This rep was also brought to you by our good friends at Unchained. Unchained is building a financial services platform for a Bitcoin standard. They have over 7,000 clients that are securing over 90,000 Bitcoin with 12,000 keys on their platform. Their platform leverages Bitcoin's native multi-sig properties. Their cornerstone product is their Volt product, a two or three multi-sig Volt, which allows you to hold

two of three keys and a multi-sig quorum that gives you full control over your bitcoin they also have an ira product a lending desk and they're rolling out a bunch of other products including an inheritance protocol and sound advisory so go to unchained.com set up a call with our concierge onboarding team today tell them that tftc sent you and use the promo code tftc at checkout unchained.com yeah let's talk about um donor advised funds sure what uh you mean you a piece of bitcoin magazine last month you guys just made a big announcement at unchained uh yesterday right so i worked pretty closely with phil over at unchained to get this off the ground i saw features that unchained was putting into their product namely connections where you can

share a key with another vault owner and then knowing the tools that exist in you know the legacy system i was like oh all i got to do is organize a few players here and we've got a donor advised fund so we could jump into what that might mean and look like for for different clients and how you use that but that was the backstories hay on chains developing features that unlock certain things so just organized a few players and yeah launched donor advised funds internally guinea pig myself a few other folks you know guinea pig themselves and we just launched it uh are unchained made it more public that they're bringing that to the retail space yeah well i mean before we get into the nitty-gritty of the product itself like i think the broader conversation of

tax planning for bitcoiners who have all these gains and yeah maybe want to be able to have a lower tax bill at the uh at end of the first quarter uh in april every year like it's something that stresses me out this tax strategy i've lucky enough to work with uh the fine folks at satoshi pacioli shout out to joe guys in his team they understand bitcoin they understand accounting and so they bring peace of mind to me but even with that backing it still stresses me out yeah obviously this is a company um tftc that runs on a bitcoin standard we have a bitcoin treasury some of our revenue is brought in via bitcoin over the bitcoin protocol we've got bills to pay we've got employees to pay so we're not at the point yet where we're

holding all the bitcoin we try to make sure our stack's increasing year on year but there are times throughout the year we need to sell and um there's just always this uh feeling of stress at the end of the year with tax season comes around and like planning around reducing the tax bill as much as possible and this is a way to do that yeah and oftentimes that stress comes because the year's already over right you're in april 25. you're like i can't go back and do anything different in you know october of 24. so accounting is absolutely necessary right getting your taxes right joe does a great job with his clients we have mutual clients where we're a little bit different is we're often not like

looking in the rear view mirror of what happened last year we're looking one five ten years down the road okay what are the tax strategies coming up on the horizon and dafs are just donor advised funds are a tool in that belt right oh we got x y and z in this case clients charitable maybe we need to look at doing a daf and kind of front loading some some gifting choosing when we get our write-off for our tax situation and then sometimes you're pairing that with other tools right so again very specific case by case but i'd say that's the major difference is a lot of cpas are like okay what happened last year let's make the most of it good financial advice is looking one five ten years down the road and be like oh if we make this move you're probably

saving tens if not hundreds of thousands of dollars just from a tax perspective it's not like a matter of opinion doesn't matter if bitcoin goes up or down or sideways that there's just structural things within the tax code and you say oh okay this exists you need to do this this and this you've got a better situation and oftentimes that's why people are signing up with us because it's not a matter of opinion kind of just point to the numbers like hey we can save you x and we charge y it's pretty easy to say yes so so let's walk through an example of this like what does this look like one five ten year time horizon what's an example of how you would prepare for for that tax strategy? Big one is retirement. And you'll have folks like working, working,

working high tax bracket one year, turn it off, right? Just drop to like super low tax bracket. And so when you're, we're paying a high rate and you've got a low right now, sometimes you're doing Roth conversions, taking money from an old pre-tax account, choosing to pay taxes early, get it into a Roth IRA account, and you're paying a lower rate on those taxes. So kind of, of i like to point out to clients like a nike swoosh right you're making a lot of money went down in a dip and then in your 70s you hit this uh government requirement called a required minimum distribution kicks in around age 72 73 but if a client has a very large pre-tax ira and some of ours have you know bitcoin in them right and if bitcoin does what people think and hope it could

do over the next 10 20 years you're having to take that required distribution out of that pre-tax ira starts at around three or four percent but a lot of the scenarios we model clients are likely approaching the highest tax bracket that exists and so you take that opportune time while they're in the spoon the dip of that nike swoosh okay let's choose to pay some taxes now we're at just lower marginal rate, get it into Roth. And then that Bitcoin is going to sit tax-free for that client's life. It can be inherited by the spouse tax-free and then kids as well. So that's a big one.

