TFTC: A Bitcoin Podcast - #636: Insuring Your Bitcoin Against Wrench Attacks with Becca Rubenfeld

Episode Date: July 7, 2025

Marty sits down with Becca Rubenfeld from Anchor Watch to discuss Bitcoin inheritance solutions, insurance for cold storage, the rising threat of crypto-related kidnappings and wrench attacks, and how Bitcoin insurance is becoming critical infrastructure for traditional finance adoption. Becca Rubenfeld on Twitter: https://x.com/BeccaAmilee Anchorwatch: https://www.anchorwatch.com/ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Opportunity Cost Extension: https://www.opportunitycost.app/ Shoutout to our sponsors: Coinkite https://coinkite.com Unchained https://unchained.com/tftc/ 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/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean that's part of the bull case for bitcoin if you're not paying attention you probably should be becca welcome back to the show hey marty thanks for having me happy to be here it's great to have you the uh i was just going through your your ex account while you were making coffee uh you guys are doing spaces that's i think this is where i want to start you guys are doing spaces and i'm

interested i haven't been able to hop in like what are the like the number one questions that people have for you guys at anchor watch because i think you guys have built up the brand in an incredible way over the last few years and brands well established but this this whole idea of ensuring your bitcoin right um in cold storage with unique custody setup that anchor watch has really pioneered. How comfortable are people with it right now? Getting comfortable. So I think one of the amazing thing about our product or the kind of combination of our product is that it really is next level security. So the custody platform is in fact unique, but we would certainly say it's superior to legacy multi-sig. The insurance

is unique, but that's a whole new concept. And so the reality is that it takes a lot to get people familiar with what we're offering. So what we find is that just actual long form contents, you know, having the opportunity to have conversations with people is really important. So right now, what we've been doing spaces on regularly is inheritance. So we've been really highlighting how our custody platform works for inheritance, but we get lots of questions in general, just about how time locks work, how the key management happens, still questions on how it is that we're a required signer, but it also becomes self-custody, things like that. And then of course the insurance, what it covers, how you do claims, dollar denominated versus

Bitcoin denominated. So there's lots to dive into when we talk to customers. Yeah. I mean, Inheritance is a big one. I think that's that the inheritance question is planted in the back of the minds of many Bitcoiners and has been for many years, which is like a totally like it's it's a little iffy. it's a little iffy i mean it's it's turned into a little bit of a joke but what happens is people tell us about their treasure maps when we get on calls with with customers and they start telling us like hey i'm looking at you i i heard that you're really good for inheritance i feel pretty good about my setup i've uh you know i've walked my wife through it But I'm just I'm not quite confident. Right. And so they tell us what their treasure map directionally is. They don't obviously share their exact details, but it always it's always a little bit of a scavenger hunt. Right. So it's like a certain piece of information is in a file cabinet and then that takes them to the next piece of information. And then maybe they say Marty. I put Marty's name down as my trusted advisor. There's a lot of people who put very specific Bitcoiners down as their trusted advisor and their trusted helper. I have a feeling that a lot of the industry is putting the same five or 10 names down from what we hear.

and so there's a lot of confidence being put into these individuals that they're still going to be around and available uh to provide that guidance so yeah there's there's a lot of questions that we've tried to solve with the design of our product yeah no there there was one point i've never told matt this but there was one point where i was like anything happens to me all right here's where you go you find this and then you just go go ask matt and he'll know what to do because So she'll see it and I'll know what to do. Like, it's like, well, at least, at least you and Matt, like, it makes sense. But I think there's a lot of people who put down you and Matt, who you've never had a

conversation with. They just based on your reputation that they, they say, like, you can trust this guy. And, you know, I think you, in fact, are like people's escape hatch. If you're out there and I'm your escape hatch, please. I don't want that responsibility. But, I mean, I think what we're getting at is the highlights, like the ridiculous picture of how lackluster the solutions for this very important problem have been for many of the winners. Totally. I went through this myself before we had developed this for Anchor Watch, where I had my own treasure map for my family.

And I, you know, I think it's a good one. It's not, it's straightforward. word. It wasn't overly complicated. It was easy to follow. And so I told my family, three different subsets of my family, you know, all you have to do is start in this location. And if you start in this location and you read what is there, it will get you all you need. Don't worry. And like four to six months later, I checked in with the family and I was like, hey, remember the Bitcoin? The bitcoin inheritance uh what's that location you know where do you start and two of the three subsets of my family didn't remember like they just straight up didn't remember one of them

remembered with prompting uh and that's freaky super freaky yeah and i mean again it highlights the need for a protocol that sort of takes the onus of gathering the key information and getting access to the addresses out of the hands of the people who will be inheriting the bitcoin uh and this is what you guys have been working on totally so we the way we actually execute the inheritance protocol is using what we call the recovery layer so the custody solution that anchor watch bill is at its core it's it is shared custody between the customer and anchor watch while you're insured So customer has their own private keys. We don't have a backup, but we're also a required signer while you're insured.

