The Pomp Podcast - #1392 Alessandro Palombo | Bitcoin Can Give You Portugal Citizenship?!

Starting point is 00:00:00 What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's up guys? Bang, bang. Today's episode is with Alessandro Palumbo. He is the co-founder of Unbound. They are doing something very, very interesting. They are using Bitcoin

Starting point is 00:00:41 indirect exposure to one of the greatest assets in the world to help you get a golden visa in Portugal. That's right. You can go and get a new visa in Portugal as a second visa, but still keep indirect exposure to Bitcoin. It's very clever what they're doing. I really enjoyed this conversation because I learned a lot. I learned how it worked, learned what the risks were, and also how I could do it if I chose to do it. So here's my conversation with Alessandro. I hope you guys enjoy it. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular

Starting point is 00:01:21 investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Domain Money. I get asked all the time, Pomp, where should I go for financial advice? Now, as you all know, I can't personally give financial advice, but I now know people who can.

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Starting point is 00:04:06 That's X-A-P-O-B-A-N-K dot com forward slash Pomp. Go check out Zappobank today. so alessandro i thought a great place to start this conversation is you all have a company that allows people to get a second visa and do it while still having exposure to bitcoin but we need to start with the idea of a portuguese golden visa i know very little about this so maybe you could just tell us like what is this program and why does a country like portugal offer it absolutely so thanks pont for these questions so uh well it was back in 2012 that the country Portugal decided to open up the doors, allowing investors to bring money in the country in

Starting point is 00:04:47 various ways, and in exchange for that, to offer them the so-called Golden Visa, which is essentially a residency permit, and after a few years, five more specifically, the right to apply to citizenship. So this was a quite, I would say, old plan that made Portugal arguably the best and the more efficient citizenship by investment program in Europe. Now, it was 2023, October of last year, that there has been actually a major change in the Portuguese law. Until that moment, the most successful way for acquiring citizenship in Portugal was

Starting point is 00:05:22 to invest in real estate-related private equity funds or real estate. In October, the legislation changes and actually makes investments in real estate or any adjacent matter also has private equity funds not anymore eligible for golden visas that's when we had the idea of creating a mound now in this visa process it's literally i just put five hundred thousand dollars uh in um and i get the visa or there's some requirements like how exactly walk me through kind of the mechanics of how these visa programs work definitely so uh it's quite in the end it's pretty straightforward so you invest five hundred thousand dollars euro sorry five hundred thousand euro in a private equity fund, which invests 60% or more of the net asset value in local

Starting point is 00:06:10 commercial companies. Upon this requirement, essentially, you just apply via, of course, our lawyer or whoever lawyer wants to assist you. And in 12, 18 months with the current list, you know, in the present time, you can expect to receive your golden visa. Is there only any other requirement the answer is yes you need to spend a certain number of days every year in the country how many on average 14 days every two years in the country so essentially it's a long vacation in the country and this is this qualifies you for renewing actually golden beer so if you like to surf you're welcome and for two weeks per two years you can actually get and maintain your golden visa after five years from the application post investment

Starting point is 00:06:57 you can apply for citizenship. Do you need to do anything else? Yes. There are two requirements. One is to actually demonstrate to have basic knowledge of Portuguese language, and specifically an A2 test, which is something in general not so complex. And besides that, you need to have, of course, a clean criminal record. So these are the only requirements. You don't need to move in Portugal. You don't move your fiscal residence in Portugal. This is a critical, actually, aspect that made this program so successful also because in essence it's the only

Starting point is 00:07:29 European citizenship by investment program that doesn't require you to really move to the country. Even Malta requires you to spend even if a shorter time in Malta and move your fiscal residency there. So that's why in my view over the years this program became probably the most successful in Europe and in my view this somehow matches very well with the unbound model and that's why probably we went so viral and we got hundreds of applications in 48 hours yeah so what caught my attention about this was obviously the intersection with bitcoin now can people use bitcoin to pay for the 500 uh thousand euro

Starting point is 00:08:04 or does it have to be in euros it has to unfortunately it has to be in the old dr euro so in fiat money we tried our best to do something different but the short answer is no unfortunately it's strictly required you well an investor to invest 500 000 euro from a foreign bank account into your own portuguese bank account this is the strict requirement got it now what you guys are doing that i think is unique and why there's been so much attention you guys obviously have gone viral online is you are allowing for when people put that 500 000 or 500 000 euro into uh this private equity fund uh then what you all are doing is you're investing in local companies inside of portugal and those companies are holding bitcoin from my understanding

Starting point is 00:08:51 and so what you're essentially offering to folks is you can have uh 500 000 euro exposure to bitcoin uh indirectly and also help to secure a portuguese golden visa is that kind of uh how the system works a hundred percent you did your homework very well and and uh yes uh and this is absolutely correct So we came up with this model being inspired by the idea of creating the most capital efficient solution and at the same time bringing in a mutually beneficial way value to the country. This is a very important topic that I would like to expand with two notes. Note number one is, you know, when it comes to European citizenships, even by investment, they are never something, you know, they are serious commitments and Portugal is no exception.