That's where I've seen seven-figure tax savings. Really? If we're just looking at same-to-same Bitcoin growth rate between whether it's in the pre-tax or Roth, but then you're just arbitraging the brackets there and making an opportune move when clients are at a low rate. So that's a big needle mover. Sometimes we're pairing a Roth conversion with a donor advised fund, right?

As you're bringing those taxes from pre-tax to Roth, it's kind of increasing your tax bill. You're settling up with Uncle Sam, really, right? Hey, I've got this big IRA. I'm going to settle up with Uncle Sam. We'll move from pre-tax to Roth. That creates income. You can actually knock that income back down by doing some DAF work, right?

let's pre-fund our you know charitable giving for the future so just tools in the belt like knowing how the existing system works what are the advantages and disadvantages of these tools arbitraging brackets and then using um all that together with the client's goals in mind it's kind of yeah high level yeah that's what it looks like but like let's dig into the daf right like so how so the daf you basically pre-fund it essentially yeah daf is a tool where you can use it to size and time your charitable gifting and so sometimes you'll have a client doing that roth conversion or maybe they're selling their business and they've got a big tax bill right i've got a huge gain coming at me this year and i'm going to be pushed up into the

highest bracket this might be a good year if you're a giving person anyway hey let's take a good chunk of that proceeds from the business sale, stick it into a donor advised fund. So we get our write-off this year on it, right? And we can knock that tax bill down. Then it can stay in the donor advised fund and you can gift out of that over time. The funds will go to charity eventually, but you can choose to hodl it if you want Bitcoin or, hey, I want 10, 20, 30% to go to X, Y, and Z charities this year. And then within that fund, it's able to flip to dollars and you have to pay taxes on it so oftentimes we'll see a client giving their lowest basis bitcoin the one they bought way back at a hundred dollars or a thousand dollars sitting at let's call it 60 today

you're avoiding 59 000 of capital gain by not having to sell that bitcoin you just give it into the donor advised fund so we use it as a strategy to increase a client's basis over time that that business owner who sells the business maybe they're getting a million dollar check, right? Sometimes they'll give a hundred thousand of Bitcoin into a donor advised fund and they'll buy the Bitcoin right back a hundred thousand bucks, you know, with fresh, with fresh higher basis. So I think a lot of folks entered like, Oh, I'm just going to buy Bitcoin, hold my own keys. It's that simple, right? I would say the average client, they come in the door already doing that. We are not orange pilling them. They're already pilled. And we're

saying hey we might need to do the tax pill right here's some things that you might not know about you know maybe we can jump rope you know play some bracket arbitrage or you've got x y and z happening in your life like how do we make the most of it i think those are examples of forward looking tax strategy yeah taxes man why can't we just make money save it and job security don't worry about all this. I don't think they're going away anytime soon. I have a thesis that it's the final friction. Once Bitcoin taxes are easy, we're there. Yeah. You know, it's not property. It's not gain. It's money. I've heard different Bitcoin heads like Bitcoin's money. Yes, technically, it's trying to be money, but the IRS doesn't see it as money. They see it as it's more sailor-esque,

right? It's property. Yeah. Quick break here, freaks. This rip is brought to you by Gradually than suddenly a framework for understanding Bitcoin is money by Parker Lewis. I wrote the forward to the book. I'm honored to have done so because it's the best zero to one primer. If you're looking for a logical explanation of why Bitcoin obsoletes all other money, buy one for yourself and maybe a few for your friends. Go to the safe house.com slash gradually. That's the safe house.com safe spelled S A I F the safe house.com slash gradually use the promo code TFTC for $5 off at checkout. Buy it now, freaks. The price of Bitcoin is going up. You need to understand it. This is the best zero to one primer. This rip was also brought to you by

