The Derivative - Crypto & Bitcoin Lending with Tom Anderson of Drawbridge Lending

Episode Date: March 12, 2020

A little different than our usual “hedge fund strategy manager” we chat with Tom Anderson – journalist turned trader turned broker turned entrepreneur – who is now President and Chairman of the Board at DrawBridge Lending; a Chicago fintech company focused on lending in the digital asset space. We’ll be talking about loans against crypto and Bitcoin – covering both sides of the (proverbial) coin with lender and investor needs – risk-based financing, “tape recorder Tom”, why having more kids increases your opportunities to live in Australia, crypto term definitions (cold storage, hot walls, custodians,…), and how to access the Bitcoin and crypto space. DrawBridge Lending is a digital asset management company coordinating USD loans on a blockchain, and protecting borrower assets and lender capital using a third-party, qualified and insured custodians, and advanced risk management strategies [video explainer here]. Touted the “next evolution for lending”, DrawBridge is a entrepreneur in the crypto/Bitcoin lending space with low risk and easy access, designed to avoid the hassle of margin calls, hidden fees, and high rates. Episode Links DrawBridge Lending Website DrawBridge Twitter DrawBridge Facebook DrawBridge LinkedIn Tom Anderson LinkedIn And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk

of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. I believe we're coming to a more normalized return flow. The idea where people say, oh, I would never sell a call because it's going to go to $300,000 in the next week. I think that's kind of like become a very small minority.

I do believe that there's still long-term holders, you know, these maximalists that believe it's going to go on forever. Hey, I hope it does. But the fact of the matter is right now, the liquidity in the marketplace can only do one to six month loans. All right. Thanks for joining us on The Derivative by RCM Alternatives. I'm your host, Jeff Malek, and our guest today is the larger-than-life,

gregarious, low-post presence, Tom Anderson. Welcome, Tom. Thanks, Jeff. So we have something a little different than our normal hedge fund manager folks on here today. Tom is the president and chairman of the board at Drawbridge Lending, a Chicago fintech startup focused on lending in the digital asset space. We're talking loans against investors' crypto and Bitcoin holdings, which seemed like the realm of fantasy not so long ago, but meeting a real investor need these days, both in terms of the crypto holders and the lending sources in search of higher yields. So a lot to unpack, and we're excited to get started. Welcome, Tom, again.

Thanks, Jeff. Pleasure to be here. Great. So, Tom, before we get into Drawbridge and what you're doing in the crypto space, you actually made your mark in Chicago in the future space where you've been at it for 37 years. Yeah, actually, I think that's a miscount because I was looking back and counting the years. And as of now, January of this year, it was 39 years. 39? Yes, so next year will be 40. You started when you were three.

Exactly. Right? Yes. So give us a little of that background. How did you get started? Where were you in the pits, in the brokerage? Sure. So in college, I had a study program, a BS in speech communication with a specialty in public relations,

and he had to have a journalism minor. And I had room for another minor, and I said, wow, you know what would be really cool? Maybe I should take economics. Maybe that'll help me get a job at the Board of Trade, which I knew nothing about at that point in time. And so... And especially that an economics degree probably wouldn't help you. Right, exactly. So I did complete it and graduated in December of 80. And my first job interview was at the Board of Trade, actually working for the exchange as a journalist. And what I did was I walked around the floors back then,

if you can imagine floors, and talked to interesting people that were involved in the markets about what was happening and what was driving the markets, what was driving prices, and wrote stories on it. And I tape recorded five stories a day, similar to what we're doing right now, and delivered them to the membership. So members could call in and they could listen to the stories in the markets. I became known kind of as the voice of the exchange. And that's where I met a lot of people that my interest really peaked in the financial markets and the agricultural markets. Tape recorder Tom. Tape recorder Tom.

You got it. And real quick, what college was it? Southern Illinois University. The Saluki. The Saluki, yes. Very good-looking dog, yeah. I don't know. Isn't it an African dog?

It's an Egyptian racing dog. Egyptian, yeah. It's like a greyhound with long hair. It makes sense for Southern Illinois to have that mascot. Exactly. So you're working for the exchange. Then how did you move into the trading side? So in April of 1992, they had decided they were going to expand their treasury debt offering,

and they opened up 10-year notes. So considering that was, you know, one year in the business and I wrote stories and I knew everything about the markets, you know, why wouldn't I be a good trader? So I went and I bought a permit at that point in time. It was a black badge and they charge five grand a year to be able to trade 10-year notes. And so I put up, I think, $5,000 with a friend of mine, Fred Brzozowski at Chicago Grain. He let me trade down on the floor, and I quickly went through that. And so myself and a friend of mine were doing the same thing.

Fred basically put the gabosh on our trading, put us together as brokers, and said, hey, you two guys, one of you got the gift of gab, the other one has half a brain for business. Why don't you guys do something and start bringing me clients, make some money that way. And that's really kind of how I got in the brokerage business. So we started doing that in 1982. That's when the S&P market opened up also in 1982. I happened to get a pretty big account at that point in time that really kind of, again, created a lot more interest and driving force within myself and our team about building a business. And so the S&P market and the Treasury market became a big target market for us as far as growth. And I worked for Ed and Bill O'Connor in the old days for 10 years, moved on to Daiwa, moved on to what we'll call old ABN, carried a big book

of business throughout all those 20 years and operating my own kind of show. Talk for a minute. So brokerage kind of has a negative connotation to some, but what were you, what was brokerage in terms of the floor operations and all of that? What were you doing for the customers? So, you know, back then a guy or a client that was an active trader, what the big thing then was selling your position on the floor. So as an off floor broker, what I did was I had guys, you know, they didn't work exclusively for me, but they were part of the team. They would answer the phones directly and we could quote markets to clients and clients would get some flavor from, you know, what was going on, some color in the marketplace. You know, we could execute trades quickly and then we would balance

the trades, make sure they clear it appropriately. And kind of, we did a full service thing from execution, handholding, balancing, making sure their statements were good. And that's how we grew our business. But it was all this kind of like, hey, I got a 500 S&P futures to buy. That's correct. Exactly right. You don't want to just put that in as a market order. Let me call around. Let me see where we can get it done. Correct. In fact, I'll tell you a funny story. I've lived through a couple of crashes, both minis and bigs, but in 87, the big crash was a little bit wild because we had big positions on for big clients. And right before the crash in 1987, I'll never forget, we had a, who turned out to be a dear friend of mine, a client at the time, was a big trader.

And he was also a Texan. And he called me up one day and he goes, I'll do it in my best imitation. He goes, Tom, how much will the government let me buy in those OEX options? And by some odd chance, I knew the answer. And I said, well, you can buy 10,000 in the front month and 15,000 in the second month. And, you know, that's your position limit, you know, that the government will let you buy. And he goes, all right, buy me 10,180 calls, click. And I was like, wait a second, that's a big order.