After you're insured using TimeLock, so enabled by Miniscript, it goes to pure self-custody. So if we've disappeared off the face of the earth, if we were bad actors, if we refused to sign for any reason, it does become pure self-custody after your insurance policy ends. And that's why those private keys are truly your private keys. It is self-custody. right between those two layers though. So there's the, we're both required signers and then there's pure self-custody right between those layers. There's a multi-institutional recovery, recovery layer. And so that's what we would use in the case of the death of a client. And that's the

multi-institutional is where anchor watch has our keys. And then we have a recovery institution. We've chosen coin corner, their regulated exchange out of the aisle of man been around for 10 years, never had any losses, Bitcoin only. So they have their own set of recovery keys. So if the client dies, the time lock will open to that recovery layer a month before your insurance policy ends. And we could move the Bitcoin from this impaired vault into a brand new vault. So if you die early in your policy, so if you get hit by a bus, you know, just a month into the policy or something, what we would tell the beneficiary is like, okay, your Bitcoin is going to sit here safe and sound. We know that you don't have access to your spouse's keys, or if it's a trustee, that's

fine, whoever the beneficiary is. But let's say on September 12th, that's when this recovery layer will come open. We would work with the beneficiary to understand their intentions. Do you want to continue hodling the Bitcoin? If so, if you'd like to be our customer, we'll get you set up on a brand new vault. We'll take care of you. You'll get your own signing devices. We'll educate you.

If you need to liquidate it to take care of family matters, you know, we'll assist you in getting the Bitcoin where it needs to go. And then that layer is also insured. So if you have questions, I'm like, well, how do I really know Anchor Watch and Coin Corner won't misuse the multi-institutional custody to steal the customer funds that is specifically covered by the insurance policy? And that's why that recovery layer happens while you're still insured, because it gives you that peace of mind that we can't misuse it. The way time locks work in Bitcoin, though, is once they're available, they're always available. So even if you passed away very close to the end of the policy and it actually the vault then did go into self-custody and maybe the beneficiary just didn't get in touch with us because they were busy with other things, or maybe they didn't get in touch with us at all. And we had to look for them and like find out why we weren't hearing from the clients. eventually when we find that beneficiary once available always available so that recovery

layer is still available even after the vault is in self-custody so that's how it can be foolproof because it really doesn't matter when we when the event happens we will still be able to assist in recovering the assets and then we have the legal side of it as well and making sure that we have documentation and everything is very very clear for your trust attorneys estate attorneys we dealt with it all on that side, too. Well, that's a natural segue into my next question, which is how are the estate planners and attorneys that you've interacted with interact or reacting to this solution? Really positively. So we consulted with a number of them in the design of how we did. So this came to life in our terms of service. So when you actually read,

you know, the language there, it's very clear, very easy to understand how we how we approach account ownership. We're very clear that AnchorWatch never claims that we have ownership over a customer's assets. So we're always looking for the rightful owner and the rightful owner is either the customer themselves or their beneficiary or their estate. And so it goes through from a legal standpoint, kind of the order of operations and who we view as that rightful owner. It goes through the steps needed to kick off the inheritance protocol. You would submit a debt certificate. Depending on certain states, they require some additional documentation, but then we would be able to recover that asset. And we also built into the customer dashboard

really easy to access instruction sheets. So there's a button that you can click right there in your dashboard, it will give you a PDF that can be put in your file cabinet, you know, given to your beneficiaries or given to your lawyer or your trust attorney. And what it, what it just, it shortcuts the path to the recovery. So it explains that this client, this individual has an account at Anchor Watch. It explains who Anchor Watch is. It shares our license numbers, three different forms of contact information, and just clarifies to whomever is going to be kicking off that protocol that you don't need to file an insurance claim. This isn't an insurance claim. And it just takes them right through that and makes it super easy. So the attorneys who

have looked at it, very happy with it. And it's also flexible in terms of the trusts themselves. So some people already have a revocable or irrevocable trust. We can ensure that that trust itself can be the client um or we have other people who the individual is the client but they have a trust set up and if they pass away the trust is the beneficiary and so any of those are doable with us we're happy to be flexible on that structure yeah and it's it's massive because i've had many conversations with estate planners and attorneys on this show throughout the years and the inheritance thing is always always uh just a headache in terms of it's typically the you know this gets put on the estate planners to sort of figure out and

really walk through with the individual um how this is actually going to happen when they pass and there is some trust involved in terms of like all right we're going to split up the keys and you have an attorney that has access to it but if you can codify it and that's the beauty of what you guys are building and the beauty of bitcoin more broadly is like as it matures you can codify it into like just suspending conditions on the protocol totally totally i mean and yeah additional functionality will become available as well when we you know when we make the transition to taproot but even today that you can set up the key management today uh you know between trustees for example, or between the lawyers, you can do that ahead of time if that was important to you.