Starting point is 00:09:37 So we don't say something with a spirit of, oh, this is going to be necessarily easy. and so far and so on. No, no, no. This is a serious commitment and we put together the best team and actually my co-founder already actually promoted and managed previously a golden visa fund real estate. Our team cumulatively worked on 110 golden visa procedures and I come from Web3 having spent more than seven years in crypto. So this is never an easy journey. I would like to remark it. And secondly, this is a real citizenship that gives you the status of of European citizens at the end of the program. And that's something pretty relevant in terms of edging.

Starting point is 00:10:13 Why? Because this is what I always say to everyone. We don't know how the world will look like in five or 10 years. And this very same reason that makes Europe highly inefficient, arguably for business, which is fragmentation, is possibly the same reason why acquiring a European citizenship can be so profoundly valuable in terms of edging the position of anyone in five, 10, 20 years. for example, we don't know if your kids want to study in Berlin or in Paris

Starting point is 00:10:40 or rather to open a company in Eastern Europe, because maybe in 20 years from now, Eastern Europe will be the right place to launch the most interesting companies for the best entrepreneurs out there. So with this program, you can get in this direction and get there. This is somehow the background of what we've put together. The very important disclaimer is we are using a very old and well validated model. What we invented really was essentially changing the scope of activity of the SPV on the territory of Portugal. And that was, in my view,

Starting point is 00:11:16 a brilliant move. And we got very overwhelmed actually by the reaction of the market, which we didn't expect, to be honest. And that's how I believe this is going to be great also for Portugal. Why? The companies pay taxes in Portugal, and indirectly, we will promote Web3 adoption and Bitcoin adoption at the institutional level also in the country. So in our view, and according to many, these are very valuable maneuvers that will bring back eventual exposure to Portugal, which has been, and in our view, will be a primary hub for Web3 in Europe. And in the end, as you know, there are many co-founders, colleagues of you, of us already in Lisbon or Porto, right? Or in general in the country or Caparica. So I think

Starting point is 00:11:59 there are many actually different points that all together probably well aligned around this initiative. Yeah. So if I was to do this, I want exposure to Bitcoin. But there are people who say, maybe I don't want exposure to Bitcoin. Maybe I want exposure to Ether or Solana or named whatever other asset. What is your plan? Are you going to stay just with Bitcoin? Are you going to go into other things? And are there risks associated with kind of picking some of these other assets? So to recap, actually, for fund number one, the exposure is going to be exclusively in Bitcoin. But of course, we are going to expand the portfolio of products of Unbound. And as you know, right now we are we are working with mainly with crypto native teams and partners. And during

Starting point is 00:12:43 these discussions, it became evident that there is an opportunity of cooperating eventually for new products, which may get exposure in various ways on different projects, potentially also Ethereum network, Solana network and other primary blockchain networks. For now, Unbound Fund 1, the current one, investment strategy focuses only and exclusively in investing in companies whose investment strategy is acquiring only exposure to Bitcoin via ETFs. Are there other countries that you can go and do this? know that there are some other countries that have kind of golden visas or you know various

Starting point is 00:13:20 types of programs is that also something that your company is looking at from a roadmap standpoint yes uh yes at the same time um so uh the answer is yes also as you maybe can can tell by the accent i'm italian and i before essentially becoming an entrepreneur i i actually qualified as a lawyer i did a bit of a academic career immediately for for in the legal sector and then I started doing various startups. So on the Italian side, we are confident we can actually implement this model potentially in a linear way compared to Portugal. And well, we may implement this model in a very attractive country that I'm sure will generate a second actually virality. But I don't want to mention it right now because it came up after an iteration with a specific

Starting point is 00:14:09 person, which is very well known in the space of immigration, actually. So let's put it in this statement, yes. Maybe if someone wants to follow us, I would really love to see anyone subscribing to my newsletter and keeping in touch. And we will be in touch and updating everyone as we progress. One major clarification on this point. So the answer is yes, we're going to expand the portfolio, of course. But at the same time, the philosophy behind this initiative is to really care a lot about the quality of product number one. And partially, that's also why we're going to keep this initiative as a quote-unquote family business. I've been doing startups since a while. I have very good contacts with very good investors,