So that's the kind of guys that we dealt with. This was during the crash? No, this was before the crash. Before the crash. Yeah. And during the crash, it was the same guys that made me markets for two years on trading big size like that folded their arms. So I learned a lot about those who you can rely on. Smart of them. So they were relatively unscathed.

Well, I'm not quite sure they were unscathed or not. I know some people that were scathed, and so some of our clients being one of them. But that was the old days of being able to actually work within the boundaries of trading on the floor and interacting with people on the phone, with guys in the pit, learning that whole marketplace. And, you know, how it's evolved to where it is today, it's just so night and day. But, you know, less volume, higher prices, greater volume, lower prices. It's all just a matter of economics. And today it's become more electronic, screen-based, API-based, execution algo-based.

But you've moved into that area. Yeah, we moved into that area in the early 2000s when I was at, we'll call it old ABN. We started building a big division for proprietary traders that were connecting to the matching engines that understood about electronic trading. And that business grew and grew and grew. I left ABN. They basically sold the business to UBS in 06. I didn't want to go into the big bank. I ended up going to Fortis, which ultimately got absorbed by ABN during Fortis' bankruptcy by buying ABN. I mean, what a crazy story that was. But at that point in time, this was in 07, Fortis had bought O'Connor Company, again, a place that I worked at in the 80s. And the decision was, hey, do we raise assets like a, at that point in time, FEMA and deal with

hedge funds? Or do we go after and continuously go after guys that want to connect as members and trade algorithmically? And so the decision was made to do that. And what we began doing back then was offering really aggressive pricing for firms that would connect and trade through ABN slash Fortis. And our business grew in both futures, equities, and options. We created a pricing model to where for the eight years I was there until 2015, nobody ever came back and said, hey, Tom, can you give me a better deal? They had a good deal, and that deal allowed them to grow. We extended a lot of credit to them. We created a product called Risk-Based Margin Financing,

back in old ABN that really blossomed at new ABN, which allowed financing positions in between exchanges on relative value. CME and ICE volume actually, and this is no kidding, exploded because of it, because of the 10 clients that were using it. The ARB that went between exchanges was incredible. And these, without name and names, or you're welcome to if you want to, but these are the biggest trading firms in the world. Biggest in the world, yeah. We're talking their prop firms means they're trading their own money, proprietary money. And they had their, whether it's individual traders that they give a risk budget to or algorithmic models are just churning out trades. Like what are we talking?

Hundreds of thousands of contracts? Well, it depends. I mean, you know, we had some clients who consistently traded a million contracts a day. Yeah. I mean, it's, you know, one client. Right. So, and there was busy times where some of these guys would put up numbers that were just astronomical that almost broke the systems, the clearing systems.

So big, big numbers. And low prices, but that was very competitive back at that point in time. And the risk-based margin financing, a little teaser into what you're into today, but that was, if I'm long Brent crude and I'm short WTI crude, I have to post the margin twice when in effect I'm netted out. That's right. So that was that concept? Yeah, that was the concept. So what would happen without that financing is, you know, you've got capital constraints, even as these proprietary firms, because there's money all around the globe by this point in time, They're trading in every country at every exchange. So what risk-based margin financing allowed them to

do was not offset by the close. So if you looked in the old days, crude oil, both at Brent and NYMEX at that point in time, the last three minutes of the day were just the ticks were incredible because people were just liquidating all the trades that they had on and spreads. They didn't want to post margin. They didn't want to post margin. So this allowed guys to actually take a basis position overnight cheaply. And then it was great for ABN because what we basically saw was both sides of a trade. So we could risk monitor both sides of a trade and extend leverage based on that risk monitoring. And it really was a very effective program. When

I left, I mean, I don't know how big it is right now. I would assume it's bigger than what it was. I think we had almost a billion dollars in extended credit. Not always used, but a good chunk of it was. And those firms, it's not because they don't have the money. It's because they have better uses for the money. That's absolutely correct. Right. A proprietary trading firm will always rather borrow money at some rate because they know they can make more money. Deploying their capital and trading strategies could return 50%. So if I borrow money at 3% or 4%, that's a giant win. Got it. So pivot a little bit.

So throughout all that, you managed to get quite a few kids in there? Yeah, I did. Yeah. So from the early days of, you know, being a reporter on the floor up until 17 years ago when it stopped, there was eight kids that were produced. Eight kids? Yeah. So my children are ages. The oldest will be 40 this year, and the youngest will be 18 this year.

Wow, and you just got back from Australia visiting a couple of them? Yes, I've got two that live over there. One works in a resort. She's 19, and she's traveling the world and finding herself and having a great time. And then I've got a son who's also got a child over there that lives outside of Melbourne. And he's been over there. He's actually an Australian citizen now.

Wow. That's the best reasoning I've ever heard for having a lot of kids, that the odds of a few of them ending up in Australia are much higher. Right. But I will tell you, the flyback from Australia is nothing that I want to have. It's not good. Our plane ride to just Vancouver alone from Melbourne was 15 and a half hours and then four more to get home. It was brutal.

The secret, when I went over there, my wife, her dowry was like millions of American Airlines miles. So we figured out you did one round-trip flight, but there was not direct. So the stop-off was in Maui for a week. Well, that's not bad. And then on the way back, the layover was in Tahiti for a week. Oh. But it was all one flight. You've got to break it up.

I'm going to remember that next time. Right. So throughout all that, what do you think was one of your favorite positions and all that, or it all kind of blends together or what was, what was the most fun you had throughout all that? Well, you know, I will tell you the most fun I had was in the eighties. I mean, it was really, it was just watching markets explode and grow and, and the interest that came in and in comparison to where we are now. I mean, literally, I remember talking to,

you know, investor groups that had large clients that would say in the 80s and 90s, oh my God, we would never trade those futures. We don't want to have pork bellies delivered on our lawn, you know, in a big boardroom and everybody would chuckle. Right. People still say that. Now it's kind of like, well, not really. Now it's kind of like if you're not hedging and you're not using futures, you're doing something wrong. So the evolution of this business has been incredible. The exchanges that have gone from member-owned to demutualized, that has been unbelievable in itself.