good friends at Zapparite. If you're a Bitcoiner and run a business or an independent contractor, you should be accepting Bitcoin as payment. If not you, then who? If we believe that fiat is systemically fragile and is a risk, the rails that that currency runs on are risk as well. you need to begin accepting Bitcoin as soon as possible. Invest in the future of your business. Create a redundant rail by accepting Bitcoin as payment using ZapRite and reduce risk for your business. I've done this for my business here at TFTC. We use ZapRite. It allows you to easily create invoices, payment links, or connect e-commerce stores, connect your wallets or custodial accounts, and be set up in minutes. We can also connect our bank accounts, our Stripe

accounts, or Square accounts to accept fiat as well. The time is now, freaks. The fiat system is fragile invest in the infrastructure that de-risks the future invest in yourself bitcoin payments with zap right go to zap right.com slash tftc to get 40 off their annual subscription zap right.com slash tftc 40 off how would trump's proposed tax plan increase tariffs crash the income tax affect any of this planning at all it could be difficult to get through i mean you do see pretty significant changes every five to eight years to the tax code um there's a big sunset coming from his last tcja bill so trump passed that one um when he was in office and because of congress needing to agree it had a sunset and so 2025 is the last year of that

bill um we'll we'll see i mean if he gets in there and is able to take some components that his constituents like from that bill and keep them going for maybe another seven, ten years. I think the tariffs are a little more internationally and macroeconomically

focused. I don't think you'll see at least my clients, we don't have to engage with that in any sort of planning sense other than it might affect prices. You see different prices as supply chains are kind of disrupted through that. Yeah, you might have volatility within

up or down. Right. So yeah, maybe, maybe brace for impact with your spending levels a little bit like, Hey, if you shake something up that big, right. And then his plan, get rid of income tax. Like that's huge source of revenue for the government. So they're just going to have to print more if they can't replace that with tariffs. Yeah. Well, that's the they're either going to have to print more or they're going to have to completely gut the administrative state and just go around like department of education, gone department of energy,

gone or spending cut by 75%. And is the other side would view that and frame that as like, look, he is destroying the democracy, right? Those things that may, may be necessary for long-term sustainability and a balanced budget. It is going to look like he's being Malay Chainsaw Ruthless.

God, I've seen what you've done for other people, and I want that for myself. Come in. Kick them all out. So getting into it, so the DAF, you guys have partner organizations like HRF, OpenSats, a bunch of others that were announced. You can use a DAF and it can go to any 501c3.

So the particular DAF sponsor that SoundAdvisor uses and the one that got implemented at the Unchained level, they're called UI Charitable Advisors. They are a charitable entity and it's a donor-advised fund. So the donor advises how those funds will be ultimately used. Are they going to be invested or will they be granted to a final 501c3? So Unchained compiled a list of Bitcoin-friendly final charities, right? OpenSats, HRF, Brink.

It's not limited to those, though. The most common top three in America are church, school, hospital, or kind of medical, you know, things like Cancer Research, St. Jude's, that kind of stuff. So it can go to all those, and we'll see clients using it in all ways. One of the more fun ones I've gotten into was a client who was a Ethereum holder up on the Ethereum, no longer believes in it, wants to turn into Bitcoin, doesn't want to pay taxes though, because he's got a game. We're using that

Ethereum, going to be gifting it to the donor advised fund, no taxes. That Ethereum can then be cleaned up, upgraded, changed into Bitcoin in kind on chain. And now that client gets to hold bitcoin and chooses when to uh this particular client it's wells in africa are his cause so hey i want to carve off 50k and i want to send that to this wells in africa project so there's just interesting cool use cases like hey here's a daf you know sounds boring interesting start but start to finish we are now like cleaning up this client's ethereum not paying any taxes and he's turning it into causes he cares about yeah and so there's a good way to look at this is for an individual is like i don't want to give my money to the government i have some causes that

like i would like to directly fund instead of giving this money to what i deem to be an inefficient and wasteful government and it's essentially like you're lowering your tax burden but at the same time using that money that would have been spent on those taxes for causes that you believe in sure yeah you see bitcoiners light up when they finally get it they're like oh okay that's like i got to fix the money part like i'm a bitcoiner right i get that now like i do care about fixing the world and i don't want to have the government be doing that they're not good at it they just create wars and i think i can do a little better with spending right and then i've got my list of one three five ten charities i care about i don't

