The Pomp Podcast - Matt Jennings - Kingdom Trust: The Future of Crypto Custody

Episode Date: December 3, 2018

Matt Jennings is the founder and CEO of Kingdom Trust, the first regulated financial institution to offer custody of digital assets, making them the first qualified custodian in the digital asset industry. ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ----- BlockFi BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Today, we're going to talk about one of the hottest topics around digital assets, custody. For this conversation, we brought on one of the pioneers of the industry, Matt Jennings, the founder and CEO of Kingdom Trust. Kingdom Trust was the very first regulated financial institution to offer custody of digital assets, making them the first qualified custodian in the digital asset industry. This qualified custody offering started with a few digital currencies and has now expanded into the most all major coins and tokens, including security tokens and

asset-backed tokens. They do all of this through an insured safekeeping platform they call KT Icebox. Awesome name. Matt and Kingdom's leadership in this space has pioneered a way for thousands of institutions and individuals to safely and compliantly invest in digital assets. I really enjoyed this conversation and think highly of Matt and Kingdom Trust. I hope you enjoy it nearly as much as I did. Before we get started, I want to talk about one of our sponsors, BlockFi. These guys are doing really interesting work in crypto lending. What they allow you to do is keep your crypto, put it up as collateral, and receive a US dollar loan funded directly to your bank account. They do loans ranging from $2,000 to $10 million, and they're perfect for helping you reach your

financial goals of all sizes. You should visit BlockFi.com slash Pomp. Again, that's BlockFi.com slash Pomp. Again, one more time, type it in, BlockFi.com slash Pomp, if you'd like to learn more about putting your crypto to work without having to sell it. Definitely do it. This podcast was recorded over a private dinner at Cut by Wolfgang Puck, located at the Four Seasons Hotel at 99 Church Street in Lower Manhattan. Cut is open for breakfast, lunch, and dinner, and of course, boozy brunch on Sundays. This podcast is presented by BlockWorks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur and want to attend exclusive events and dinners, visit them at BlockWorksGroup.io.

I promise you won't be disappointed. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. All right, guys, we are here with Matt from Kingdom Trust. We are actually recording this live in front of a bunch of people that you can't see staring back at us. So we're going to try to keep this entertaining, both for those listening at home and those here in person.

Thank you so much for coming. Yeah, it's good to be here. Awesome. You've got a wild story. So let's just start at the beginning. A wild story. No, I think there's a lot that you guys have done that people don't know. So maybe let's just start with kind of your background before you started Kingdom Trust. Yeah, so I was in the real estate business before I started Kingdom Trust. Did all kinds of different real estate investments, real estate syndications, things such as that.

And then in 2009 was when I guess the idea of Kingdom Trust was born. In late 2008, we actually put it to action in 2009. Got it. And contrary to popular belief, Kingdom Trust had nothing to do with crypto in 2009, right? No. In 2009, I'd never heard of crypto. And so we, Kingdom was actually founded to be a different kind of custodian than what most folks are used to. So Kingdom was founded to custody unique assets, and the idea behind it was to empower investors to invest in through a qualified custodian, have the ability to invest in unique assets that are, you know, either illiquid, you know, non publicly traded, hard to value, hard to store assets such as physical precious metals, private securities. You know, we anything non publicly traded that the larger custodians, for whatever reason, you know, aren't interested in, but but are still really good, viable investments. We wanted to empower investors to be able to self direct and buy those investments.

And that's that's where the how the company was founded. What gave you the idea to do this? Was it something that you tried to, you know, custody an asset that another custodian wouldn't do or how do you come up with this? Yeah, it really came through the real estate. We were taking investors into different real estate projects. And I personally had a retirement account that I wanted to invest in what I knew and what I understood. And and that's really what where it began. Yeah, got it.

And then what's the first asset that you custodied? was it real estate i'm not actually sure what the first one was um i was the first one to open an account so it probably was real estate um who was the what was the conversation with the first person not named matt that you went to to get somebody to open an account with um to be honest when we first started the company it was it was nearly two months before the phone rang the very first time um i don't remember exactly what that first phone call was about i wasn't the one that took the call but um but it was slow in the beginning you know we um we we founded it from from from scratch so to speak we uh we we didn't have a book of business we didn't buy a book of

business we didn't buy an operating company uh we started uh with nothing and went and got a startup as a startup got a trust charter back in 2010 and just started uh beating the bushes and going out and talking with people and pretty quickly physical precious metals was pretty quickly where we started seeing some of our growth. Private securities was probably the next. We did a lot of non-publicly traded REITs and things like that. Real estate actually is one of our smaller asset classes um and uh but yeah that's where it all began peer-to-peer lending uh private loans uh are a big asset class for us as well and then obviously now crypto is is our focus um and our largest growing part of our business but we're still very involved in all