But I think the most important thing in this is just that your beneficiaries don't need to understand Bitcoin. Like you can ensure that they will receive the benefit of your legacy without actually counting on them to understand key management or even know where things are. And I think that's a huge difference. It's a really huge difference. Even collaborative custody, collaborative custody provides amazing backstops against a single point of failure but for inheritance it still assumes it still requires that the beneficiary have at least partial access to private key material uh and and can handle it well uh for a long long time so it's a big improvement i think so freaks this rip of tftc was brought to you by our good friends at coin kite

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sats go check it out at opportunity cost dot app that's opportunity cost dot app yeah and i think one of the things that makes these conversations uh or the thought of just like inheritance planning around bitcoin specifically so daunting is that it's it has been historically a pretty involved process of like literally setting up legal structures and um and processes with estate lawyers and i think in terms of the process of getting onboarded into anchor watches inheritance protocol like what's what's the time look like from like all right i'm gonna do this too it's set up and we're good to go i mean uh from the point in time that somebody reaches out to us and they're interested to become a customer to having an insured vault with the inheritance

protocol set up is less than a week. And really that, that timeframe is just mainly to send them their signing devices because they set up their private keys themselves on brand new signing devices. And so just the mail time. So a few days, uh, we would quote them, they fill out the application. That's like a 15 minute thing. Uh, and then we'll send them the welcome kit that has the signing devices and some goodies. And then it's just setting up an onboarding call and going through and creating their vault. During the application, that's when they provide their beneficiary and their secondary beneficiary and contact information for both. And then from there, everything about the inheritance protocol is just built into our services. We don't charge

extra for it. If we do need to assist a beneficiary and recover it, we don't charge a finder's fee or anything like that this is just this is just part of our services and it's just built into everything that we do natively yeah and i guess on top of that like since you guys have been out market really hitting the pavement and uh telling people like hey you should be insuring your bitcoin we have always a london cover letter you can insure against five dollar wrench attack losing your private keys which is also a big a big thing yeah like how how would you describe the state of the market in terms of people understanding the importance of like ensuring your bitcoin and really taking care of it i think i mean it's definitely coming along we

it is better understood at the commercial level uh for sure so commercial clients who already are buying insurance on other aspects of their business and are used to, uh, needing to secure insurance to provide comfort to others. Right. So, I mean, if you think about directors and officers insurance, for example, um, you know, the company might buy that for themselves and, and they are the customer of that insurance. But really the reason that you do that is to give peace of mind to your board members, right? So you wouldn't want to serve on a board if the company didn't have DNO in place. And so this concept of having insurance not only to protect yourself, but to also protect other stakeholders is really important. So fiduciaries, fund managers,

company business treasuries, Bitcoin treasury co's, they definitely are all seeing the benefit it and they see that having it insured, having in very secure custody makes LPs feel better, makes investors feel better, makes regulators feel better. So that's definitely coming along on the individual side. I would say, especially at the mid and higher level policy size where people are really thinking about wrench attacks, it's definitely hitting home. So I think this wrench attack thing in the you know over the last six months has been really intense like really really intense they've been accelerating uh significantly they're happening in the first world um they're getting violent early so it used to be kidnappings in the first world anyway

for recent history for the last decade or so you know a kidnapping would happen a ransom situation would happen. And it would take some time to actually build to violence. But recently, over the last six months, they're going straight to violence. These are tactics that we're seeing more in like Central and South America, cartel kidnappings, where they would go straight to chopping off a finger, pulling out fingernails, things like that. And crypto, crypto wrench attacks are going that direction right now. So it's definitely on people's minds. And the other thing that's very interesting in terms of the reports is that if you look through the publicized reports, there's a lot more that happened that are not publicized. But if you look through the

publicized reports, you'll see that the size of attack is less than you would expect. The ones that make the news are like 10 million, 20 million, they're significant dollars. But if you look at the people who are actually attacked, it's like husband and wife kidnapped and held in their home been tortured for $268,000 or $300,000. A guy was murdered, I think in December for $58,000 of crypto. And so I think just having any amount and being public about it actually puts you at risk. And insurance really is the solution to that because you can have very clever key management and risk management concepts. You can have your passphrase, you can have decoy wallets, You can have multi-sig, but at the end of the day, if a gun gets pointed at your kid's

head, uh, generally, uh, you know, people, people hand it over. And so insurance serves a really important purpose. So it's, it's really the only, only backstop and even giving your keys to a custodian, uh, you know, even that does not solve a problem. So I've, I've talked to people who are like, look, I don't want the counterparty risk of a sole custodian. That's, you know, the antithesis to my owning of Bitcoin. However, I'm thinking about it because I just don't want that risk in my home. But the reality is, even if you don't hold your keys, wrench attacks are still are still a possibility because they can still just put the

gun to your head and tell you to make a withdrawal. So it's a new paradigm. And I don't I don't even think I've mentioned this to you. We actually just started selling K and R insurance. So kidnap and ransom insurance. We're able to sell that as of last week. We'll start marketing it soon. Um, but it's a different policy from our wrench attack policy, our custody policy. And, and so they, they actually covered different aspects of this risk. So our anchor watch custody policy. If you're a customer, if your Bitcoin is forced to be sent, so gun is to your head or my head or coin corners, any heads, right? If the guns are pointed and the Bitcoin moves as part of the theft, that is covered by our policy. So ours covers the loss of the asset itself,