And quite honestly, the monopolies that have formed out of that. But the products that are offered are incredible products. And people need them. And taking credit risk out of the market and putting it into a clearinghouse through a great regulated exchange like CME or ICE or Eurex in Europe or some of the far eastern exchanges, it's phenomenal. It's brought a whole new level of safety to investing. I would guess that the people who were around and doing stuff in the 80s,

and if you ask them the same question, they're probably 80% would say, yeah, my best times were in the 80s. Yeah, probably. You know, there's also a very disturbing part of the 80s too, is that, you know, there were so many people that I know that were very successful traders on the floor, making a lot of money, homes here, homes there, fancy cars, you know, big dinners, you know, living the real high life that literally in the course of the last five years, I've run into so many of these guys and I see them walking and they come up and they're like, hey, Tom, how are you? I'm like, hey, great. What's going on? And, you know, you expect to hear some great story and you hear just the opposite. You hear like, hey, do you have any work? I mean, anything. I'll do anything right now. And so what happened was as these exchanges demutualized and a lot of

these guys that used to trade on the floor who thought they were great traders, but technically they were just guys that really understood how to grab edge for a tick or two, thought they could take it up to the electronic world, and couldn't. And so their whole fortunes and their lives in trading just kind of dissipated away. And so that's kind of like the sad side of what I've seen from the robust years, the fun years of the 80s and 90s to where it's at right now. I haven't seen too much of that left, but that is the one sad story. The positive story is that in between the electronic world in the 80s was this 90s switchover. And, you know, we had a lot of big events when you look back at it.

Like if you look back at long-term capital and the amount of money that was involved in that is so minuscule to what goes on today. Yeah, that was going to take down the whole system. It was going to take down the whole system. And you look at the numbers and you're like I don't get it right you know relative to today's numbers so there there is a largesse that goes on in our marketplaces that is just absolutely incredible and built with the liquidity that surrounds it it makes these markets just they're so efficient it's it unbelievable. So talk quick, then we'll get onto the actual into drawbridge. But I'm just curious what you're painting a picture for people of like what the

trading floor was actually like back then. Yeah, well, I can tell you the first day that I walked on it. And I work for a wonderful lady, Leslie Villarosa, in the market information department. She's all right, Anderson, let's go. We'll, We'll give you a tour of the floor. And I walked down there and I walked on and people were screaming and yelling and elbowing one another and taking paper and throwing it over their shoulder. And guys were running and picking it up. And I'm like, what is this? And how does this work? And she goes, it does. I go, I can't believe it, but it does work. And it did work. And there's a check and balance that happened down on the floor that was incredible. It was a game of honor. And those who played by the game of honor survived, got trades, did well.

And those who stood in the way of honor and tried to short stride, short step, cheat, whatever you want to call it. The guys had either failed or moved on to the Merc at that point in time. So it was always, you know, the Board of Trade, the bad guys always went over to the Merc, right? And then the feds came calling over there. Right. So there was this like natural evolution between Board of Trade and CME and all this.

But, you know, now it's one big happy family. It's just amazing. So the chaos that actually did happen in the floor in the old days was unbelievable. In fact, I remember the time at the Board of Trade when the bond market traded 100,000 contracts. You would have thought that there was a volcano on LaSalle Street. People were running around. They traded 100,000 contracts. Now, nobody knew until the next day because at the Board of Trade, they didn't release volume and open interest until the next day.

But they guessed that it traded 100,000, which it did. And people were just like, oh my God, this is incredible. And it never really looked back. So it's the camaraderie from the floor to where it is upstairs today is so different because there's people that are upstairs today that don't know what a trade is. It's computer programming, it's placement of an order inside a matching engine, it's speed of execution, it's speed of cancel, and it's programming. So there's kids that are 22, 23, 24 years old, like when I started in the business, not 13, that really don't understand trading. They don't really get it, but they do understand how to get an order in and out of the market and how to capture an edge.

So it's like there's this whole metamorphosis from the caterpillar to the butterfly. Yeah. What I always tell people is the thing that would shock you if you went back in the time capsule is that amount of paper. There's like two inches of paper on the ground at the end of every day. Yep. Paper flying everywhere. Everywhere. amount of paper there's like two inches of paper on the ground at the end of every day yep paper flying everywhere everywhere and stuff you know out of guys pockets you know stuffed all over the place it's like all the stop orders right and you would come in there you'd be like this needs to be

digitized this is insane right in today's world you'd be like what is happening here it's crazy now i always remembered something when i worked for ed o'connor he always said everything reverts to the norm you know and i don't know if he meant an option price or whether he meant the business. So I always wonder whether or not there's a catastrophe waiting in the electronic world and that somebody will try to reinvent the idea that the floor is and always was the best place to actually have price discovery. So I don't think I'll ever see that in my lifetime. But the fact of the matter is it's something I always think about.

My bet would be it wouldn't be because of some electronic failure, but some movement of like, hey, we do get better price discovery when we're face-to-face. Right. Or, you know, we're not getting gamed by the algos or something like that. Right. And so I have to ask, while we're off topic here a little is we have a mutual friend that you used to play basketball with and you travel around to different cities play for the club what was going on there so uni league club yeah so i've been a member over there since 1992 and they gotta name a room after you or something oh yeah they might that's called the fourth floor

yeah anyway so they had a um uh there was a lot of good ball that was played over there like you know at noontime and afterwards and a lot of good ball players and so the union league club is part of a network of clubs around the United States and actually around the world, but back then specifically the U.S., they had a national basketball tournament. All the clubs got together. So the first time that we actually seeded a team was in 1995. We won the national championship. That was out in the championship. The tournament was held out in Los Angeles.

We ended up winning that tournament, and then we also did it the following year in 1996. And then one other year, I think they actually popped a pretty good team that went out there and won a division. But outside of there, I think the average loss every year has been about 35 points. I mean, now you've got guys that are showing up in silk warm-up jerseys and pants, ex-pro ballplayers. So it's morphed again into somebody else has got a better league going on than we ever did. Yeah, it just blows my mind that these grown men are traveling around to different cities playing pickup basketball, basically.

Oh, no, it was very organized. I mean, there were great tournaments and everything, but pickup basketball over at the Union League Club is down. Yeah, Obama's been known to get in there, I think, there were great tournaments and everything, but pick up basketball over at the Union League Club is down. Yeah, Obama's been known to get in there, I think, right? I don't know if he has. I never played with him, but he might have. So somewhere in all this stuff, you got into crypto? Yep.

So on a personal basis, what happened first? You started looking at it? You started buying some coins or what happened? No, I never, you know, again, back to my days of trading in 1982, there's still a memory that every time I want to make a trade, something taps me on the back of the head and says, don't do it. You're terrible. So I never got in it from the trade side. The real story is I had a good friend of mine who was very involved

with the firm where he was being a consultant to them and helping them kind of in a legal and business capacity help them. But what he couldn't get across to them was, my God, you guys have just created a giant balance sheet in your life. And you have no idea about what the markets are all about. This could crumble tomorrow. And he tried to get in their mind that they should think of some ways to hedge, to reduce their exposure, to do whatever it is. And they just never listened to him. So he called me up in October of 17 and said, hey, listen, will you do me a favor?

Will you come out here? The firm was out in Denver. Will you come out here and help me talk some sense to these young kids? They bought coin like 13, 13 12 13 14 and suddenly now with this run-up that was going on you know they got a couple hundred million dollar balance sheet and you know they're like hey kind of reminiscent of the 80s in the bond pit and the firm is like they had created some sort of prop firm or they were no what they had created was a lending business no no but the firm oh the one that was out there was already doing that oh yeah so they created a lending business. No, no, no. But the firm, oh, the one that was out there was already doing that. Oh yeah. So they created a lending business. I ultimately went out there.