have to worry about how do i get bitcoin to all that how do i orange pill this hospital that church this school you just put it into the daf you keep it as bitcoin and if that charitable entity is not ready for bitcoin yet you flip it to dollars send them a check it's business as usual for them you just put in the memo field this came from a bitcoin daf you know if you want to um but yeah it's it's a cool tool i'm glad it exists and then my job uh which makes it really fun is like okay that's a it's just a tool when we're trying to build a house like how do i combine that with other tools right okay daf roth conversion brackets business selling and it makes it fun like the job is never boring no this is this is how stuff used to be funded right it was charity

like before the income tax and this bloated federal government that is taking large swaths your your hard-earned money year in and year out and they make the argument like oh no we need the federal government need taxes to make sure that things get funded but historically and arguably um the like back before the income tax like the the renaissance the american renaissance in the late 1800s like a lot of the beauty that was built parks monuments libraries buildings hospitals churches whatever it may be it was funded by charitable giving yeah there aren't too many charitable wars started yeah i i mean i have over a dozen california clients and sometimes they're they can have a

10 state on top of a 50 federal so 60 cents of every new dollar they're earning is going to taxes the federal government in california and that is immensely frustrating when you're like why is over half of that next dollar that i make going to these things that are not supporting the world i want to see being built so dafs were a pet project like i wanted to see that tool in bitcoiners hands right and so they did exist in a non-on-chain ways but knowing what i knew from the team at unchained it's like hey let's do this you know you could put a key in the daf donors hands key with ui charitable and key with unchained now you've got on chain daff and people can keep bitcoin in there growing for the causes they care about and you're really just using that

structure to size and time when you want your write-off yeah and talking about like tax planning Like how do these conversations with your clients materialize? Do you have like a beginning of the year meeting? Like, all right, what do you think your income is going to be? Here's a tax code and the changes that have happened from last year to this year. And do you plan that in the beginning of the year or is it a fluid conversation? So we meet quarterly with our clients from a financial perspective. And then they go over quarterly to Unchained as well.

they meet with david on that team to work on key control operational security concept so it's usually eight meetings a year they're going back and forth between um because if we create say like an inheritance plan or a trust right bitcoin doesn't know about trusts or inheritance like it knows about private keys and so that technical component over at unchained crucial so we always line up the financial with the technical i meet with our clients half the year david meets the other half and then they bounce back and forth and then we're bringing up topics in a season where it makes sense right and so we have a rough uh it's not cookie cutter but like a rough framework for like hey typically we're addressing an estate and inheritance uh q3 that's what you know we're

in this quarter but q4 will be moving into tax projection season so hey what's happened so far this year what do markets do you traded this this and this getting into that client's basis file okay which coins do we want to choose that we sold and then just kind of doing an end of the year hey do we got any year-end moves to make right uh markets could be volatile around election time just want to have a plan going into that quarter and then execute on it by december then we have a cpa on staff as well so when we get into next spring and it's cpa season we've all made all the best moves we could in 2024 he can dig into that taxes are pretty streamlined in the spring so So, yeah, it's kind of an efficient calendar, just keeping people on track, what they need to know about and decide when.

And then we just meet regularly to make sure it's happening for them. Yeah. What are some of the biggest mistakes that people make? Oh, geez. And I think more often than not, most people have made this one as you get into Bitcoin. And I think the we'll just call it like the altcoin season and the cost basis implications. like it can get pretty messy. Myself, when I was learning, I took a very classic financial advisor approach, like, oh, I'm going to diversify

and buy the top five coins, right? Because I don't know, I'm just getting exposure. And then you go back and I look at that in the cost basis file. I'm like, oh, okay. And well, those end up in my situation. Those are all the ones I've donated to the DAF, right? And like, clean that up.

It doesn't matter, you know, the gains associated. So I would say cost basis and tracking and the rules weren't very clear when a lot of people were first buying and exchanges have collapsed. So having a good understanding of where things are at from a tax foundation, get into that, dig into that, because then you can build upon that. It doesn't matter if you've got 5, 10 coins you can't track down.