whereas the K&R policy covers a whole bunch of things, a lengthy list of coverages that are all specific to a kidnapping situation. So it covers the ransom, which is different from losing the assets. So if instead of saying, send us your Bitcoin, if they said your family has to gather $5 million and send it to us in whatever currency, that would be covered by K&R. The most important thing, especially if you're a high profile person, if you are known to be, a Bitcoin holder, if you're public, if you're a company executive, the K&R policy covers the hostage negotiators. And so that is actually very expensive and very important. So if you didn't have coverage, your first call would be to 911, right? That my family member, my business partner

was kidnapped. And then if you wanted to bring in professional hostage negotiators, you'd be like Googling them and trying to vet them. And then they, once you had chosen one, then they want you to wire them a retainer for their services. And so then you're not quite sure if you're even, if they're good, if it's worth this money and if they're even honest, then are you wiring money? So it totally removes that because, uh, our K and R policy is also backed by Lloyd's of London. Uh, and, and so Lloyd's and these, these insurance syndicates have all the very best crisis response teams. So the hostage negotiators, they're all on retainer. And so as soon as a claim comes in, you've got that resource. It's working for you immediately. They're

coordinating with law enforcement. And so they're going to take over from there and resolve the situation. So it's the cost of that. But more importantly, it's just having that service. And then there's a whole, you know, it also covers medical expenses, income loss, like, you know if you need time to recover after that event mentally or physically uh it cover it you know if a murder happens it covers things you know regarding the recovery of the body things like that it's it's look it's pretty morbid stuff but we're gonna say we're getting morbid here i know it's it's pretty it's pretty heavy but it does actually provide all that coverage and so they're, they're good to go hand in hand, uh, alongside each other because they cover

the full aspect of the risk, but that, I mean, look, it is, it is hitting home for a lot of people because these attacks are very frequent now. Um, I think overall, I'm not trying to fear monger. I think overall, like, you know, this is still a low risk or a low frequency situation. It's still very unlikely, but it is accelerating significantly. And because of starting to sell K&R, we have additional visibility into attacks that don't make the press. And there's a lot, right? There's if you were a victim of one of these and it was resolved, right, whether it was

resolved with the person getting arrested and no money sent or it was resolved by a having been paid and you walked away safely. Either way, there's a lot of people that if that happened, you don't actually want it in the news, right? If you're able to keep it on the DL, you'll do so because it just invites more attention to you. So there's a significant number, you know, for everyone that's reported, there's a good handful that are not reported. so it's a real problem yeah and i think the publicly available data i last heard cited a couple weeks ago was that up until mid-june of this year there was 30 public sort of ransom or kidnapping attempts and attacks on individuals to give up their their bitcoin and

crypto yeah and last year it was 30 for the whole year for the whole year yeah and then on top of it then there's a whole month a whole bunch more that are not on that list at all as well and then i mean and those are only really the first world ones or the ones that made western media as well and then there's an entirely whole separate thing of uh small dollar attacks that are happening you know that happen in poor countries in asia and africa that those don't make the list at all but i think you know it's it is a real problem and this year in particular has been a big up to yeah the france uh yeah the france string was interesting because he had that guy in morocco who was essentially you know he was young too he's like 26 and he was uh contracting

out kidnappers and friends to go after all this wasn't very good at it but didn't get away with a ton uh at the end of it but yeah i mean he he wreaked a lot of havoc for sure yeah it's pretty crazy it's uh a bit morbid and uh unnerving to talk about but it's important to talk about it's important that people are aware of these risks and the fact that there are ways to protect yourself against them yeah or mitigate the risk and uh and we we try to do both right we're we're definitely trying to mitigate as much as we can, just by being our client in the way that the keys are distributed, it would be really challenging to steal your Bitcoin. If you're an anchor watch customer, you know, we have plenty of opportunities to slow down the process. We're a required signer,

even if there is a situation that we're aware of, we always have the opportunity to pull in law enforcement, uh, as soon as we're aware. So, you know, we can, we can help to mitigate, but you know, we have to protect it from the other side too. And the other side is if it's successful, then it's covered by the insurance. And in that way, if you're in that situation, you don't have to be trying to outsmart the people and try to outthink them. Like you really can just focus on keeping yourself safe and just understand that the Bitcoin, you know, it's not a risk of ruin. We've removed that particular risk. And so in that situation, you can simply focus on doing what you need to do to survive, survive that event.

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Go pick it up. And transitioning to less morbid, but just as important, I think, for your business. I mean, having been in the market now for as long as you guys have, i think one of the core theses of of your business and why we're proud to back you and excited to back you at 1031 is like the diversification that you guys bring uh alloys of london and reinsurers in terms of the quality of the premium revenue and more importantly the

uncorrelated nature of premium revenue? Yes. Is that been validating in your mind? Say, what was that question? Is that that's being validated? Oh, yeah. I mean, I think it's a really cool thing about how we are fitting into traditional insurance. So I mean, insurance is a capital market. So the reinsurers or the insurers, they have their pool of capital, their reserve capital, and they can allocate it to really whomever they want. So it's like, they have, there's a pie of insurance dollars that can be set against whatever risks they want. And so a certain large portion of that pie is property insurance. Within that property insurance, there's a little sliver called specie. Specie is kind of

small, weird things. So fine arts and expensive jewelry, things like that. So most of our coverage falls within specie. And then there's crime as well. That's also like internal crime. And that's part of property as well. And so when Lloyd's looks at us, we are a way to have access to a risk that is uncorrelated from the rest of the property bucket. So property is dominated by homeowners, especially in the last five to six years, homeowners is dominated by wildfires and hurricanes. And so you have these weather events or these fire events, and they can have major wipeout years. And hurricanes in particular have wreaked all sorts of havoc on the insurance industry. And so we can come in and we, while there are risks of physical disasters causing a