I went out there in December and visited with him. I talked to the owners and something struck me right there. Number one is I really liked their model because I think any market grows from leverage and leverage done in lending is the way to do it. Just like a stock loan business, you know, where you're, you're capable of transferring assets around at a price to one another, and that helps create value in the marketplace. So leverage by lending is a very important thing in a real market. I like that concept. It wasn't a trading business. I like what they were doing, and I saw a lot of things that I would do differently. So at that point in time, I came back, I talked to a couple of my partners who were also in positions in their life where they wanted a change of landscape, all doing

something different. Ran into another friend of mine who turned out, he says, hey, I want to get in the crypto space. So by the spring of 2018, we had formed our own business with a core product around lending. And lending, you know, fiat against secured crypto, namely Bitcoin, held in custody. And that absorbed that Colorado business? No, that Colorado business, I think, still exists. Just kept doing what they were doing. Yeah, but there was pitfalls to what they did, and those pitfalls came out. Number one is, and these are things that we learned that we kind of transposed into our business,

is we never wanted to touch technology, nor did we want to hold anybody's coin. Number one, the technology side is somebody will do something faster, quicker, better two months down the road. And number two is I don't want to have insurance risk by taking coin and saying that I'm holding it myself. There's custody solutions that are out there that I would rather pay that are state-registered, trust companies, qualified custodians.

Put your coin in there. It's safe. They've got systems. Life is good. It's a cost. Yeah, it's a cost, but it's not that big of a cost when there's a lot of edge in other areas. So that was a big thing that we came away from.

We wanted to use a custodian that held the coin as collateral, right? Secondly is in the retail space, they were using a margin model. So effectively, if your asset declined in value and you had a 50 loan-to-value loan out and the asset declined and it became a 60 LTV, you had a true up. So I'd either sell coin, I'd send more money in, or send more coin in. So every time the market went down, you had a business that revolved around calling people for margin. And the third thing, though, real quick, was they were recourse loans. So in other words, if I took a loan out for somebody and Bitcoin went

to zero and I had a $200,000 loan, hey, sorry, my collateral's lost. Bye-bye. No, no, no, no. I'm going to come and get that $200,000 from you. So these are three things that we looked at and we said, hey, this is not a way where an institutional or commercial user is going to come into a lending space. So for this market to grow and to thrive with commercial and institutional users, you've got to change that model around a little bit, which is what we did. So, yeah, we went a little backwards of getting into the details before the 30,000-foot view. Got it. So I'll come back to that in a second.

Thanks for listening. We're back with The Derivative by RCM Alternatives, and we're joined by Tom Anderson of Drawbridge Lending. So, Tom, let's get into Drawbridge a little bit and what you guys are trying to do there. Give me the 30,000-foot view, elevator pitch, whatever you like to call it, the short summary. I got a great short summary for you.

I actually wrote it down. I shouldn. I actually wrote it down. I shouldn't say I wrote it down. I typed it out. We have three products. Our core product is our lending product, which is geared at eligible contract participants only. And if I were to put it in a word or a sentence to describe it, it would be borrow cash up to a 75 loan to value against your secured Bitcoin held in cold storage custody. There's no margin call, and it's non-recourse. Okay. So there's my...

I like it. We'll unpack what some of those words mean in a second. Sure, we'll get to that. Secondly, we've got two investment products that have emanated off of the lending product. We've got a series fund, which again is for eligible contract participants, and normally for those people who are already long Bitcoin. So our pitch line for that would be pre-sell your Bitcoin today at 125 to 175% higher and earn yield while the market bounces around. I like it. That's a good one. And that market is built to compete against the coin lending market, which we can talk about, and also against some of the larger asset managers like Grayscale.

And then our last product, which is something new, it's a separate managed account product. It'll be involved with the futures world because now we can open it up to retail investors. So this would be for somebody that wants to have diversity into Bitcoin. And it's kind of the same tagline. It'd be invest today in Bitcoin futures and pre-sell your position 125 to 175% higher, get up to 50% of free downside protection and earn yield while the market bounces around. And again, this is going to be run by our CTA. Got it. Yeah. And so let's start with the basics of, okay, I'm a holder. Do they have to be holders? Is it typically they don't want to sell, right? They've owned this coin. They've got a big balance

sheet and they're saying, now what I saw go from whatever, a couple thousand bucks into the millions back down to maybe 1 million. What do I do with this coin? Do I just sit on it and hope it goes to $30,000? Right. Or is there some utility I can get out of it while I'm holding it? Yeah, so that's basically our two products, our lending product and our series fund. So you're exactly right on that, Jeff. So somebody that's got coin, it sits there.

I mean, it's in cold storage or it's placed in cold storage. It doesn't earn yield. You can't leverage it. You can't do anything. Give me the in cold storage or it's placed in cold storage. It doesn't earn yield. You can't leverage it. You can't do anything. So our lend. Give me the quick cold storage just means. Yeah, the computers have never touched the internet. Right.

They're on a stick in a basement somewhere. Yeah. So they're kind of like they're, you know, there's air in between them. They're in a separate room, never touch the internet. Which is always crazy to me that this super digital modern world thing goes back to non-digital physical storage. Right. Yeah. And that's where all the keys are. But the cold storage is something that's not been hacked. Hot wallets are the ones that have been hacked. So you've got this asset. It doesn't do anything for you other than goes up and down. And the

volatility of Bitcoin, I think, as everybody's already fully aware, it moves quite a bit. So inside that volatility, what we're trying to do is take advantage of market structure to give that holder of that Bitcoin access to either leverage or investment tools. And real quick, so what does it look like for, say, I've got $5 million in Bitcoin and I want to buy a new house? Are there any traditional sort of things where they would consider that as one of my assets or is it pretty hard to do these days? No, I think you would look at that as an asset in, in, if you

want it to, but more importantly. If I'm getting like a Bank of America mortgage, are they going to count that? Yeah, they'd look at that because you pay taxes on that if you sell any. So, I mean, it's definitely an asset. It's not, it's not money yet, but it is an asset. And there's a lot of arguments as to, you know, whether or not it's an asset that you can get a secured lien on or not. But the fact of the matter is it is an asset so rather than sell anything or rather than you know to sell it pay taxes and then buy your house I'll give you a loan and 50% of your value so okay so I've got my five million you're gonna give me two and a half I'll give you two and a half million dollars what I'll do is I'll do