those different asset classes and we're very actually very proud that we have a very diversified portfolio which i think anyone looking at a custodian wants to see is someone who's uh all their eggs aren't in in one basket so to speak for sure well before we get into crypto you know you had over 10 billion dollars in assets before you got into crypto but i want to talk about two things first so one is uh you're building a company in kentucky yeah which is not silicon valley not new york not you know zoog or or asia right i'm assuming you started there because that's where you're from but just talk a little bit about the benefits and challenges of building a company outside of those kind of traditional tech hubs given what you guys are doing today

yeah i think in the early stages it was really challenging um obviously uh and and it is there because it was my home and um as the founder of the company i started the business in my home town and um we all sound like you're from new york well that's good that's good that's good um so yeah there was a lot of challenges in the beginning particularly when we were smaller and unheard of and we were from kentucky um which is not one of the financial hubs obviously um but you know over time we grew our business and as you said before we ever even got into crypto we were well over 10 billion dollars in assets under custody um so over time as we met uh people in the industry. We started doing a lot of work for some of the larger, you know, some of the biggest

custodians in America actually refer business to us because we custody assets that they don't custody. And they had clients who needed custody. They would refer them to us. So we built relationships, you know, through all different sorts of channels and in different ways. And as we've grown um we became much more well you know respected in the industry um and and i think also very well respected in how we custody assets is uh when people learn that as a directed custodian most people don't understand that they don't understand uh qualified custody as we were talking about a lot of people don't understand that but they also don't understand what a directed custodian all right so let's go through um like a 101 in custody right so just what is

a custodian and what services do they provide the market so a custodian in general um is anyone that you give um that you entrust to secure something for you basically um and you know when you get into the financial markets it's um uh it usually involves holding the asset and reporting the asset. That's the role of a custodian is to safekeep the asset. That's really the better word to use is a safekeeper. And then to report those assets in a manner that according to the client's needs that keeps them compliant. It's a transparency thing that came down through the Dodd-Frank Act. So when we hold assets, we report those to the need to know parties, which in some cases is the underlying investors behind a fund rather than just reporting it to the fund. We

report it to the underlying investors in the fund. As a transparency, that was all spurred through the Bernie Madoff and some of that that happened way back when. So that spurred a lot of those regulations. So typically in the financial world, that custody is done by what's known as a qualified custodian so there's two pieces here there's qualified custodian and there's a directed right uh let's go through the qualified custodian because i think a lot of people hear oh qualified custodian is is coming into crypto right or somebody got the the regulatory approval they actually don't understand what that means right it's one of these things everyone shakes their head yes i got it nobody actually knows so what is a qualified custodian why is that

important it's not a designation that you that you go get and they and you get this tag name of a qualified custodian um qualified custodian comes from the 40 acts there's two of them the investment companies act the investment advisors act there's actually two different ones and we're a qualified custodian under both of those acts and the requirement there is you have to be um a a a financial institution um in in broker dealers banks trust companies fall under that so but you also still have some requirements you have to meet within that so purely having being a trust company doesn't necessarily make you a qualified custodian there is a few other rules we don't want to get real deep into that but so essentially it is a regulated financial

institution and when a regulated financial institution takes on custody of customers assets, there's rules, regulations, audits, things that they have to go through in order to do that that is for the protection of the consumer. So if you use a non-qualified custodian, they don't have those audits, they don't have those regulations, third parties looking over their shoulders like we do as a regulated financial institution. And I think the reason why it's important really is if you're a large institutional investor, the odds are you're going to want to work with a qualified custodian, or you may even have to in your part of your due diligence process, for example, because they need the peace of mind around those

audits and kind of the checks and balances that are required for a custodian to meet those criteria. Is that correct? Yeah. Certain advisors reach certain limits and even certain products, You know, whether it's SEC, CTFC, there's certain ones who are required to use a qualified custodian, but it's certainly best practice for anyone who is, you know, investing other people's money to keep those assets at a qualified custodian. Got it. And then let's talk about directed. Right. And kind of what that means, because I think a lot of people, again, they they don't even hear that as much as the qualified side. and they don't know what it means. Yeah. And that's where it's really different because we're a qualified custodian and a directed custodian. So what that means is that our clients, as I told you, Kingdom was founded on the principle that the individual or institution who owns the asset should always control the asset, which is very much the same principles,

ironically, that blockchain and crypto has been founded around. So I have no idea how you made your way to crypto so um so a directed custodian um only uses the client's assets only moves the client's assets only does with the client's assets what the client directs them to do um we charge fees for custody you you see a lot of the big custodians you know in the country I hear it all the time. Well, they do custody for free. Well, they do, but they put your out your assets on their balance sheet. They go and they leverage your assets and they loan your assets and rehypothecate your assets, which is a big topic in crypto today. And they make the spread on that. Right. I mean, that's how they make their money. It's way more than the fees that we charge. Those spreads are. So it's you know, we hear all the time that that's the business we should be in.