Bitcoin loss. It's very small, right? Because of the way keys are distributed and we're a required signer. So really we provide a completely uncorrelated pool of dollars that help them balance their own portfolios because they have their own risk appetite. They have their own KPIs. And so we come in and we're just this very nice kind of uncorrelated pool of money that comes in balances their own portfolio and we hope that because our custody is so secure uh you know we hope that we will continue to have low losses um and therefore the insurance industry will continue to see bitcoin as a good risk to insure and what that will mean over time is that over time the costs will come down and the dollars will get bigger because they'll say look we're willing

to open up a bigger sliver of pie for bitcoin insurance uh and that pie will get bigger the costs will go down a bit because you've proven to us that the custody is very safe and so we'll just continue getting more and more access to the capital markets that way yeah i think it's there's a good sort of parallel to a disconnection in the market that exists right now in bitcoin lending where if you do it in a way where you're not re-hypothecating, they're unchained. It's really led the way

in terms of their collaborative custody. Bitcoin and escrow sits in a multi-sig. You can audit it on chain. And just the nature of Bitcoin is collateral despite how it's custody should run with the assumption it's not re-hypothecated. Like it is literally the collateral's there

if you're the lender and you need to recoup your principal because the borrower is not paying it back bitcoin trades 24 7 365 sell get your principal back you're good uh very very little risk of losing your principal i think what you guys are doing on the insurance side it's like the same thing um if you can ensure uh that you mitigate the risk of loss to a very small surface area due to the nature of how you guys are leveraging mini scripts, when people are holding a policy with you, it's like, Oh, like, this is relatively low risk, like the cost of that capital should come down. That I that's definitely our thesis.

So we are already insuring private loans. So loans where an individual has negotiated a Bitcoin backed loans with their own bank. We and the bank agreed to do it, they negotiated terms on their own. But the bank stipulated that they wanted the collateral insured. And so they ended up using us for insured custody. And we were able to do kind of a side letter to their loan agreement. And so that's already in place today. And we do think over time, though, you know, if you have a loan with uninsured collateral versus a loan with insured collateral, we think it will be bring down the cost of the loan for the borrower, just because it gives a lot more peace of mind to the lender that, in fact, the collateral will stay safe. So we're going to be offering that within

our own platforms next year. So in 2026, you can borrow against your Bitcoin in our platform. But we're also talking to really the majority of the Bitcoin-backed loans in the space already. So we announced that we'll be insuring Arch Lending a couple of weeks ago. So that will be coming out shortly, as soon this year, talking to some of the other lending platforms. So I think this idea is catching on very, very well. And it's appealing to both borrowers and lenders. Nobody wants the collateral to disappear.

The benefit of the product disappears if you can't trust it. And then I think, you know, we always looked to the mortgage industry as an example. And, you know, so banks will let you highly lever the house itself, highly lever, but they do have that rule that you have to have insurance. You can't close on a mortgage without the asset being insured. If you don't have insurance even for a day, you can't close on the house. And so we just view, especially as banks come on, that they will, and I think they will, start doing Bitcoin-backed loans themselves. I mean, the broader TradFi banking, I think they will. But I do suspect they will actually stipulate that the collateral has to be insured.

That's a little different from the guidance that came out this week, too, which was a cool development, I think, for Bitcoiners. yeah and this is this is gonna sound weird to anybody listening to this but like this is what gets me going uh because there's i just hopped off of spaces earlier today and people are like oh like it doesn't seem like uh layer twos and all that are having that success that they should be like defy is not really materializing on top of bitcoin it's like listen stuff's all interesting cool like lightning's awesome it works but let's be real there's an order of operations to all this uh bitcoin's going to succeed number one more people need to adopt it uh and come to the realization that i should be receiving receiving this as

income or selling goods for it and so like there's going to be a a period of time between now and when that is sort of widely uh the way people use bitcoin um widely really before that like we've talked about this many times off air but like i think we've had many conversations about this with anchor watch and the 1031 team like the next order of operations is bitcoin as a collateral asset throughout the traditional financial system the bitcoinization of finance and a critical building block to enabling that and getting people comfortable with using bitcoin as a pristine collateral asset in traditional financial products is insurance and so like that's what i want to get through to anybody listening to this like talking about insurance

uh may seem boring at times may seem a little morbid at times but if we're talking about like fundamental building blocks for actually integrating bitcoin into the financial system this is like a this is like a table stakes needs to be there needs to be in the market and available to people and i mean it does make sense right like the idea of of using a high amount of leverage like right now like loans are very over collateralized even that's that's a temporary i think right i think that's a temporary reality of the development of using bitcoin as collateral i think the those collateralization rates will come down but insurance will help that I think, because again, like it, it's fair that a lender wants to feel confident, right? Like that's, that's a very reasonable, a reasonable basis to start this discussion. And so having the insurance there actually just, that is the way institutions gain confidence is, is it removes the risk of a, of a wipeout.