a collar or do that now yeah yeah absolutely we'll do a collar. Do that now? Yeah, sure. Yeah, absolutely. We'll do a collar in the marketplace. So, you know, we have lenders that actually provide capital to us, and we originate the loan. So our lenders will originate through us a loan to you. Once that loan is to you, we know the coin's securely in custody, we'll actually go and put a collar on in the marketplace. The put side of the collar protects the lender to zero. So his money outstanding at $2.5 million is a strike price. And that strike price then is covered all the way to zero. And then to create a low interest

loan for you, what we do is we sell an asymmetrical type of call above the marketplace. So maybe it's a 50 LTV put and 150% LTV or 150% up call that we sell. Because of the skew and options volatility in Bitcoin, the call premium is substantially over the put premium. We take that income in. We're capable of paying the lender his rate, which is a pretty decent rate to loan that money. We pay all the cost of storage for you, the borrower. And then the biggest thing is we're capable of buying down that interest rate to you to sub 3%. So I could give you a loan for 2%. Wow. And so that lender, let's get into that. You're serving two sides of the market. One is the person holding the coin who wants to get access to some fiat. That's right. And two is kind of alternative lending, people who want a little higher yield or some different sort of interest rate income. Yeah. And right now it's

very difficult for banks and credit funds and some of the bigger guys to give you a revolver. They don't understand it. They don't feel they can get a perfected lien on it, a variety of different reasons. The exchange will bring, we'll get to that, but the exchange will bring some new ideas about the security of their lending. So there's a trade-off here. You've got, again, as I said, you've got to know you would have a non-marginable loan. So it doesn't matter where Bitcoin goes up or down. It's non-recourse. You could call me the next day, you take your two and a half million dollars, you could call me the next day and say, see you later. I'm leaving the country. I'm going to run away with everybody and you're never going to pay you back. And I would be like,

yeah, okay, whatever. Just give me an address. So after I liquidate your coin, if there's anything left over, I just have to send it to you. Right, right. And the cheap borrowing cost, your trade-off is that you've got an opportunity risk with the call. So if the coin rallies and at expiration, whatever that expiration could be, one, two, six months, and settles above your strike, you're going to owe some money to the call buyer. And we've got ways where you could work out payment in Bitcoin from your pile, which is then your only taxable amount, and so forth and so on. So it's a market structure that provides a lot of really good opportunity for you against a call, which is not a market risk,

it's an opportunity risk. Because you pre-sold that at 15,000 bucks is what you've basically done. Assuming we're talking like Bitcoin at 10,000. Yeah, 10,000. Yeah. So in that example, Bitcoin at 10,000, I've got 5 million worth. I borrow the two and a half. If it drops, if it gets cut in half and it's down at 5,000, I keep the 2.5. Right. Or more yet, if it's at 3,000. So now you're $2,000 underneath the put level. Are you going to pay back $5,000 on a $3,000 investment? No, you're going to walk away.

Right. You're going to walk away, but you don't care because you've bought that put. I have the put. At $5,000. Correct. And that's going to pay out to your lender. So all he's risking is, what is he risking? He's risking the two and a half? No. So that where that risk goes and this will go into a bigger conversation

about credit where that risk really for that lender is in the world of over-the-counter options which has been the only thing to trade before the exchange came and listed their their options is who sells the put so what entity is selling me the put because that entity that sells the put. So what entity is selling me the put? Because that entity that sells the put to me on behalf of the lender is really the lender's credit. So if it's Goldman Sachs or JP Morgan or Morgan Stanley, the lender's probably okay. If it's a market maker company in Chicago or some guys that split out of Goldman Sachs that have an office in New York or a group of guys out in Los Angeles that did

something, he's going to look at that and say, I don't know these guys. And I don't know whether or not I'm going to feel comfortable with that risk. Regardless of the fact that we margin him, we margin that put seller. They've got to put up a deposit when they sell the put to us. And as the market moves closer to the strike, they're going to be margin more aggressively. But again, it's something where there's credit risk. But before we get into that, whoever's loaning the money still has the 50% loan to value. Right. So they've got coverage of that $2.5 million down to that $5,000.

Yeah, so it's two to one. Which in a normal loan environment would be more than enough to do anything, but people are scared it could go to zero tomorrow or over a week or whatever. People are scared that it'll go to zero from the big money side. And people are scared that it'll go to $300,000 tomorrow from the borrower or investor side. So those are the two scares. And in between what you do is you bounce around up and down with no rhyme or reason other than liquidation or entry to the market. And so that's the downside. Then the upside, you're saying they give up some upside.

They pre-sell, basically, is what they do. And our tenors are not long. They're one to six months. So it's not like you're in a loan that you're locked in for three years or two years. Right. It's like, oh, all I can make in Bitcoin over the next eight years is for it to go up $5,000. No. All I can make over the next six months is it to go up $5,000.

And quite honestly, if you think about it, when we come to a marketplace where you start viewing it as an investor or a borrower, where returns are becoming more normalized, is if something happened to where you had a coin at $10,000 and it went to $15,000 and it increased $5,000 in value, 50%, it increased 50%. Inside six months. Inside six months. Which has happened. Would you sell some? I mean, would a prudent investor in a normalized return flow sell some? My argument is yes. And that's full circle. That's what the guy brought you out to Colorado to kind of talk some sense into these people of like, hey, you should be hedging, selling some. You should be doing something. You should be doing something at that point in time. Now, there wasn't a lot to do, but there could have been

some offset. We could have been some offset. We could have figured something out. So the fact of the matter is, I believe we're coming to a more normalized return flow. The idea where people say, oh, I would never sell a call because it's going to go to $300,000 in the next week. I think that's kind of like become a very small minority. I do believe that there's still long-term holders, these maximalists that believe it's going to go on forever. Hey, I hope it does. But the fact of the matter is right now the liquidity in the marketplace can only do one to six-month loans. The way, you know, using market structure.

So until that expands and grows, we're in what I'll call a safer zone than we would if I had a one-year or two-year loan with somebody. And so these, do you have some of the, you mentioned like Morgan Stanley, are some of them in that game or no? It's more of these local firms. Yeah. It's mostly local firms and some of the bigger investment banks in the digital space. But there's nobody, there's no Wall Street quality firm bank, investment bank that's involved in this marketplace. And who, outside of you guys, who are they trading amongst themselves, these options? Yeah, well, they'll trade around. They'll offset maybe amongst themselves. They'll offset with coin.

They might be long coin. They build a vol book that they're trading some things around it. I don't think there's enough liquidity to pass around $100 million of a trade right now in the marketplace. There is probably to pass around 10 million or 15 million. So it's kind of, now we've got another outlet. We've got two exchanges. We've got the over-the-counter market. We've got over-the-counter option market. So you've started to build an ARB where money can flow more freely. So liquidity should build through the course of time. So talk about that a bit more.

So the exchange came out with their options, but now there's two exchanges with options? Yeah, so Bakkt, which is ICE-sponsored in the U.S., and CME. Okay. And so that's on their Bitcoin index? What's the Bakkt? Right, so Bakkt is actually physically settled. Yeah.