Starting point is 00:14:52 and I do respect them a lot. But at the same time, I don't know, maybe because we went so viral and maybe because these are business targeting Indian families. So we are serving literally the future of families. And we believe, with you, my co-founder and fiance, that having this as a family-run business somehow, I don't know, adds specific value. So this translates in our approach of treating every potential investor, LPs, and customer as a new member in our global family. This is what we like to say. We live in Lisbon. We have also business in Portugal. So we... Sorry, in Porto. So we lose often back and forth with Porto. Actually, also our dog name is Porto, just to give you an idea because we met in Porto with you. So

Starting point is 00:15:33 So this is the kind of leg of the connection with the country. And so what I'm trying to say is sometimes it's very good to scale up fast. But at the same time, occasionally, it's even more important to take the necessary time. Even if we went hyper viral and we got more than a quarter of a billion of manifestation of interest in 48 hours. Still, I think it's very important to focus on one single product and do really your best. And I could expand on this a bit, but I will keep it short. There are various reasons, Anthony, why Portugal technically and strategically makes a lot of sense as a citizenship and investment program. So I would first want to make sure that we are delivering the best value in a very solid way in Portugal, and then we want to expand.

Starting point is 00:16:21 But only at the condition that we really can ensure the best qualitative service in every other country, which is inevitably generated when you have a direct touch with the territory. You know your partners very well. You have been doing this already a couple of times already. These are regulated environments. It's a very complex industry, a very old one. So for innovating it, inevitably, you need to know your own things. And for now, we have the best experience emerging crypto and immigration, actually related industry knowledge in Portugal. So, yes, expansion, but at the same time, focused on delivering a lot of one-on-one quality in Portugal.

Starting point is 00:17:03 So I have some questions around maybe the nuance of the mechanism, right? So I put 500,000 euros into this private equity fund. Do I get the profits as profits are generated from the fund or what happens there? 100%, sure. These are all the effects, Anthony, of private equity-related investments. So it works like that. So first of all, we agree to do this together. There are two options, but I'm not going to go into details.

Starting point is 00:17:28 In about four weeks from when we decide to move together, you are going to be investment ready. You send €500,000 on your new local bank account that we will help you open. You will invest the €500,000 in the fund bank account, which will invest in the SPV or in the SPVs. Now, the fund duration is eight years as a worst-case scenario. The fund is a closed-ended fund. So you technically can't at the third year say, hey, I want to get back my money. But a secondary market transaction is allowed. So in case you change at the end, you don't want to anymore the residency or citizenship,

Starting point is 00:18:06 you can tell us and we will do our best to find eventually an acquirer and this may happen. So it is true, it's a closed-ended fund, but there could be potentially ways for allowing someone to change idea and eventually get back the liquidity. So over eight years, worst case scenario, is the time needed for everyone in the fund to arrive to the citizenship essentially finish line. It may happen that on year six or seven, this already happens. In that case, the assembly of the share units holders can deliberate an earlier liquidation of the fund. So when the fund liquidates year six, seven, or eight, essentially all the assets of the SPV are liquidated. The money is returned to the fund at the fund level, and the fund distributes

Starting point is 00:18:47 actually the capital back plus the profit. The SPV will pay some taxes in Portugal. Instead, the fund level doesn't pay taxes. And if you're a resident in Portugal, by the time the taxation on the personal income level will be 10%. If you're a resident abroad, you will need to double check with tax advisory in your country office for residence. So the answer is absolutely yes, you're going to get back, finger crossed, the capital and the profits, assuming as we all to believe that Bitcoin will perform very well in the next five, six and more years. And we take only 10%. So just to clarify, the typical, you know, VC model is 220, as you know, very well better

Starting point is 00:19:24 than me. So in this case, we brought down the management fee to 1.5% per annum, and 10% performance fee. We believe that this better align with this use case. And in my view, it's quite fair request for put together and assist you all the way along actually for actually a very long, long, long, long time period. So yes, it's absolutely an investment for profit. And we recently actually improved also the model of the fund.