We haven't chosen to go to that route because we believe that the direct as a directed custodian. Sure, if you want to leverage your assets, you can do that. We have partnerships and integrations with people who can provide that leverage, allow you to, you know, that matches up borrowers and sellers. And actually, yes, you pay us a small fee for custody, but you have access to do your own leveraging of those assets. And in many cases, it's much better for the client who owns that asset to be the one receiving the interest on it as opposed to someone else. So, yeah, so the directed part of it, really one of the key things is we don't put your assets on our balance sheet we don't take um we take title of them we have to to to be considered in custody and we do have the effective control but by way of contract and

through our regulatory the way we set this up with our regulators we don't put them on our balance sheet and we don't do anything with those assets unless our client tells us to um and it gives the client complete control of the assets at all times. Um, and there's nothing going on behind the scenes that, uh, that they're unaware of. And so once you got, you had a qualified custodian direct, uh, directed custodian set up, start out with precious metals, real estate, what's some of the like weirder things that you've had to cut? I knew you were going to ask that. Um, cause I know you're gonna tell me the truth yeah we uh particularly in the early days we had we had um really some we had a we've done fire trucks which were actually fire trucks that were being bought

and leased um uh which was actually a really good business idea for the for the guy that was doing it was very successful with it but what does that mean so to custody fire trucks like you just pull them up in the parking lot and leave them there or what do you do well so it was an individual who would they would buy the fire trucks um you know through their custody account and um and take title to them so we would hold the title we don't we didn't park the fire truck in the parking lot um and then they would turn around and lease those fire trucks in rural communities to small fire departments um and um they were kind of a lease to purchase you know with a you know basically an interest rate and i'm not a lease expert but um you know it these these were older

fire trucks they were already depreciated they would buy them lease them get the lease payment then sell them at the end and made some really large returns um through that but um yeah we've had people that have done you know timber rights it was a pretty unique one i thought even foreign timber rights down in brazil in different places um we've had cattle we've had people who were investing in cattle who would who would uh it was basically syndicated ownership in cattle but um yeah we've we've we've done a lot of unique assets but by far um private securities physical precious metals uh lending and loan contracts uh has always been uh one of our largest asset classes Um, where do these customers come from? Right. So I'm just thinking somebody's got timber rights. Somebody's got fire trucks. Somebody's got cattle. Kentucky's a cool place, but they all sitting in Kentucky or how do you kind of get all these customers?

Kentucky is probably one of our smallest states. We have over 100,000 clients now that we have in custody and somewhere north of 13 billion in assets. Last I checked, I haven't checked in a few weeks or a month. So it may look a lot worse today than it did a month ago. Depends on how much Bitcoin you got on the balance sheet. But so, no, it's people all over the world and all over the, you know, mostly in the United States. But we do some international stuff, too. But who find their way to us because they want to invest in things they know, things they understand.

You know, I don't understand fire trucks or I didn't understand Bitcoin when I first heard about Bitcoin either, which was actually kind of a cool story. When it was first brought to us, I hadn't heard of Bitcoin and I said, well, somebody explained it to me. I said, well, that sounds like nothing that's worth something. and i was like and it really didn't make sense to me but uh but my my comment was but i built this business around allowing people to invest in unique assets that they want to invest in whether i understand them or not is irrelevant and so we begin to look into it and then i actually kind of get you know i got bit by the bitcoin bug myself and um so it's become a personal passion of mine, I guess you would say. For sure. Do you remember the first person

who came to you with crypto custody needs? Or do you remember some of the early people? Yeah, absolutely. Yeah, yeah, yeah. So it was actually a client of ours from the precious metals world who is still a big client of ours. It's a guy named Chris Klein. He's from the digital IRA platform, which is by far the largest crypto IRA company in America. We still do all their custody for them. They came to us and wanted to allow people to buy digital currency in retirement accounts. The precious metals market wasn't, I think, performing really well at that moment. And he's a real visionary guy. And he brought that idea to us. And we started working with them to build that out and ultimately ended up building out that digital IRA platform.