Those might be the 5, 10 that you're giving to charitable causes. And you're like, oh, there's a piece of mine that's like, great. You know, I don't have to go back and dig up that basis and I don't have to pay all the tax like it's 100% gain. So that's a big one on the tax side. And then I'd say on the state and inheritance side is it's usually a husband eight out of 10 times, right? Yeah, there's a single point of failure, their mind, their map, how all the Bitcoin works. And they believe in Bitcoin. But that spouse, that wife's like, I don't really know as much I believe in my husband, right? I believe in the believer, but I I don't, not technically as savvy or competent and they're the real risk, right? Or they're just looking at their inheritance plan. Like I've got the keys, my wife knows where it's at and there's not good like legal title structuring processes, you know, wills, trusts behind that to support that. No, those coins now actually do belong to the wife.

We'll see a lot of gaps in planning opportunities there. so well-rounded estate plan and then good tax planning because they're again not really a matter of opinion we don't have to be right about bitcoin's direction or price or anything like that you're just getting the blocking and tackling of financial planning done yeah so much that goes into this yeah and when you think about like bitcoiners specifically a lot of bitcoiners not everyone um are more like cutting edge just like risk takers younger millennials who myself included just aped in and um weren't as financially savvy or didn't have the concept of financial planning behind them when they got into it and yeah and you were so right about that right yeah

And it can create a bias towards there's nothing valuable in the old system. And I saw that. I was like, oh, there's still things that we want to go back there and grab, right? What are examples of that? Retirement accounts. I'd say young Bitcoiners, like, why do I need a Roth IRA? It doesn't matter if you've been building into IRAs for 20 or 30 years and you're going to be half of it's taxed and another 10% penalty

and you live in California. So you're looking at like 60, 70% if you're a high income earner, like you can have 60 to 70% more Bitcoin if you use an IRA structure. Right. And if you've got the cynical down with the man, like I don't touch the, I'm no KYC to the core. You can be cynical of that, but that, that absolutely matters to that retiree. He's retiring in two or three years, all of his money's in a 401k or IRA. And he's looking at like, how do I get more Bitcoin? you will get more bitcoin by using some existing structures rather than just like let me ape out of the tradfi system pay 70 tax and now i have like 30 of the bitcoin like

yeah how do how does somebody who has historically held that thought and may listen to this big off maybe i should do this like oh how do they how do they go about doing it like they had the realization like i want to keep 60 of the bitcoin that i could lose for not doing this because that's still possible so let me let me clarify you're asking about what type of scenario the the like the younger millennial or the young millennial is like screw the system i'm just going to stack bitcoin and not think about these tax structures and they're still holding their stack like it like do they have time to be like all right i'm going to make a wiser decision roll it into these things and not have to eat you might not roll that in um it depends right

And so just knowing the tools that are available, it doesn't mean they're going to apply to every situation. It's not like everyone's coming in the door, like, Hey, we're slapping them. You know, we need IRAs and all this stuff. You just take them for where they're at. And maybe if they are like early Bitcoin or never used a retirement structure, you lean more into the tax planning around getting into the basis. And what would be the implications if you sold versus do we take a loan against it? That market's developing, right? It's becoming hopefully more and more mature and so a cell versus loan analysis like you might use a different set of tools and approach but um i think the the larger point what we're zooming back to is like not

everything about the existing system doesn't apply to bitcoiners right yeah loans are a perfect example that is a concept of you know the existing uh system bitcoiners look at that like oh i'm I'm going to do, I'm going to do USD, you know, it's a, it's a tax rule basically is what makes that efficient is you don't have to pay taxes on loan distribution receipts. Yeah. It's a beautiful product that Unchained offers as well. Yeah. That's what we need to, cause when we, we talk a lot about a 1031, um, when you look at like the Unchained lending desk, yes, the rates are high,

but if you look, they survive, they're very high, but, uh, that's because there's like this asymmetry of information particularly within credit markets where if you actually look at how the loan is collateralized the custody of the collateral and the ltv like it's nothing's risk-free but it's one of the lowest risk sort of like loan vehicles that exist out there sure yeah yeah it should come with like a lower cost of capital over time there's more people i think it will when they understand that the trouble is if you've got a lot of money and you understand that Bitcoin's good collateral,

you almost just rather buy Bitcoin. Like, why do I want to fund loans and get a net, you know, 11%, 12% fixed rate of return? It can happen. It does belong in certain scenarios. I hear that all the time, but it's also like there are these dedicated credit funds that, like, don't have mandates.