Starting point is 00:19:50 And just for your own interest, there may be also on an annual basis, earlier distribution of performance performances to the share unit holders and to us, of course, in the same proportion 90-10. In case the SPV business, which is indirectly connected to the Bitcoin market, performs very well. So in short terms, yes, you send $500K in the fund, of course, which technically is closed, but there could be early distribution in case Bitcoin, as we will expect in year two, three, four, five, will either perform. Now, if I go and I do this as an individual, I'm married, I have children, do they also get citizenship? Or what is kind of the

Starting point is 00:20:34 implications for families? 100%. This is actually the best part. So these are very family oriented solution. So you can bring your spouse, your kids, your parents, and also your spouse parents, there are some requirements, I will be very short on this, but in general, so all your key all the kids you may have, which are actually financially dependent from you, they can go apply with you. In general, if they are up to 12 years old, our immigration lawyer suggests to avoid, essentially, they will be reunited after you gain the citizenship, this process could be easier and avoid essentially the burden of the language test also on them. But in any case, don't worry, even if they are 18 years old, they can somehow become citizen,

Starting point is 00:21:22 either co-applying in the program or by reunification once you're a citizen. For the parents, the same story applies. If the parent, your parent is a bit elder, so above 65 years old, this is completely automated. If instead your parents are below 65 years old, there is an additional requirement, which is you need to prove, but our immigration lawyer will assist you in everything. Essentially, you need to prove that your dad or your mom are currently non-financially independent. So the same is valid for your spouse parents, and this is quite relevant. Just today, I was interviewing our immigration lawyer, Filipe,

Starting point is 00:22:02 from, in our view, the best immigration lawyer in Portugal. They've been doing this for 20 years. They managed 1,000 plus, sorry, 4,000 plus procedures. Only right now they have 700 procedures, and it's a small firm. Also, in that case, carrying a lot of the one-on-one relationship with the clients. Essentially, he was telling us the story of there's been a guy with eight kids. and yeah so he essentially invested 500k and he brought you know eight kids at once and i think there could be a joke you know these are one of those very rare cases where having many

Starting point is 00:22:35 kids is i would say financially more convenient right than than having less so yeah you may have more kids and take advantage of of the of these investment and citizenship investment program opportunity in this way so the answer is absolutely yes uh to be complete on this point the only we always tell the pros and the cons transparently the cons is in this case that also everyone who applies Anthony needs to come in the country and spend 14 days in the country every two years so uh long story short whoever applies will need to join in this family vacation in Portugal every two years what are the other risks associated with this obviously if you invest in a you know fund and the uh kind of exposure uh indirect exposure to bitcoin doesn't work out

Starting point is 00:23:19 Bitcoin goes down, you could lose money. But are there other risks associated with participating in these programs? So, well, being an investment in a private equity fund, the risk associated with the investment necessarily is correlated to the investment strategy. So in this case, the strategy is pretty straightforward. So investing in Web3 companies, which their primary objective is investing and specifically in Bitcoin. So I would say that the predominant risk in this whole operation is exclusively correlated to the web market, specifically in the performances of Bitcoin, which in the end, we know this all very well, right?

Starting point is 00:24:03 the end represents, until now and maybe also in the future, somehow the performance of the entire industry. So there are no particular other risks, which of course are not dependent on black swan events or whatever major, very unexpected events. So I would say no, they at least they don't come into my mind let's keep in mind by the way that in case of a very remote black swan event on bitcoin which we we all clearly don't expect um the fund manager will summon an assembly and the share units or online every participant will be able to vote on a new asset reallocation so these of course the the um something you know we don't expect but just for clarity you know uh it's it's feasible in case of a black swan event that makes sense

Starting point is 00:25:00 um how can people find you on the internet if they want to reach out and ask questions then what is the website if they want to go ahead and apply to to work with you guys absolutely so the website of the unbound is unboundfund.com unboundfund.com My personal website is alepalombo, A-L-E-P-A-L-O-M-B-O dot com. And my newsletter is alenewsletter, which is A-L-E-newsletter dot com. So it's very straightforward. I'm going to actually produce a lot of content because I think this vertical requires, I mean, there is a lot to say. And, you know, I think I do think that right now citizenships are at all the effects, probably a new asset class.

Starting point is 00:25:44 and a very useful tool for edging the future of yourself and your family in the coming years. Personally, I'm super interested in everything connected to originally to the DAO sector and right now to the network state sector. I'm working on a couple of initiatives and I will be talking, writing, intervening a lot on these matters. So if anyone is interested also in this vertical, I would love to essentially engage. And I'm very thankful for this interview. It was actually, until two weeks ago, I didn't expect to be interviewed by you, to be quite honest. And it's great.

Starting point is 00:26:18 So sometimes, you know, you wait for 10 years and you work for something and then suddenly this materializes. So this is amazing. You did a fantastic job and people will reach out if they're interested. But thank you so much for explaining it to me. It's a pretty cool program. Very clever kind of how you guys have figured out how to do this. And I wish you guys the best of luck. Thank you so much, Anthony.

Starting point is 00:26:38 Thank you. Thank you.

The Pomp Podcast - #1392 Alessandro Palombo | Bitcoin Can Give You Portugal Citizenship?!

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