So BACT is in a good position because they have a warehouse. They've got an actual qualified custodian with a BIT license out of New York. So they're connected with a warehouse to an exchange to a clearing organization. So they've got all three prongs. And I think in the long haul, when you look at it, that's a very potent model. I think they probably need to fix up some of their contract specs as they move along. But that's part of learning as you grow. And there was a rush to obviously get a lot of these things listed. They listed their options in December before the CME in January.

CME, though, is the reference rate. So they use five different exchange or venues to create a reference rate for cash settlement. And the CBOE contracts no longer? No longer, yeah. It's a shame they were first to market. They were first to market, and they had a small coin too, just like BAC does.

BAC is a one-coin market. CME is a five-coin market. But the SIBO, although first to market and put a lot of marketing in it, they had a settlement process with just one provider. And I think as time went along, they were never going to get anybody serious in there to place a lot of money because... People were afraid to get gamed and whatnot. Yeah, exactly. That's exactly right.

How they come back into it, I don't know. If they do. And so CME lowers those fears by saying, no, we go across five different exchanges. And BAT says, I don't care what it says. I've got it in the vault. That's right. Yeah.

I mean, the big thing that BAT will have somewhere down the road will be if they've got a, if the business grows and it becomes vibrant and there's volume and there's open interest and there's coins sitting in that digital warehouse, the back digital warehouse, if that could ever be used for margin on ice clear US, I mean, it's a really potent, that's kind of back to the risk-based margin financing. Does that hurt you guys a little bit? No. Drawbridge? It's a similar thing, right? Like, hey, you can take, because it's not your coin. No, no. That would be giant for us. So, I mean, somewhere way down the road, I think that that would be a big possibility for back success. Meanwhile, CME is gaining market share. Their big contract is every day growing. Their options haven't really taken off yet.

We hope to help that soon. We plan on, you know. And so in your perfect world, you would do the options on the exchange? We would in our lending product and in our fund-to-funds product, if the investor wanted it, but certainly in our lending product is we would execute the put side of the trade through an FCM into the exchange. So as I mentioned earlier, when somebody says, hey, who sells you that put? It doesn't matter who sells us that put as long as it's cleared at a DCO, you know, designated clearing organization. So CME right now, if that trade sits at CME and through a good FCM, you know, we've eradicated 98% of the credit risk. So we believe that that's going to draw more lenders into the space at some point in time that understand the CME process. And the more lenders that come into it, the less

I'm going to have to pay out as far as, you know, for that money. So that money might not be 12 or 13% anymore. It could be six or 7%. And that makes that, you know, that can be passed along to the customer in savings to allow us to remain competitive. So the lender, excuse me, the lender's taking on some credit risk with these prop firms selling the options, but they're getting paid for it. There's a higher rate. Yeah, they're getting paid for it. Some of those guys, though, I mean, you know, to really get them interested,

they would say, I wouldn't talk to you unless you're paying me 18%, 19%. That price is our model pretty much out of focus. And those, I mean, but this isn't a new world. Like there's swaps and over-the-counter options traded all day long. All day long. All sorts of stuff. But that's also with Goldman Sachs and J.P. Morgan and Morgan Stanley. Well, but with these prop firms, too.

They're making markets on some of that stuff. Some of the bigger ones. You know, some of the ones that might be listed like, you know, Flow Traders or Virtu, you know, Citadel. You know, some of the guys that are the monsters in the marketplace. No doubt about it. All right, so we talked about the first product. Now, the second product is still involved with lending, but it's a series fund. Can you unpack that a little bit?

Yeah, it's actually not involved with lending. It's an investment product. Okay. So what happens, you know, from the lending side and back when I think people were still a little unrealistic about the return flows of Bitcoin, is we did hear, and you have to listen to your clients, hey, you know, I don't want to be short of call. The market could go up. You know, I would end up getting some of my coin called away. And when we think about it, you know, we sat around and we're brainstorming like, well,

who wouldn't mind having their coin called away is really what it boils down to. An investor. So we created the same product. Someone who would love a 50% return in six months. Not only that, but to earn yield along the way, which is the big thing. So we found that there was a marketplace called Coin Lending that exists out there, which to us is just a disaster waiting to happen, where, Jeff, you've got coin and you say, hey, it's idle. I just want to earn interest on it. And you say, hey, Tom, will you pay me 4%?

And I go, sure. And you actually transfer me your asset in the hopes that I give it back to you at some point in time, plus 4%. And then you have no idea what I do with that coin. I could give it to somebody else who could give it to somebody else who hypothecates it somewhere else. It turns into this house of cards. And that's total Wild West, no regulations. It's a Wild West. Or you give it to a broker, and a broker takes it,

and you have no idea where that coin goes. It could be on some exchange in Canada. It could be somewhere in Tokyo. It could be anywhere in Africa. It could be with a bad guy. You just don't know. So we felt that the credit scenario and coin lending needed to have a competitive force to it. So our fund of one, our series fund, basically competes with coin lending. I mean, what we're saying is, hey, if your coin's already in custody or you don't have it in custody, put it in custody. Let's make sure that thing's safe. It's in cold storage. It's

sitting in custody. Now, we deploy the same trade. You can have a put if you want to have protection or you can have a call over, right, if you want to earn more income. The bottom line is instead of paying the lender that actually gave me the money to borrow to you in our first example, I now pay the investor. So if the investor's got a million dollars of notional value that sits in a custodian, says, hey, I want to earn yield. I don't want to put because I'll probably buy more coin down there anyway. Let's just sell a call.

I might be able to sell him a call in a one to three month structure where he can make maybe 18 or 19% on his money annualized. So these are the things that I think are really important. Now, whether it's 18 or 19%, again, coming from the regulated CTA and CPO world results, or nobody should expect any results, and I'm only talking my own personal opinion on this. Past performance is not necessarily indicative of future results. There's no doubt about it, and I want to make sure that that's very clear. I'm only talking my own opinion, but that is how it works. And so the light bulb just went on for me. So product one is I've got coin. I want

currency. Right. I'm going to pledge my coin for currency. That's right. Product two, I don't need currency. I've still got coin. I just want to earn a yield on it. I'll pledge my, I'll loan my coin to someone else to do what they want with it. That's correct. And earn a yield. That's right. The difference is in the lending, you've got to over-collateralize, right? So it's two to one.

You put a million dollars of coin in to get a $500,000 loan. In the second product, the fund of one or the series fund, it's one to one. One to one. You've got a million dollars. I'm going to pay interest on a million dollars of your coin. And this is a stock lending world. This is billions and billions of dollars. Billions and billions of dollars.