They own the digital IRA platform. We're the custodian for all of it. And yeah, so a lot of the early stuff that I learned about the asset was through him and folks that I met through him. Got it. And so how do you go from pre-2015, no crypto business to, you know, really you guys are seen as one of if not the market leader and kind of you know the tip of the spear when it comes to crypto custody uh really on a global scale how does that happen um how you can't say because you're smart no it wasn't it definitely was was not uh because i'm smart so it was you know we just started building out the platform and and um hiring people and learning how to secure the asset how to um how to custody the asset and applying a lot of the same uh old

security and custody principles that we use in precious metals and other things and um how do you apply that and we've been through many versions so to speak of of how you do that and then obviously dealing with regulators and um you know as we uh as we were maturing that process in our company, Bitcoin and digital currencies were maturing, you know, through 15, 16. And it was really good timing, call it luck, you know, in early 2017 is when we really went public and started promoting it more. And it was perfect timing for the market. And then we launched our institutional platform in 17 to start doing qualified custody for sec advisors and folks like that there was a ton of people pouring into that market right at that time

we were the very first qualified custodian the first uh regulated entity to ever uh custody cryptocurrencies um and i think probably by at least a year maybe two actually before any other qualified custodian. Um, you know, it's, it's only been recently really that there's been any other qualified custodians come in in the market. So, um, so it, it just grew from there. Um, and we already had a lot of relationships in the, from having the other unique assets for some of the, you know, so we have some crossover clientele, right? So, um, so it allowed us to jump out pretty quick. And, you know, I think today we've got over 5,000 institutions and individuals that we hold crypto for uh which i'd say if uh i'm gonna do some back of the napkin math here

if you get over 100,000 clients about 5,000 crypto right it's a it's a growing number right but it's still not 20 50 you know 75 of them holding crypto but but it's still a meaningful amount of the customer base it's our fastest growing asset class by far um we have a whole team actually two or three teams that are focused on it i'm very focused on it as the ceo i just it's a personal passion i love where the industry is going um so it's definitely become a huge focus but um it's still just one of the assets of of many that that we custody at kingdom which again i think is it shows strength in a financial institution when you have multiple your assets It's spread amongst multiple industries and asset classes.

Let's walk through, when you guys are doing custody for crypto, what exactly are you doing for those customers? So we're safekeeping the asset. How? We're storing it, so to speak, which is a, you know, it's a, it's a, it's a, it's a word. Do you, you know, people will get into argue, what do you store Bitcoin, you know, but without getting into that argument. um we um we safe keep the asset which in in bitcoin it's the keys it's the private keys that's um so we we um we built out a storage solution we call the icebox um it's not just a uh it's kt icebox and it's it's not really it's not just a wallet so um in bitcoin until you hear about

wallets and there is a wallet component which you know a wallet is a piece of software that helps you secure your digital currency um but to really safe keep it properly and to do it in a way where you can get it insured and things which is which we built our the kt icebox was built around the idea of building an insurable digital currency solution so to do that you have to You have geographically dispersed controls and, you know, multi verification, multi signature on the actual wallet side, multiple verification on the actual how the transaction is built before it ever goes to the wallet procedures. So there's all these policies, procedures, you know, roles that are played, geographic dispersion to where, you know, ultimately at the end of the day what you want is to where no one person or even no one group of

people can gain access to it um and it takes multiple people and technology to get to the asset or to move the asset so to speak um technology can't move it without human intervention human can't move it without technology intervention and none of that can be done from any one physical place so that you know so that your physical security is less important right so um we spent a lot of time a couple of years um building through that we've been like through v1 v2 v3 so to speak um to get to where we're at today uh which is we do now have an insured um an insurable um safekeeping solution so we call it a safekeeping solution it's not a wallet it's an entire process um and and within that entire process also is all of the audit trails and

controls we can tell everyone who touched approved uh and and it all has to move through these processes to make that happen and and we've got that time frame down now for our customers where we can make that happen in you know a couple hours all right before we continue with this conversation i want to mention our sponsor again blockfi remember they do crypto lending so you posted your crypto as collateral, they give you a US dollar loan, and you can use the US dollars to do whatever you want. You should visit BlockFi.com slash Pomp, and then tweet at me that you win. If you tweet at me after you went to BlockFi.com slash Pomp, maybe I'll throw you a like, a smiley face, or the fire emoji. The fire emoji is the best. Remember, go to BlockFi.com

slash Pomp, and I'll see you on Twitter. Before we continue this conversation, I want to say a little bit more about Kingdom Trust. I'm really impressed with Matt Jennings and Kingdom. They're a qualified custodian of alternative assets, including a growing list of cryptocurrencies. They're doing all of this in a space that's known for its bureaucratic and dated processes, but they are anything but. Matt's an entrepreneur's entrepreneur, and he's built a massive business in a very short period of time. You should go check out KingdomTrust.com and let me know what you think again go to kingdomtrust.com kingdomtrust.com kingdomtrust.com and tweet at me if you let me know that you went maybe i'll throw you a like or a wink face on twitter

um and part of what you guys are doing i think is as a custodian is you're addressing the settlement risk and some counterparty stuff maybe talk through kind of how you you know what that is and how you guys address it yeah so um we um just in the last couple of weeks went live with a platform that we're partnered with called otcxn well hold on that was like an alphabet soup what is that otcxn okay um yeah so we were consensus today we've talked with i don't know how many clients today about it and have onboarded a ton of clients who are uh onboarding for this purpose And it's all around, we call it store it cold and trade it hot. So this is, it's a partnership between Kingdom Trust and OTCXN.