And I think, you know, the guidance this week from the FHFA that, you know, Pulte tweeted out the other day, you know, it's a step in that direction. It's that guidance was not about Bitcoin as collateral for a mortgage. It was about guidance on taking into account somebody's Bitcoin to determine if they are like their total assets and if they're a good. get the credit worthy yeah yeah yeah and so i mean i think it's a step in the right direction uh i think it's still up to individual banks and bank officers like i think it comes down to individuals uh how they actually put that bring that to life but it's certainly it's certainly promising and and like i said we've we've already done private loans where a bank officer was open to to viewing bitcoin as collateral itself uh and we were able to help

help out with that and make that happen for those customers who otherwise you know just would not have been able to get that deal done and and by doing it they're getting better rates than you know some of the some of the companies that are operating in the space specializing it like if they had a really long-term relationship with their bank they're getting good rates as long as the insurance is in place yeah it makes sense like and it's great to see that there are individual bank officers out there willing to understand this and be like okay yeah this makes a lot of sense and i mean to that point like going back to the ltv too like the ltv i think it serves two purposes one for the lender or the liquidity provider that's giving the cash to the

lender like this is a bit foreign to us like we need to have some assurances about like we want it over collateralized right their benefit and then the borrower's benefit to considering the historical price volatility of bitcoin up to this point like i think people may not like it you need to put up two dollars of bitcoin to to get a dollar and a loan back but i think considering yeah the price volatility historically like that is a good buffer and like it's just like sort of guardrails for borrowers to make sure you don't get blown out totally totally and yeah i think it seems like on the borrower side they're they're more than willing to do it right now and you know we'll see what happens with price action too like i don't know where you are on on four-year cycles

versus are you a cycle guy or i'm getting yelled at for for even mentioning the potential for a super cycle so i'm not going to say it okay are you a super cycle guy i make fun of super cycles yeah i'm becoming more convinced so like it's just going to be a boring grind up into the right So that's I mean, that seems to be the sentiment at the moment. I've always been pretty hardcore on like you follow the pattern until the pattern breaks. And right now we're still on a four year, four year pattern. But I will say, if we do transition to the slow grind up, I think it actually, it does ease the transition into TradFi, because it means that they can start modeling Bitcoin in a more predictable manner. And so things like LTV, or the rates, you know, looking at how they view collateral, looking at it in terms of your overall financial health. If TradFi can actually say, look, you have this much Bitcoin, and sure, there's some volatility, but we can trust that if you have this amount of Bitcoin, a year from now, you'll still have this amount of Bitcoin, or maybe it's going to be worth more. that's easier for them to stomach to understand to model uh you know at the aggregate for their own financial models than something that's having 80 percent drawdowns um so i mean i

we'll we'll see what actually happens but if it does transition to a slow grind up i actually think it it enables faster transition of integration into financial products and then that slow grind turns into a hyper bitcoinization real quick when it's like oh why are we gonna but i mean ganda i mean going back like going back to like building blocks and table stakes for this to be enabled again like i think what you're building is critical to that with you and the team at anchor watch are building and then like we were in dc last week we're talking with andrew hones like if you think of like what they're doing at battery like if we i don't know if it's this cycle next cycle a couple cycles from now but you can squint and see if the traditional financial

system obviously andrew and the team at new market who spun out battery they're coming from the traditional financial system they're pretty comfortable very comfortable with bitcoin as collateral with that that like we're going back to like cycle theory discussions about what's happening like if that takes hold reaches a critical mass like you're taking bitcoin off the market and holding it off for long durations and that's where you can get a liquidity profile and volatility profile that it makes sense for all this stuff yeah battery i mean battery and and what andrew is built there and the team is one of my favorite it really is it's i i met them really when they were first launching which was right around the same time

we were launching as well and so both our companies have kind of grown and uh been working through kind of this hybrid Bitcoin TradFi world. And so we end up at the same events and speaking to the same people. So I've had the opportunity to watch them develop as we've grown as well. And I just, I'm a huge fan. I think it's a really clever, it's very simple, right? Like it's a very simple blend of Bitcoin and a traditional investable asset class, but it's one that benefits the individual or the business taking the loan. And obviously, the idea is that it will provide good returns both to them and to Battery themselves. And I just think it's a very approachable way to pull capital in, get long-term holders in a very approachable way that you don't

have to be a maxi to understand the model and to be willing to take a step into Bitcoin adoption. Um, I'm, yeah, I think it's, I think it's great. And so again, going to the price action and does that model work better on a, uh, a four year cycle or a slow grind up? And I think on, on that product in particular, I think it works either way. Um, you know, either way they can manage that product that benefits the borrower, uh, in either scenario. It's cool.