It's the same concept. Like, hey, you own 100,000 shares of Amazon, a few million bucks. You don't want to sell it. Brokerage will set you up. They'll loan you money against it. Got it. So that's what our series fund does. It allows the institutional investor to earn yield on coin that's stored in custody. And it's got the same parameters. It's got a call and it's got a put,

or it doesn't have a put and it's only got a call. And the beauty of it all is the tenor, the one to six month tenor, what call we're selling, which is the driving force for all the income, is how this all gets generated. So we work with our clients to determine what the best trade would be for them and the parameters that they want to work with them. Yeah, just, hey, what are you comfortable with in terms of, it's a little puzzle of the yield and the tenor. Right. And we provide a bunch of different alternatives. We don't have a standardized product. We have white glove service for all these clients. I think you have a calculator on your website where they can tool around with some different options? Yeah that was on

the lending product right we're revamping all this so there'll be a whole new look and feel to drawbridge lending within the next couple months and then our so that is like I said the competitive force of that is against the coin lending market because this is now a client understands his coin is safe. He understands that the only risk that exists is, again, opportunity risk. Can it gap through his strike on the upside and will he lose that? And can he adjust it if necessary? Of course he can.

You can buy futures. You can buy perpetual futures. You can buy more coin if you're really nervous about it. You can try to get out of the trade. It's going to cost you, but we can do it for you. Great. And so the third product? Third product is for everybody.

So now that options and futures trade on exchange, I can sell this to retail investors. And, you know, that's the one thing that we were missing. So we had this wide marketplace of potential clients. We narrowed it down by doing ECPs. Now we're opening it back up again for everybody. So the same strategy in the series fund where you're long a Bitcoin with a collar around it. This time you're actually long Bitcoin futures with a collar around it with the same outcome. We're creating a yield for your Bitcoin future.

And so that would just be an investor who wants exposure to Bitcoin. Correct. With a yield component, with some protection component. That's right. Would come to you and that's through a registered CTA. Yeah. We're a CTA and a CPO. Okay. Yeah.

And what's the argument for them instead of just going to Coinbase and buying some Bitcoin? Right. So there is a wide swath of people, including institutional investors, that cannot buy Bitcoin in venues like Coinbase or Kraken, settle it the way that they settle it, put it in custody. No investment committee will approve that. But go to them and say, hey, I've got a way to gain full exposure into Bitcoin by using CME products. And they're like, okay, let's hear about it. And what's interesting about the CTA product is we built this for the FCM.

Coming from the FCM community and understanding the FCM community, they're all still petrified of Bitcoin. Yeah, some of them are still 100% margin. Oh, yeah. So what we're doing here is if you want to invest, it is full contract value. So if you want to buy one unit of our product and it's a CME basis, you're going to have to put in around $50,000, and we could do the structure, and it's cash, and it's fully paid for. But the FCM will never have a worry.

So the FCM, who we look for as our partnerM will never have a worry. So the FCM who we look for as our partner can, will never have a variation call and has absolutely no financial risk, regardless of where the market goes under the structure of a collar against a fully collateralized position with the option premium sitting on top of it. And we're the only ones doing this right now. I like it. Yeah. The, and so there was a fourth product we met with a couple months ago because it ties in with what RCM does in terms of matching investors with different hedge funds and managed account programs. So that's kind of a portable alpha approach? That's right. So that's kind of a hybrid between the investment products and the lending product.

And our thought process is offer a lending product. As we originally talked, you get a million dollars, you want to take a $500,000 loan, take a $500,000 loan. And rather than take it and do whatever you want with it, is we will offer a variety of investment alternatives off to the side where you could match your duration. Maybe it's a six-month loan with these investment products. And so to do that, we it's a six-month loan, with these investment products. And so to do that, we would offer a very cheap borrowing rate, maybe 25, 50 basis points. And that way, a client, if there's a good slew of products to invest in, he could actually leverage that money that he gets and hopefully make even greater yield.

He or she has the Bitcoin exposure still plus this new product exposure. Correct. On 50% of their capital. That's right. And that's kind of our fourth product that we'll be coming out with sometime, you know, probably mid-year. We've done a lot of homework on this, as you can tell. We're trying to answer a lot of solutions or a lot of questions with a lot of different solutions that fit a lot of different clients. Yeah. And I'm sure every person you talk to has a different scenario, which makes it so tough, right? There's not one product that fits everybody.

Nope. There's not. Our series fund, for instance, nobody's interested in buying puts because they say, I'll buy more coin down there. I'm just looking for yield. Right. Has that been a hard transition for you to kind of come from this professional trading group world where they have no bias, right? They don't care if something goes up a thousand percent, down 90%. They just want to trade it. To where we're at now? Yeah. Well, this crypto world, it seems like they're hugely biased to the upside. Yeah. I think the biggest shock is the size of the market. It's not an unlimited amount of investors that are out there. So you have to really target and hone in on people that

you're hoping will do business with you and understand your model. So we've spent a good year and a half doing a lot of education. And a lot of the light bulbs are going off right now. So a lot of the hard work that we put into this in the last 18 months is actually starting to pay off right now. And ultimately, I think it's going to be a big hockey stick business where we'll have a lot of demand. We won't have enough money to lend, for instance, or we won't have the capacity to grow further in over-the-counter or exchange-traded products until more liquidity comes in. That's where I think we're going to be. But you're trying to kind of be the Levi Strauss? Yeah, we're trying to be a leader in it. And so what does it look like if Bitcoin falls out and

Ethereum becomes the big player? Some other coin, do you care? We don't care. Two things. Number one is there's going to be more coins that become listed in mainstream. I think Ethereum being one of them. We're not going to pick a winner. We don't know what the winner is. All we're doing right now is going along with the leader. The leader is Bitcoin. It's the most liquid market. It's the biggest market. They make options on it and it's listed on an exchange. We'll go with that. if somebody else pops in there and takes over Bitcoin We'll go with that. So we're we're not gonna pick a winner in this one. We have no idea What what are your thoughts overall in that space like four years ago? There was a new coin launched every day

Yeah, well, I think the ICO markets dead. I think there's enough scams and enough security You know security law breaches in that to where I think you've got to be really careful listing or putting out a new coin today. It seems to me it's become more of like penny stocks these days. Instead of doing a penny stock listing, you do an ICO and, you know, hey, I'm starting this new company.

This is how you invest in it. Back my coin. Yep. So the coin market, that altcoin world has compressed. I think the next thing that compresses is exchanges or venues. I can't call them exchanges.

Are the venues, there's just too many of them. Talk about that for a second. So they were called exchanges, but why? Well, most of them aren't regulated. So they're venues where people can transact. I mean, I'm an old exchange guy from CME and ICE and Eurex. So that's an exchange. So an exchange means something to you.