And the client can come, they put their assets into deep cold storage at Kingdom. And this can be virtually any asset. It actually doesn't even have to be crypto assets, but it's really built around crypto assets, at least at this point. So we'll use Bitcoin as an example. you come to kingdom you open an account you put your bitcoin into the kingdom account and um and then you go out and to the otcx platform which you join that's very simple process it's actually free i think on their side and it's free on our side as well to to start and um so once you join you you ask us to place that asset onto the platform this is all done through automation

so to speak and that asset is then put on the platform so there's um we already have dozens and dozens of people signing up this platform it's basically a closed network blockchain trading software so all these assets are held in custody at kingdom they're all verified before they're put on the platform and all of those folks have the ability to trade and we're loading exchanges, OTC desk, along with funds and fund managers. And it's all institutional. But it provides really, really great access for exchanges and OTC market makers to trade amongst themselves to provide deeper liquidity. It also provides the ability. It takes out the way it's done on the blockchain. The assets are in cold storage.

removes settlement risk, removes counterparty risk. There is no counterparty risk. All those assets are held in deep cold storage at Kingdom. They trade. And then the settlement, it's basically just book entry on the Kingdom end. So the assets never have to move. There's no need for it ever to come out of cold storage. It's always held in that insured cold storage. The only time you need to have to move it out of cold storage is if you want to redeem it for some reason, which we're which is we can do. And it's a couple hour process, as we talked about. But it it makes those assets tradable immediately. So if you trade, you know, if you have cash in your account and you have Bitcoin and Ethereum, you can go and sell your Bitcoin for cash and you can take that cash and

buy Ethereum and you can do all of those trades in literally seconds behind each other without having to wait uh to move out of cold storage or settle a trade you know t1 t2 um it it's really it's really solving a lot of the problems that we see out there in the market so if this works which i think it does right yeah it works yeah for those at home he's looking at me like it works dude yeah it works um obviously institutions are going to be super interested in this right yeah I don't know how much you can talk about your experience talking to institutions, where they are in the process of coming into crypto, thinking about digital assets, maybe not cryptocurrencies, but tokenized securities, etc. But you sit in a really unique seat where they all need a custodian provider. And so I'm sure that you're on a short list of who they have the conversation with.

What are those conversations like right now and kind of what's your outlook for the next, let's say, two years or so? Yeah, it's been an interesting year on that front. Um, and so in 2017, we had hundreds and hundreds of institutions that we were talking to, um, and, and, and a lot of them opened accounts and, and, and never funded, never, you know, were never achieved raising their capital, whatever, whatever it may have been. Um, what we're seeing today is, uh, less phone conversations, but we're onboarding more clients interesting well more clients that are funding right and actually putting the digital currencies in their account so why do you think that is i think it's you know the wheat's been

separated from the chaff a little bit with the the markets where they're at um but um but and i think people are beginning to understand qualified custody and that they need a qualified custodian. They're understanding the risk of holding those keys on behalf of their clients. I think the insurance was a big deal. And, you know, I know this has been a down market and, you know, even at the conference today, you could sense some people that were a little nervous or a little doom and gloom here and there. I think you probably saw that as well. But for us, we're not in that position. Actually, the month of November was the largest month We've had since we've been in business at onboarding new institutional clients.

Wow. So by far. Yeah. It's really interesting you say this because I've been talking a bunch on television and writing about this idea that the institutions aren't going to come in in the digital asset space. So it's crypto or tokenized securities on the exchanges. They're going to come in through OTC, et cetera. And actually, the custodian is that layer of the ecosystem is probably one of the best ways to measure what is that institutional interest. Right. And I think our hunch has been this is both through conversations.

So we've kind of directly heard it. But you talked way more institutions than we do. Even the price drawdown actually makes it more interesting to them than them chasing something that is just growing exponentially from a from a price standpoint. Yeah, I've always kind of laughed. It seems like everybody gets in when it's high and when things go down, nobody wants in. And we've seen some of that through crypto, particularly on more of the individual side. My partner, Mark Yusko, says people buy what they should have bought and they sell what they're about to need. There you go. Yeah. Yeah. Yeah. Mark's a brilliant guy. So I take what he says there. But we are you talk about our position and that's really probably the coolest thing about my job is we we do as you're talking about these institutions, we do talk to most of them in some kind of in some kind of a way and have have accounts with most of them, to be honest. And the other really cool thing that we get to see as a custodian is I think, you know, nearly every technology innovator out there in the marketplace, you know, needs custody for whatever it is they're building.