Yeah. You just extend your duration as long as possible. Capture. Totally. stay in cycles capture multiple cycles but i mean to that point of um hitting the road and bumping elbows with the battery team at events that maybe don't cater exactly to bitcoiners what is your perception on the sort of acceptability as bitcoin broadly and in the tradfi world as you've been i think it is changing rapidly to our benefit as bitcoiners um you know

I think the initial kind of steps into TradFi were almost the degen side of TradFi initially, um, over the last few years. So it was like the more aggressive hedge funds managers, right. Would, would have exposure, but now it really is. It's becoming more conservative. Um, you know, bond, obvious, obviously bond traders, uh, are getting involved who were traditionally a a more conservative investment class pensions but just talking to wealth managers they're all

their clients have bitcoin it was always kind of set aside uh just like as the part of their clients portfolios that they didn't actually touch or speak to and now they're educating themselves. Um, they're not resistant. Uh, they're curious. Um, they're making plays. They're advocating to their own leadership to allow themselves to like interact with their clients about it. So I think it's actually changing really quickly. Uh, like really quickly, like in, in this year alone, it's, I feel like it's different now than it was at the beginning of the year yeah well on the perception of tradified change like that's one thing i think a lot of bitcoiners have top of mind particularly in the last year or two whether it's strategy the

etfs the emergence of the treasury company in public markets that has been becoming a fervor and you could see it turn into a mania as we as we head towards the end of the year all these guys are cussing with a single point of failure sort of uh yeah custody solutions like coinbase fidelity whatever it may be i mean this is your pinned tweet about like uh make sure you know like that you're insured make sure you understand what that actually means we've talked about this before in the context of other exchanges that will market that your coins are insured if you're holding them if you're custodying with them but it's really just a small minority it's effectively uninsured yeah and that's a pet peeve of mine obviously that's like they're like to what we're

saying earlier like you could imagine a scenario like drawing on the analog of mortgages where if you're going to begin to integrate this into the trad fi system like the insurance is demanded by some of their stakeholders within some of these agreements and like could it actually be a forcing function to drive these larger institutions to more optimal custody setups like anchor watch i think so so historically insurance just wasn't available or it wasn't cost effective if if it was available and now it is i think there's anchor watch has kind of one hurdle to get past to really become a viable option for a lot of companies. And that's that we're becoming a qualified custodian. So we talked to lots of publicly traded companies

and fiduciaries. And they're like, I like the custody model a lot. It makes sense. We need the insurance. I need that for sure. But are you a QC? And we were not. So we are in the middle of that process and we will become a qualified custodian this fall. And then at that point, I think what we will see is that we become the anchor watch is

actually one of the top options for these Bitcoin treasury co's. The companies themselves, the leaders of them, they understand the risks of putting out a honeypot at an uninsured custodian sole custodian but they still do need to check the boxes uh the insurance is a way to set them apart it helps them raise money uh because again it makes the investors feel confident that it's safe um and it just gets away from you know this and look one one inside bad actor you know what what i fear is that a bad actor will have gotten a job at a a large custodian, and will spend years infiltrating their systems in to plan a large heist. And if you read the fine print on the ETFs, you know, even the ETFs, in their prospectus,

they say that this is uninsured. And effectively, if the if the principal is lost, there's no recourse, right? That's not ideal, right? So yeah, we view this and ourselves as actually the responsible alternative. And what we think will happen is once we have QC under our belt, I think what we'll see is something of fiduciary flight, where if you're a fiduciary and you're responsible, how can you pay, you know, bips for uninsured custody versus maybe slightly more, not even a large amount more, but just slightly more for insured custody. If you're a fiduciary responsible for your client's funds, it just doesn't make sense. And in fact, paying significant bips for uninsured custody, even that you have questions on, right? Because there is certainly

a cost to maintaining a very secure system. So I'm not saying it should be free. It can't be. Like this is an expensive thing to maintain security at that level. But once you have hit a certain infrastructure standpoint in terms of your costs, then at that point, storing private keys is is a low lift activity. It's a tiny piece of data, right, that you can store all the world's Bitcoin on Google, Google Drive or AWS for like 20 bucks a year. So it's not about size of the data. It's about security. And at some point, paying BIPs just for the security of the platform, I think the market will push back on that to a certain extent. but paying for insurance, insurance, you're actually securing the collateral. So that's why it is BIPs is because the more insurance you want, the more collateral that needs to sit and reserve they're ready to cover financial obligations. And so you're actually accessing the capital market

with when you buy insurance, and you're you're purchasing that promise that guarantee of being you're fail safe yeah that risk transfer and to your point earlier like who's to say that having the insurance doesn't unlock some level of capital on the other side you do the cost benefit analysis of like it's worth the bips because you're going to make x amount of money on the back yeah i think so yeah it seems like it could be a big market it does seem like it's going to be a big market we we're excited about it in fact so it's been it's been a fun it's been a fun year for us because a lot of things are happening that are the premises for why we built anchor watch right so we are getting the enjoyment right now of of it's the satisfaction of having skated to where the