Like, they can't buy spot Bitcoin. Like, they're forced to allocate towards credit products. Yes. if you are one of those pools of capital like yeah like yeah and if we're trapped in fixed income like how do we get the best fixed income i see that case but often i'm sitting with an client who gets to decide like do i want fixed income yeah usually not that's usually like the bitcoiners first thing to i'm not thinking of individual bitcoiners but like you talk about like these pension funds these large institutions that have sort of portfolio slivers that they need

to allocate capital out of and they have a mandate for each sliver which is like this can only go towards fixed income this can only go towards public equities this can go towards private equity like for those pools of capital it's like why wouldn't you it's the fixed income manager who gets bitcoin that is just trapped you see sailor arbitraging that a convertible debt there you go like he knows there's a big pool of capital almost every issue does oversubscribed i mean the one And today it just came out like, oh, you issued $750 million and oversubscribed to $1,050,000,000. Going to put it into some yield? Yeah.

Be careful, Michael. Careful. It's never turned out badly for anyone. No. Basically risk-free. Basically risk-free. Ralph Paul said so. All right.

I told you this when you came in here. You're the first. Ready? You're the first of a new segment. we're starting here see it's getting hot at tftc we're we're ending it with uh a question which is looking ahead what's a bold prediction or idea you have for your industry our industry that most people would disagree with right now bull prediction for my industry bold prediction bold not bold not there just a bold prediction

clarifying or thought that you have that a bold most people would disagree with bold prediction for the industry I don't think volatility goes away I think we have cycles cycles

are big maybe bigger if you see nation states get rugged or coin base honey pots get seized or companies with 1% of the Bitcoin put it up for yield and get rugged by JP Morgan. Those are huge.

The dominoes are getting bigger, right? And there's nothing to me that's proven that the volatility has gone away. And so here's where the bold prediction comes in for the individual is that sometimes you might be more stable by not being all in. on bitcoin right and being able to hey maybe i want a year or two of cash to just ride out a cycle and not have to sell bitcoin if it goes back down so downside protection probably makes me sound like a bear sometimes but i sit with a lot of clients who are in their 60s 70s 80 they they love bitcoin they get so frustrated when i'm like hey you should probably sell something you're like

90 plus of your life and you know i don't i don't want to see the 80 down for you right just modeling that for them and so trying to stay humble um they've done such a great job stacking sats right and i'm like oh i don't want but we're just not hyper bitcoinized yet right you can't you can't take it down the street to the grocery store and be successful with getting a sandwich with it like it's just the dollar's still present and dollar's huge and it'll be a it'll be an interesting unwind and i don't know if it happens fast or slow but i think it happens with volatility so protect yourselves maybe maybe sell bitcoin which is heresy i know but i've i've seen it and recommended it to people because i think they'll be safer and probably

have more bitcoin for themselves their spouse or their kids by not having to sell if we dip again in a year or two or three so your bold prediction is we're gonna have a massive rug that creates uh that's the that's the risk and so part of being the financial planner is like let's identify as many pits as we can and try not to fall into them and so yeah i see etf says a 6102 away matter of national security whatever administration decides you know agnostic to that side of things but But, hey, we need Bitcoin. Let's go ahead and these ETFs, they'll print the money, you know, make ETF holders whole, quote unquote.

But I see that as a huge honeypot, Coinbase specifically running majority of those ETF funds. Do you think, I mean, multi-institution, multi-sig, unchains, enterprise offering, like do you think that needs to be the standard to i would love to see a ticker symbol msig etf right i i would really like that where you've got multiple uh entities securing an etf coins that would be a better version of an etf but etfs are still wall street's layer two yeah right that's they got into the the game and they came in like right at layer two and i know it's a rough

analogy but that's kind of how they're operating is you could transfer etf shares from brokerage account to brokerage account and all that basis information would actually come with it too not an on-chain footprint but it kind of gets the job done of transferring value in a layer two kind of wall street sense so they're gaining popularity there's far more bitcoin in etfs than there are in the lightning network and they're here they're a contender bitcoin does a great job of aligning incentives so you know flows are coming in but they haven't proven themselves to be on like the uh in my opinion respecters of custody and keys yet and just seeing i get emails from coinbase all the time xyz garbage token is a top mover today it's like you guys you guys are