Their clients need custody in some in some way or another. It plays around custody. And I would say there's probably not a VC or anyone in America that sees any more of these cool innovation that's going on out there in the marketplace than we do. And so that's I enjoy that part of it. That's one of the things I really enjoy. I'm an entrepreneur myself. So there is some really cool stuff being built out there right now around blockchain and cryptocurrency. But back to the institutions, yeah, I think the ones that have made it are funding their accounts more. They're realizing the regulatory potential issues if they don't use a qualified custodian. Um, and so we're starting to see more of them. I think they're also starting to see the advantages of having a custodian from a operational

perspective in the fact, and this is partially things that we're working on and we're building out like the OTCX and, and, and many, many other, you know, that's really been our focus for the last six months has been building integrations with, um, service providers that can provide our clients with, uh, with what they need. So we really see, you know, if you think about custody, um, this is one of the things I see about the marketplace in general is it's fragmented. Everybody's building a piece, right? And you've got all these, these little pieces, and I don't care if it's, if it's leverage, if it's trading, if it's exchange, what, you know, there there's, there's a lot of stuff being built out there and a lot, and a lot of really good

stuff being built out there but um how does someone access it and and and particularly institutions um you know are you going to go place some of your crypto over here to do this and then move some of it and place it over here to do that um and at the at the center of that is the storage right they all need storage well what what what they're beginning to realize you come to the storage house which is you know we like to think of his kingdom as the storage house And if that storage house is integrated with all these different players, then you can leave your assets sitting there in cold storage and have access to all that. You know, people are in institutions they're worried about going and putting their assets on exchange in a hot environment. You don't have to do that if you custody a kingdom, but you can still trade.

and through integration and platforms that we have. So you can choose to do that. We're directed. We'll do whatever our clients want us to do if that's what they choose to do with their asset. But there's other ways to access liquidity without risking setting it on in a hot environment. So I think a lot of people are starting to realize

you come to the custodian. And we don't charge much more for custody than most of your high end, what I would call wallet services do. It's really and you have a regulated entity that is safekeeping your funds. It has insurance. It has and it has integrations through two different, you know, to many different platforms that that allows you to use these different services. Where'd the name come from? Kingdom? Yeah, it's a badass name. So where'd that come from? Well, it was really built around build your own kingdom.

You know, every human being kind of has their kingdom, right? And so when the name first was kind of thought of, it was control your own assets, rule your destiny was one of our slogans back in the early days was rule your destiny. It was this kingdom, you know, thing with like a sword, kind of like the old days. But which is why I say our business model before crypto was around and we were involved in it, certainly was really built around a lot of the same ideas and mentality that that comes through crypto as far as, you know, ruling your own destiny, controlling your own assets. So, yeah, that's where it came from. Very cool. Let's talk about the future of banking. Rex, I know you've got a bunch of kind of unique ideas here.

in, uh, in what this is going to look like. And, and you probably have one of the most aggressive timelines as well as what it will happen. Maybe just start with, you know, how do you think banking for individuals changes, uh, you know, in the future? Yeah. So, uh, I think it's a big change. Um, and I guess the, the way to start would be to, to talk about the end or at least the end of how far I feel like I can see it. And as you said, I think I probably see that here sooner than most people do because I've seen the technology that's being built and we've been integrating and working with people to build some of this. So I see the Futuristic Bank as one entity where a customer, whether it's institution or individual, can house or store, as you would at a bank with your cash today, all your assets. um you want to say all of your assets literally it could be all of your assets but coming in the

near future um it'll be your digital currencies top 50 let's say you know you could you could have there um your uh public equities not on blockchain just your normal public equities um and then um your tokenized securities which is all of your uh private securities today which is the the world that kingdom was you know we basically built our business around um whether it be um you know privately traded mutual funds you know non-publicly traded REITs or stock in private companies or asset-backed tokens that are backed by gold or oil or, you know, some type of commodity. And then you have your cash, right, and your fiat currencies, which could be, I think, the one company we're working with on some of this has the ability to do up to close to 100

different fiat currencies. And you have all this in one place, in one account that you can pull up, see look at on your phone and you have the ability to not only exchange those but exchange them amongst each other right if you wanted to trade your bitcoin for public equities you could or you know your private mutual fund for fiat or ether or whatever you know all these things would be completely interchangeable um and exchangeable amongst each other and um also the ability to quickly without filling out a stack of paperwork this big like you do at your bank today but to quickly leverage borrow against those assets leverage those assets in different ways and even do margins and things like that all this available in this one account and then

I think the really kind of the most futuristic kind of cool part of it is what we call the fungibility of those assets which is the ability to take every one of those assets flatten them down into one spendable currency um that is accepted at thousands and thousands of merchants so it's the ultimate asset-backed currency yeah exactly it's back it it basically um you know you you you do it on your phone let's say well let's call it a debit card for the sake of something and that we can use it in an analogy, you swap your debit card and spend your cash. With this, you swap it and you can spend your mutual fund.