puck was headed um and that feels it feels really good it feels like all the work that we had done I mean, even before launch, right, we were so heads down and building towards this vision of what we thought would be happening in two to five years. And here we are a couple of years later, and it's starting to happen. It's awesome. It's like, it's just kind of things that we predicted and not us alone, but things that we felt strongly enough that it was worth leaving our careers and building a company for, you know, they're starting to happen. And I think it's going to keep happening and uh we're gonna crush it's gonna be awesome no it's it's been completely gratifying to watch as you've been building us out over the course of the last three four years and uh what uh what

people often worry about is like like you have two like when you build for this moment yeah there's like two outcomes like the dog that finally caught the car or like you built for this outcome so that you could sprint and it's been fun i think you guys are squarely in the latter sort of outcome which is like is it's not like you caught the car it's like what do we do it's like no we've been waiting for this like let's go and run yeah and i mean yeah at this point it's like the car the car is getting the speed and we're we're right alongside it right now and uh it's it's gonna get insane and uh you know we're ready for it we're ready for it like we were just off calls with Lloyd's this morning um getting extra capacity uh and I think you know just little anchor watch

startup anchor watch we're gonna double the amount of insurance capacity that's available to this industry you know in a year that's that's crazy yeah that's crazy like we and we did that through tech by the way right like through really educating them on how we can uh diversify risk like we talked about earlier, but also diversify the risk of key management as well. And by giving them that confidence that, hey, we can actually limit your losses meaningfully at the aggregate by the way that we do key management, you know, was the difference that made them unlock a huge pool of capital that previously wasn't available. Yeah. And what can anybody who's listening to this? How do you think they should take action? Um, what do you guys need right now? What would

your message be to anybody listening to this? Yeah. I mean, look, I think we covered on a bunch of stuff, right? So I think if you're an individual, um, and any of the earlier part of the conversation, whether it was kind of protecting yourself or from wrench attacks or inheritance, you know, we're happy to, uh, bring you on as a customer. You can reach out to me Becca at anchor watch, or you can sign up for a calendar event directly from our website at anchor watch.com. And we'll get you squared away. And if you're an institutional customer, if you're one of these larger players, and you're trying to look down the road at your options, if you're diversifying custody, if you're trying to understand your custody options,

your insurance options, I can also write custom policies. So if you're a large, if you're a large player. And what I've described isn't exactly the insurance that you're looking for. And you're looking for some other level of insurance coverage on your Bitcoin, or the custody of your Bitcoin, you know, let me know. And, and for the right size clients, we can do that directly with Lloyd. So we can get you a custom Lloyd's policy that's really oriented to your exact business. And we're always happy to talk to those people too so just get in touch i want to stress i'm trying to figure out like it's not boring to becca and i i'm sure sure insurance is a boring to many of you but i i it cannot be overstated how important something like this is to unlock the wave of capital that gets

comfortable with bitcoin that many have been talking about it's like a literal critical piece of infrastructure that enables all this so i just want to thank you rob the team at anchor watch for putting in the time it's been a grind and like you said you've been building for this moment the moment is coming and uh i just couldn't be happier for you guys considering watching you guys do this over the last two years and yeah um i know you're going through a bit of a personal battle right now and i think it would be remiss of me not to mention just how impressive you are individually um thank you do all this with what you're going through uh and doing a class and strength that that uh i only wish i had so well well i'm at the i'm at the very beginning of it

So, uh, I'm sure I will have my days here as we go into later in the summer and the fall where things are going to get a lot, a lot tougher. Um, but I, today I feel good today. I feel strong. Um, you know, Hey, this is one of my last podcasts where I still have the hair. That's, uh, that's going soon. And that's going a week from Friday is when that that will happen. So I'll have my all of my moments for sure.

But the support of you and, you know, the 1031 team and just the Bitcoin community has been very transformational for me, really. And having having Anchor Watch, the team is so good. They're so strong that there's there's really no impact to the business right now. And that will continue. And so that gives me a lot of strength and having the opportunity to, at times, you know, just be focused on work is wonderful. I love Anchor Watch and I love what I think, like what you said, I think we built it for a reason. I think it's going to improve adoption. I think it brings more adoption and liquidity to Bitcoin and the opportunity, despite all this stuff going on, to take a few hours and just focus on that is it's a good escape from it all. And I'm grateful to have it. Well, we're all grateful for you and what you're building, Becca.

This has been incredible. Thank you. hey it's scary to think about inheritance insurance wrench attacks but you got to think about it if you're out there i can tell you corporation you got to think about it so go hit up becca and the team at anchor watch start thinking about it if you haven't already and um we'll catch up there's plenty that's going to happen between now the end of the year yeah next time uh next time we talk about how we uh we turn on the bitcoin yield flywheel using insurance let's get really exciting that's going to be that's going to be a big one you know that

the question is uh very controversial in the space where does the yield come from well but i can tell you i can tell you right where it comes from it comes from insurance premiums so yes yeah let's let's do that one next time uh i would love to dive into that topic sometime soon it is it is literally the only thing that makes sense in terms of bitcoin yield to me right now but we'll die we'll do a deep dive all right we'll jump into that one thanks for having me all right peace love freaks freaks thank you for listening to the show i hope you liked it if you did like it please make sure you subscribe rate review the show it helps us out a lot and also if you like these conversations i've come to realize that many people listen to the podcast they don't know we

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