lost on what really matters here in my opinion you know this is financial advice coinbase like start focusing on bitcoin and and getting that right and protecting your customers and you'll be better off for it coinbase is the most disappointing story if bitcoin's early two decade history not two decades yet but one and a half decades in our second decade all the opportunity in the world i mean launched and they still have it and they still have it but like if you think of launching in late 2012 early 2013 whenever they launched and the fact that they only have like 2 000 bitcoin on their balance sheet like they should have way more bitcoin than micro strategy the politicization that they've expressed particularly

around the fork wars in 2017 like basically trying to pick which fork was the quote unquote actual bitcoin um and then like as you mentioned the lack of focus on the most important asset in this industry which is bitcoin and the over indexing on all these shit coins yeah essentially becoming a casino to get those revenues i'm sure those revenues are good but i think they'll be ephemeral in the long term there's another question like do you think um the the altcoin cycles continue Or do you think the market, particularly with the ETFs, if you look at the Bitcoin ETF flows versus the ETH ETF flows, for example, they're non-comparable, essentially. I don't know if I would have a prediction about any specific coin, but as long as altcoins do exist, they're kind of like leeches on Bitcoin's success. If Bitcoin's having a cycle, I don't see them breaking a correlation from that cycle.

I can't imagine Bitcoin down 80% certain altcoin, unless you're looking at a stable coin. Well, that's why the ETFs are particularly interesting, because historically, the broader crypto market has benefited because the inflows into altcoins, where you'd get on exchange like Coinbase, Binance, Bittrex, Poloniex back in the day, and you'd fund your account with Bitcoin, and then you'd go and trade into the altcoins. But now with ETFs, which are taking an insane amount of inflows, that's basically like a one-stop. It's not like you get into the BlackRock ETF and then you diversify into Solana or whatever. That flow of capital into the broader crypto space is way different now.

And most of the flows are coming into the ETFs and there's no possible way that they're going to flow into crypto. so that's one thing i question heading into this next cycle is like will it be as pronounced as in the past because the dynamics of you know the pure flows of money into this market are different um but then number two like people will say like even on these all coin exchanges now it's really not flowing through bitcoin is flowing through stable coins people load it up and with a stable coin or something and then use those coins by the crypto so i guess that is and the stable coin success is showing you that the dollar's not done. People probably largely overseas need that

exposure. And so they're willing to, it's like a money market fund with yield stripped away so it can ride on crypto rails. Right. But people are like, well, I know I don't get the 5%. I'm fine letting Tether keep that, but I need dollar exposure because my currency is even worse than the dollar. Yeah. So yeah, in a way they're using things like stable coins to balance their own volatility is tether the most successful company in the world right now maybe per capita i saw the definitely per capita like that is wild it'll be interesting how they can uh keep it up if we are in a rate down cycle right because so many treasuries were purchased you know they were floating at five percent for a while but if you go back down to lower rates they can be able to

keep that um at least the yield on the treasuries should decline with that and um heard them say that they are on the shorter end of that curve which is wise but then also hedging the rate cut with the bitcoin that they hold it's like oh they could you know i would likely yeah likely squirt up when you get the rate cuts so it'll be interesting to to see them juggle the cycle right yeah rate cutting cycle now i was talking to preston pish um last month or the month before he's convinced that like the two year is going to go to seven percent like two year to seven even with like rate cuts because that'll allow that they'll buy that down you think so oh yeah fire it up you know they've been money vacuum for well just like yeah money printer like you

just mentioned tether's perfectly edge if that happens like if if they have to if for some reason they lose control of the yield curve and yeah the front end floats up to seven percent and they have to print a bunch of money to push it down like bitcoin's gonna benefit from that so like yeah We'll see with a lot of clients where it's just a very barbelled strategy, right? They're so concentrated on Bitcoin and they're like, oh, is this too much? What's the natural opposite to Bitcoin? It's the dollar, right? And it is the currency of today.