You swap it, you can spend your Bitcoin. And it's all done at a fraction of the cost of credit and debit cards. And so we have a partner that we're very deeply integrated, partnered with, who's building out this technology company called Vault Bank. I'm not sure if you've heard of them or not. Early stage company, but the tech is basically built. um kingdoms providing all the custody and the fiat and and uh in in the background of all that um and um it's really really cool um what these guys are are are building out and we're working

with a lot of different lending and leverage companies that are going to be involved in all this so it's it's it's kind of bringing the ecosystem together um and it's bringing some of those fragmented pieces we were talking about together um and that's been a real focus of mine and several of us at Kingdom Trust over the last little bit has been working with the OTCXians, the vault banks, the other guys out there that are building these security tokenization platforms. You know, I believe that the tokenization of securities is the next big thing. We're going to be fast friends because I've been doing that for a long time.

People have been saying I was crazy, and all of a sudden now it's popular, and I'm not talking about it as much. But I'm waiting for my victory lap on Twitter to say I told you so. Well, it's going to come pretty quick. Your victory lap's coming pretty quick. So when we talk about time frame, that futuristic bank I talked about, it won't be completed in 2019. But the basic structure of that will be out, I believe, in 2019. You think it's like 12 months or less for the basic structure? For the basic structure to be out and including the payment system part of that.

I think you will see in the next six months major household name securities issuers that people probably never even think about in the blockchain world are going to issue tokenized securities in the amounts of hundreds of millions of dollars in these tokenized securities. I think that's going to happen in the next six to 12 months. And when one goes, the others follow suit. Of course. And when you look at tokenized securities, it's really, I'm a common sense entrepreneurial thinker. I'm not real, I'm not super in depth, but you look at it from the issuer's perspective, it's all good. Like, you know, there's no, there's nothing negative to the issuers in this. And you look at it from the investors to who, which is the world we grew up in, where we grew up in, kingdom grew up in, where you sign up for these long lockup periods and all these different things.

You have no liquidity for five years, two years, seven years, whatever it may be, whether that's private equity or just a private fund or, you know, whatever it may be. And you look at it and then you talk to the SEC. We've met with the SEC. We met with the CFTC. But it's a win, win, win all the way around on tokenized securities, particularly when you look at non-publicly traded securities. And the great thing for Kingdom is that's our – I call it our old world. And then little did we know in 2014 or 15, we started building out the Bitcoin and the cryptocurrencies. Conferences, we really didn't know at that time, but for the last couple of years, we've really been focused on it as we realized the power of blockchain and that our two worlds are in the process of colliding.

And we feel like we're probably one of the best positioned companies in America to capitalize on that because it's something we know a lot about both sides of that. Absolutely. Before I get into the rapid fire questions to end this thing, I got to ask you, what's your outlook on Bitcoin? Not price, but in terms of, you know, we've had this, you know, let's call it a shaken belief or a little bit of fear given the price drawdown. But what's your kind of outlook of the next 10, 20 years? I think it's great. I think my outlook's good. I'm not a price predictor in the kingdom. We don't give investment advice. We're directed custodians, so we don't do that. But I think blockchain in general is going to change how most everything's done. And I think that Bitcoin is right now going through what I expected it to go through. And I think most people in the market expected that you would see something similar to this. And some of them thought it would stop it, you know, going down at six thousand or five thousand. And now people are saying three. I don't know.

But I know that the the the use case is strong. The I believe in the store of value through through Bitcoin. And so, yeah, I think we're going to see another run. I don't know exactly when I would like to think it's going to be in the next 12 months. um you know um but i think it's not probably going to be quite as spiky and bubble you know as much of a bubble the next time i think we're going to see a little more of a steady up and steady down which is good i think actually um but yeah i'm i'm a believer in in in bitcoin and and long term awesome yeah um all right so i got a couple of rapid fire questions and then at the

end i'll let you ask me a question which scares me sometimes you didn't tell me i could do that Well, I warn you now. And then maybe we'll take one or two questions from the audience since they all came here to listen to us talking to microphones. What do you think the most important company in crypto is other than Kingdom Trust? Wow. I start out real high. Most important company. The regulators.

Do they qualify as a company? for sure we've never had that as an answer explain let's say the sec okay why um is probably because um you know every company in crypto is waiting to um i would say very few to none of them want to do anything wrong we all want to do it right everybody wants to do it right um everyone's waiting for clear guidance yep and there's a lot of things sitting on the sidelines and being held back until we get that clear guidance. And I think they're working on that. And, you know, I'm not downing the SEC when I say that whatsoever.