It's, hey, there's a guarantee fund, there's regulations, there's laws. Right. And I'm not to say these are bad businesses. I'm just saying they're venues. And, you know, they're all competing for the same account right now. So there's somewhat of a staleness in the market. We need to bring in some new blood. But there's too many exchanges or venues, I should say. There's way too many of them. Those in the market. We need to bring in some new blood. But there's too many exchanges,

or venues, I should say. There's way too many of them. Those need to compress. I think that there's way too many businesses also that are trying to get in the space on white papers or models without a real market sense for what's going on. That needs to compress similar to probably 2000 in the NASDAQ market um so it's a game of survival and it's a game of runway and that's what we're fighting against right now we need to survive this thing and to grow this business and be around three five ten years you know when this thing has really become mainstream because it will be it's not going away and that's always curious to me of people say well it's going to be huge it's going to once we get institutional in once we

centralize it some more and i'm like well the whole point of it is that it's curious to me if people say, well, it's going to be huge. It's going to, once we get institutional in, once we centralize it some more and I'm like, well, the whole point of it is that it's decentralized. Like it seems like a, how do you square that of once we get some more people in and we can get some more kind of guardrails around this thing, it'll be bigger. But the whole purpose of it in the beginning was to not have guardrails around it. Right. To a certain degree, but I think any market really does grow with regulation rules and compliance. I mean, you could still have free flows of money and you could still do things differently. But I still think you need to keep bad guys out. You need to have a general sense of rules to follow where people understand the actual, the playground more or less. And so you'll never grow without that hand at least involved in it.

Now, for our instance, we're registered by the CFTC and the NFA, right? So we already have some inherent rules that we need to follow in our disclosures and the way we talk to people and the things that we put out there and even sitting here in a podcast, things I can say and I I can't say so it brings more of a credibility feature to it and that's always going to be with any real market and stick it on markets and what you see in the near future we've got negative interest rates a lot over the world if that comes to the US does that affect the lending cycle at all well I think here's where I think it's a positive.

I mean, buy an asset and take a loan or lend money into a new asset class and earn much more interest than negative interest somewhere else. And so it's a matter of risk and reward. If the market's around and it's viable and there's viable products to invest in, I would say, hey, look, you know what? I can either put it over there and experience negative interest rates or do it over here and get paid a healthy interest rate. I think you'll start seeing more demand for some of these alternative lending businesses like mine. Yeah, but that's a huge segment of the alternatives industry already and growing of alternative lending. Oh, yeah, and payments and settlements. Yeah. I think the bottom line is everybody realizes these big institutions have made way too much money off of us

and are very inefficient, like a government. Yeah. So these new breeds of businesses that are popping up that are regulated or not regulated but involve cryptocurrencies and transfers of money around the world safely, I think it's cheaper. Or even like a SoFi and, hey, we'll lend you much cheaper than the credit cards and whatnot. All right. We like to ask each guest some of their favorites at the end of the podcast. So here we go.

Your favorites. So you're a Chicago guy. Sox or Cubs? Oh, total Cubs. Total Cubs. Come come on i'm a north sider yeah total cubs where you grew up on the north side i grew up on the north side yeah where was that it's a little area called north mayfair it's around pelaski and lawrence no north mayfair all right totally you think they'll pull it out uh is this era gone and we have to rebuild i think

it looks to me like the rebuild the socks have the upper hand and rebuild um although don't discount the cubs because they're spending money so i don't know i i i i'm not going to call that one what do you think of the new all the new stuff down there i was just at that hotel zachary last night for an event it's great down there i think it's i think it's really cool because they've preserved the old and they built you know they built businesses around there that actually will draw people there when the game's not being played i think it's really cool because they've preserved the old and they've built businesses around there that actually will draw people there when the game's not being played. I think it looks nice. Yeah, I was there last night on a Tuesday in February.

What are you doing on, right? You were never at Clark and Addison on a Tuesday in February. Never. You were down in the old days down, you know, Rush Street. Now the new Rush Street's Clark Street. I like it. Favorite pizza place in the city? Marie's. That's in the old neighborhood. Marie's. Marie's Pizza Clark Street. I like it. Favorite pizza place in the city? Marie's.

That's in the old neighborhood. Marie's. Marie's Pizza on Lawrence Avenue. Love it. MU55030. That's their number? That's their telephone number. Can you believe that?

This episode brought to you by Marie's. By Marie's Pizza. Order today. What's the number, Tom? MU55030. I don't even know. How do I dial MU5? Well, it's Mulberry.

All right. Favorite Chicago thing to do? Oh, definitely be on the lake. Yeah. I mean, you know, we have one of the world's greatest assets right at our doorstep. So I love doing everything on the lake, riding bikes, walking. We have a boat. We're on the boat. Just, I love the lakefront. I love it uh sailboat or stink boat uh motorboat yeah yeah is that what you call a stink boat yeah we're sailors we call them stink boats okay i got it yeah yeah there really is something between sailors and motor get out of our way uh and you're rather well traveled coming back from austral, what's your favorite foreign locale? Well, man, I'll tell you. We really liked Australia.

We really liked Australia a lot. What's left of it? Was it on fire when you were there? It was on fire. Not as bad as it was after we left. Sydney is an amazing city. I mean, that kind of blew us away. And the drive in between Brisbane down to Sydney was really cool.

It's like they almost take for granted this beautiful ocean that's right there at the doorstep. It's like, oh, yeah, it's an ocean. And I'm like, it's unbelievable. Yeah, so I'm going to say that Australia, I want to go back and actually tour around more of it. Did you get over to the West Coast? No, I didn't. I want to get over there. Yeah, Fremantle. I want to go up north actually tour around more of it. Did you get over to the West Coast? No, I didn't. I want to get over there. Yeah.

Perth. I want to go up north into that. Yeah. To what? Fremantle, just next to Perth. Oh, okay. Yeah. So Australia is a really cool spot.

We really liked it a lot. I'm going to say that, you know, and I like going to Ireland too. I love golfing over there, and I love touring around in Ireland. All right. And lastly, will we ask everyone, favorite Star Wars character? Chewie. Chewie. Can you do a Chewbacca?

Perfect. How's that? That was pretty good. All right. What does everybody say? I'm curious. A few Chewies, a couple Lukes. Yeah.

One Rey. no Leias. I'm hoping for a little more female participation for whoever's listening out there. Well, my second was Leia. Okay. Like old school Leia or new Leia? Old school. Yeah. Oh, yeah. With the buns.

Yeah, with the buns. Perfect. Yeah, absolutely. All right. Good stuff. Thanks again to Tom and to Drawbridge Lending. Thanks for listening. Check the show notes for links to Drawbridge and how to reach out to Tom for more information.

So until next time. Thanks, Tom. Thank you very much, Jeff. Thanks, everybody. you've been listening to the derivative links from this episode will be in the episode description of this channel follow us on twitter at rcm alts and visit our website to read our blog or subscribe to our newsletter at rcm alts.com if you liked our show introduce a friend and show them how to subscribe. And be sure to leave comments.

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