Bitcoin's hopefully that store of value money for the long term in the future. But if you're looking to like, you know, have a little more balance, like you don't be totally loaded up on one side of the barbell. so yeah cash is still a necessary evil for a lot of people yeah it is cash is king still is whether you uh down with the king like to admit it or not yeah come at the king you best not miss bitcoin's got a shot you think it's got a shot absolutely i wouldn't have uh yeah i'm probably the worst person to ask because i'm going down with the ship at this point right like moving career um clients a lot of my time and energy like i am focused on this being a tool to

better the world it's not it's not just money or an investment or savings or this you know makes people wealthier it does but what are the the downstream effects of that i think it makes the world a better place and that's that's what i want to see so i appreciate my job where i get to work with the best you know bitcoiners who are taking it seriously in the world and then make them more efficient at doing that just kind of unlocking things like taxes protecting their their heirs and spouses and kids and just really creating like long-term generational wealth with a plan and a strategy and educating and really supporting that uh i'm probably the worst person to ask like is bitcoin gonna succeed like i'm so biased at this point so yeah and i think the

probability of its success is only going up and now like i know that was supposed to be the last question of the episode but now i've got like more questions floating around my head particularly like client facing like have you encountered i mean obviously sound advisories cater towards bitcoiners but like do you have any anecdotes from clients that were maybe a little bit skeptical of bitcoin but put it into their portfolio and were surprised or now hardened believers um it increases is. So I've got people at all different points of the journey of client who bought their and we did use the ETF. They just aren't ready for key control structures at this time. So like, hey, let's just have a little bit, you know, put it in your Roth IRA. And then I know that in the future,

if she becomes a believer and like, hey, this Bitcoin thing, you put it in there, it's working. Yeah, let's talk about that. We can do a rollover to a better key control structure with no tax consequences so sometimes i'm ahead of like where this client's going to be in five ten years if i'm right but i don't think pushing people into the the deep end right they've got to like get there themselves and you can't you can't fake or copy and paste education onto someone right it's it is proof of work and that's what creates a hodlers they know what they have they've done the work they're educated and so that's what i try to do is just like hey you might be on step one or you might be your 10,000 hours in

what's still deep in education, right? If you know more about Bitcoin or tax strategies or state planning techniques, you're just going to become that much more capable in using Bitcoin's power and promise to better the world and accomplish your goals. Yeah. It's a beautiful thing.

Thank you for doing what you do. It's important. I think you see more RIAs coming to this market because it seems like you are one of the few dedicated RIAs to clients who are focused on Bitcoin and need a competent advisor who understands Bitcoin and their needs and how to manage everything, whether it be tax strategy, estate planning, whatever it may be.

What would you say to any RIA out there who's looking to create an opportunity for themselves? Is there a big opportunity to cater to Bitcoin clients? We're growing really fast, and I can't serve 10,000 clients. I probably max out around 50 to 100, depending on how complex those cases are. So I'd say to those RAs, talk to me. If you're interested in Bitcoin, we're looking at the long-term,

hey, if this is around for 10, 20 years, and you're a young, hungry advisor who understands Bitcoin and what's valuable about the existing system, that that overlap, as soon as we jumped into it, it was just open season, right? No one's sitting in the space for what's good about the old financial system and how does that make Bitcoiners' lives better.

And then you just navigate that for clients. And so I think long-term, that's absolutely coming. I hope that advisors don't settle for two three percent in an etf balance portfolio like i think you're missing what will happen with bitcoin over the long term that and if you do and your clients could get pissed at you right yeah if you keep rebalancing them back down to three percent yeah yeah they might they might uh they might book an intro with us so yeah learn and if they wanted to where could they do that just go to the website we're at the sound advisory.com there's a book and intro button so

small but mighty team of three i've got two certified financial planners like myself and then one cpa on staff and growing steadily just crossed 150 million under advisement so that does include bitcoin we're about 100 million ish of bitcoin that we help with and maybe about 50 million in traditional securities so it definitely leans it leans bitcoiner um in that sense that's beauty uh a bitcoin for you to double from here you got 250 million under management yeah we don't uh we don't take aum fees on bitcoin i mean it kind of helps with notoriety and like hey look the things we're doing you know a lot of our clients doubled their network like that's great but uh yeah the the proof of work still exists with we need to be serving our clients

every quarter they can always cancel 30 days notice and so we're not interested in holding any hostages like they need to be getting value every quarter from our team and that's what that's what will keep us in the game long term so yeah good on it freaks hit up jesse sound advisory thank you for coming on thank you for having me um it's been a pleasure that's all we got today freaks. Peace and love.