I think this has all happened fast, and they've got a lot to think about and deal with, obviously, and the CFTC as well. So I think that's the most important thing is the regulation. and and i don't love that i don't know if there's any one company that i think is necessarily uh super important perfect that's a great segue into the next question which is if you could wave a magic wand what one regulation would you change or improve um if i could wave a magic wand

you already got your own kingdom so now you're a magician well i think it it's really just clarity you know it's it's it's not so much that you know from a kingdom's perspective that we have an agenda that we want a certain regulation um approved or not approved i actually can't think of one just clarity we just want to know the rules yeah so that we can so that we can abide by them and build out our business to be within the framework of those rules so So it's really just clarity. I think I don't I don't know that there's any one regulation that's the showstopper. Yep. The main is there is there even any regulation? I actually don't think there's one that's a showstopper as much as I think a lot of people in the tokenized securities world.

That's where most of the answers come in around either accredited investor laws or the hoops they've got to jump through for going public or the reg D reg A plus type restrictions. restrictions yeah it's all around securities laws usually um but but none of them are regulations that necessarily need changed they need clarified on how it affects this particular asset class right there's a lot of uh crazies that have sat your seat you'd be surprised what people want to change yeah well well i won't name names they know who they are i'm not necessarily wanting to change them i just want uh clarification around them so that us and our clients can go do business yep i think that's completely fair uh what's the best book or the most important book you've ever read the bible oh no one said that before either yeah that's uh that's my go-to so um yeah that's that

uh you know if you just said around crypto um all right what about crypto too uh i've actually i don't think i've ever read a book about crypto amazing um i've read some pieces of some books but i'm a i'm a huge reader but it's mostly stuff from anthony pompley on oh jesus christ no so i'm i i read all the new you know i'm i'm a news and article and yeah though you know those kind of things but um i study it every day but um you know a book is usually one person's interpretation of of what's going on and and to be honest if it's a book on crypto if it was wrote last month it's outdated anyway so um so i haven't really read any books around crypto okay um so the one non-crypto question i always ask we've just got to admit that aliens exist

all right uh but whenever aliens are portrayed in sci-fi and movies etc it's always as a human comparison right so so do aliens have pets are there animal aliens and human aliens or is it all just one single species of of aliens well i'm a big dog lover all right so i would hope that if there is there i have to assume there's aliens right so since there is aliens then and i'm sure that they have dogs or at least something similar to some kind of if they're similar to human they have some kind of pet that's similar to a dog all right the amount of people who've also sat in that seat and admitted that there's aliens is pretty high as well which is which is one of the joys of this um all right what uh what one question do you have for me before we take one

or two from other people here oh man i wish i wish you'd have told me i was going to ask you that before i got here i would have came up with a really good one do it good one tony buddy um what do you see as in in the crypto space um what do you see as the biggest thing needed to move the asset class forward time yeah i think uh everyone wants all of this to happen today um i'm a huge there's like five quotes right so there's some people who know a lot of quotes i know like five i'm not really that smart uh but but one of the five is uh is this idea uh bill gate says you know we overestimate what can happen in one year and we underestimate what will happen in 10 yeah and and so uh i tweeted the other day i said you know bitcoin is almost 10 years old

right from when the network actually went live uh we're about you know a month or so away from that and uh if you think about it you know you got tens of billions of dollars in market cap you've got a state that accepts it as payment for taxes right you've got uh millions of people who have bought sold or hold um and you've got it being covered daily on cnbc bloomberg etc yeah exactly in 2009 there is like less than 20 people in the world who thought all of that would be possible in 10 years it is if you i tell everybody to think back 12 months you know 12 months ago this this uh this industry is way different than it is today. Um, I remember we were at the, uh, coin alts conference in San Francisco and which was in September of 17. Yep. Um, and, and we had

a lot of monumental things happen right around that time within our institutional offering. And, um, man, you just look that that wasn't that long ago. It seems like an eternity. But if you look at where we've came, when I look at where we've come since then and look at just the industry as a whole, where it's where it's came in that short amount of time is nothing short of amazing. I've never seen anything like it, but I do agree with you. It takes time. Most things do. Wise man once told me that you can't hire nine women to have a baby in a month. so uh it uh i now have six quotes that i'm gonna use i uh i appreciate you coming mad it's been

awesome and i'll have to do it again yeah it's been a great time appreciate it all right you reached the end of the podcast congratulations i appreciate you listening all the way to the end you deserve a trophy but before i hand out the virtual trophies remember to go visit BlockFi.com slash Pomp. They're the crypto lending leader in the US. They do it in 45 states, interest rates as low as 8%, and you can use the US dollars funded directly to your bank account to do whatever you want. You should definitely go visit BlockFi.com slash Pomp. You know you want to do it, so just do it. BlockFi.com slash Pomp. Hey everyone, Pomp here. If you like this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify,

and other podcast charts please do us a favor and rate review and subscribe to review simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain