Stephen: This is your host, Stephen Sargeant from the Around The Coin Podcast. This is not an ad or promotion, but I just love this shirt from Trust Finance. Anyway, crypto gang.

We have an amazing conversation today with Joe Kelly, who's a CEO and co-founder of Unchained, and these guys are doing amazing things. And with Bitcoin only Bitcoin self-custody, custody, they're doing inheritance retirement planning.

Bitcoin backed loans. They are the OGs when it comes to utilizing your Bitcoin, and they only really focus on long-term Bitcoin holders or people getting into the industry, getting into Bitcoin, especially with this huge regulatory push and momentum in the us. This is a great conversation as we talk about the evolution of Bitcoin.

What happened from 2016 when they started to build this company until almost 10 years later, which we've seen the industry evolve to some of the all-time highs that we've ever seen for Bitcoin pricing. Great episode with Joe. Just really detailed about how to break down, how to utilize your Bitcoin that people probably haven't even thought about, including estate planning, tax planning.

They do it all at Unchained. Enjoy the episode.

Stephen: This is your host, Steven Sargent, the Around The Coin podcast. We're in for a treat today. We got Joe Kelly, co-founder and CEO of Unchained. No, not that unchained, but we'll definitely explain. Joe, tell us a little bit about, you know, you're building a leading Bitcoin financial services company, but you've been doing it since 2016, so you've probably seen a lot, heard a lot shared stage with companies that may not still be with us today, and some that probably have surprised you. I wanna go back a little because you know, you founded a big data company back in 2011 working with like data scientists and cloud computing specialists, you know, what set the stage for you as an entrepreneur? What was your experience like in, in Austin, especially that far long ago, which has turned out to be quite the FinTech crypto hub?

Joe: Yeah. Personally I've been thinking a lot recently about kinda the metaphor and the experience of the frontier. I knew I wanted to be an entrepreneur as a teenager and tried my hand at a couple companies here after moving to Austin. But I wanted, I knew I wanted to work in the frontier of technology.

And what's, you know, the latest and greatest. And so that, that era of 2009 and 2013, when I worked on my first technology company, that was just as big data was becoming a, a term. And I actually did seed some experiences that were helpful in coming into Bitcoin because a lot of it gave big data at Sizzle.

And most of the, the you know, thing happening, there was these large data sets coming from online, from, from digital applications, and. People needed to store those data sets. They needed to do analysis, gain, gain insights, but as they got so big, you couldn't fit all the data in one machine, one computer.

So places like Google and Yahoo were early pioneers and distributed systems or how to distribute these big data sets across multiple machines at a time and pre-calc, cloud computing and all that. So that, those issues though with having how to have a data set that's consistent, that if like a record is manipulated or changed on one of the nodes.

How does that affect the overall database? How is data replicated? So it's, it's, it's staying up to date and consists with every, everything at the same time. I wasn't an architect or a developer in that prior business, but my co-founder here at Unchained, he was, he, he was one of the other co-founders of that company.

So when we sold that business in 2013 and started. Looking at and studying Bitcoin. He was very helpful to have along for that. And he was, he was actually kind of leading more of our investigations to it because he had that background in distributed systems and understanding what is the problem blockchain solves.

And then really the second thing I'd say, even some of what, what I kind of brought, well, he brought the technology. I was looking at it from the development of, of markets and companies. We, we, that being our first company together, we'd gone through some painful experiences. One of the more painful ones was.

Pivoting the business from being kind of a what was an open data marketplace at the time into being an enterprise software provider. And that was this experience of changing out your customer. Like you start a business to do one thing. You may not be sure who your customers are, but you're piecing together great technology and then the pain of trying to take that to market and convince people to take your product 'cause it's better for them.

You know, that's not, not necessarily how customer behavior works, they're, they're looking for problem solutions. All the time, or either vitamin or a or pain medication kind of a thing. So like that that model wasn't there as, as embedded in us as entrepreneurs early, but we found our way there as just by needing to make that business work.

And so coming to the Bitcoin space and ecosystem there from like two, 2013 to 16, what I observed was a lot of that similar behavior that was there in big data. Hey. I don't know about Bitcoin or, you know, it's confusing. I don't know if it's the, but blockchain technology, that's great. Let's do blockchain for healthcare, let's try to do blockchain for this other industry.

Let's bring in these other things. And pretty much all those companies died. Like that vision was just, you know, really misguided. So we, our insight was to really start with the customers are Bitcoin holders. The, the, this is a new market and the number one users of, of the blockchain anyways are, are Bitcoin holders.

That's where the most value is. And so go there like, or steer your business to that that kind of north star. So that's for all the, you know, changes and lessons and learnings and pivots. We've then have maybe more of a product level, sometimes business model. At the least. I can always, always say from the very beginning on Jane's always been here to serve like the long-term Bitcoin holders.

Stephen: I love that you, you know, you mentioned and touched on, you know, being an entrepreneurial mindset from a teenager. We have a lot of entrepreneurs, investors, tech, crypto payments professionals that listen to this episode. Was there anything, was there anything that you were doing back then? Like were you selling burnt CDs where you.

Joe: Yes, no.

Stephen: Maybe I'm aging myself there, but were you selling candy in school? Were you fixing up cars? Were you like tearing apart computers and speakers during class? Like what were some of the things that you could tell right away that this is the kind of path I wanted to take? That might not be the normal path that you saw some of the other students.

Joe: Yeah, well, I, I was born actually in Anchorage, Alaska. That, and grew up there until I, until I was a, in, in my teens, and my dad was, was definitely an entrepreneur. He'd worked for IBM. In Anchorage and then left IBM to and ran his own computer services business for a couple decades. So I got to kinda watch him.

He ran that with my mom. I go to go to their offices and hang out and, and and we did when I was seven we built a computer together, a desktop computer. So I had some of that and we exposure to technology. He was just always at the frontier of things. He was like, you know, working on typewriters in the seventies and then.

Later on, you know, small networks and, and and then internet applications for, for his customers over time. So we always had to kinda keep up to date and I had the benefit of, yeah, being from I really feel like these just a classic guy of that generation in terms of that, that mechanical mind through what was just a ton of changing technologies over, over several decades.

So that, I'd say just his influence in that, being around that and, and the idea of, I think even Alaska's this frontier state. And the kind of mindsets that are there and experiences I got to have made me more open-minded in accepting to things like Bitcoin. Maybe even seeking them out, seeking what are these things that are not super popular yet, or just kinda more niche, but that could be very transformative.

Stephen: You mentioned transiting and, you know, transitioning and pivoting in your past business and even that unchained a little, finding that right product market fit.

Joe: yeah.

Stephen: What, what are your thoughts? You also mentioned a bunch of companies that were there, you know, yesterday, but not there tomorrow.

When is it like a time to pivot versus like looking at the next shiny object and, hey, we need to be an AI first company versus, you know, the foundations that you've built in blockchain over the last eight years.

Joe: Yeah. Okay. I mean, there's no, certainly no one size fits all answer. Because you, you're dealing with layers of these things. You're dealing with purpose. And I, and we still hit on it, you know, in, in more like business development context. Hey, this deal, it's taking now nine to 12 months when we thought it might be three to six.

Do we cut bait? Do we think we're still just a few weeks away? Those are, those are challenges. You're always faced with business. So, I mean, do I do think in, in any business, I mean the number one cause of death is people giving up. So it's kind of also like what? Yeah. What is the choice you just need to make today that helps you survive another month or year?

and then evaluate the choices that you could make that would lead to your certain death in, in either this year or next year. And that's, that even brings up, I think, the way when you talk about financial services businesses for this space that have fallen to the wayside, it's often because they're making decisions, maybe a little bit for that short term optimization.

But that. Starts to stack up risks for them further and further down the line and cause them to potentially blow up and they, and, and their customers lose a lot of money.

Stephen: I'm curious, you mentioned, you know, you're servicing Bitcoin cryptocurrency holders. That's been your main mandate. How's that evolved? Like how's the Bitcoin holder evolved? And I'm assu. We're gonna get into what you're building there, unchained, but you know, you've been in this space long enough. How have the needs evolved?

How have the risks evolved that you've seen in this industry?

Joe: It's interesting because I think uh, I mean Bitcoin. The holder base has only grown since we started and I mean since has day one of, of course for it. And there are interesting, I think, cohorts or ways, you know, we talk, I'm a class of 2013 Bitcoin, or I'm a class of 2017, or I'm a class of 2020. I do think it's being at the front lines and onboarding people either into Bitcoin or to like, later, later parts of the journey and self custody and multisig.

That I, I found there is that, you know, the earlier, earlier bitcoiners, 19 to 13 was very OG cyberpunk you know, as, as like an architect. People were, were on original mailing lists or in certain parts of the, the forums out there. And then 13 was really a, a Silicon Valley moment or like kind of a moment where more tech and that, and I would, I'd say that's where me and my co-founder kind of were, we're here in Austin.

We're not based in Silicon Valley, but we're very tech adjacent. We're kind of in that and then. 17 was a mainstream moment. 2020 was even another mainstream moment. But it also had, by then more investors talking about it that had platform. Paul Tudor Jones started to see the birth of, of Sailor and his narrative.

So that it is, has been very, I think, really interesting to see how those have evolved and. At each of those stages, there are always kind of more like mainstream people or just, you know, doctors, lawyers, real estate professionals that, that hit Sean. But it, it's been, it's been more of those, and especially the last five to, to eight years.

And that's, I think that's been nice. 'cause that's kind of just where and unchain is that we, we see customers across all those populations at very. Early OG Bitcoin holders. We have the technology professionals. We have people that work in Wall Street for their day jobs and, but increasingly, a lot of the folks are again, just of a more mainstream variety.

And and that's, that's encouraging. I think it's good for the asset ecosystem. It, it emphasizes, you know, providing good education. And I think for businesses like ours too, some of our, having been around for a long time, help also serves us because now. When, when you are new to Bitcoin or something like this, you, you go to the people who've been around for longer than you have and say, who do you use?

Who do you recommend? What, what should I be doing? And so to have have the trust of those people, the, the, the legacy holders as well, really helps.

Stephen: Can you tell us a little bit about Unchained, right? When you were getting into this specific niche of the industry, you saw a lot of projects going around. problem, what void were you trying to solve for Bitcoin holders specifically, and was there any companies or you know, projects that you saw that were like, Hey, this is great, but we want to add a couple more features, or maybe focus more on security than other things, and you're like, Hey, we like this business model, we just wanna do it a little bit differently.

Joe: Yeah, so and so you brought up product market fit. I think uh, we knew very clearly who our market was as I described. So now it was the right product. There's a story of, I think even like Amazon's founding, that was something like Jeff Bezos did a hardcore analysis on Internet's here selling things on the internet.

That's where the future's at. What do we sell? And like in, and like almost a there's a list between CDs or books or furniture or garden equipment or these things. And then, you know, books have this, like several of these qualities that just kind of made it a, a good thing to start with. And so we. we wanted to do something similar.

I, I can't vouch for it as it being, as as absolutely thorough or quantitative in a spreadsheet format, but it was about, okay, you're, you're something newly wealthy in a, in an asset. What do you need? Do you need tax advice? Do you need alternative investments to invest it into, do you need ways to see safe?

Keep it. And so when we looked at lists like that, we thought things like custody and exchange. You know, how do I keep it, how do I trade it for dollars in, in and out? We thought those were solved problems. That, that was kind of naive. Actually, it turns out that the that's, that's still a, a great evergreen frontier.

But well we did come, come down to be, and we. Prioritized because we didn't see it in the market at the time. Was the Bitcoin backed loan or taking Bitcoin is collateral lending dollars against it? And it is a place where Navy Day and like ignorance can help because not having been a financial services person worked in capital markets or in credit and loans before.

I, I, I could kind of study this stuff without the ways, you know, now that I've been in it a lot longer and know just how hard it is to raise capital for this or how hard, how difficult it is. As a business that, that lending can be, you know, so we started that. We started with a, a very hard one that we had to combine.

We had to solve custody 'cause we wanted to keep the collateral safe. We had to solve sourcing capital, getting dollars from traditional institutions and investors. And we had to solve that, you know, marketing, how to acquire borrowers and then, you know, how to service that, have a good experience. So we really bid off a lot in, in the early days.

But it, it benefited us. 'cause then, you know, after, after the loan product was out, we had this custody platform that was interesting, that was differentiating unique, and that, that led to our Vault product, which is more of a standalone custody account for clients to use where they hold their own keys and we hold a third that can back them up.

And then, yeah, that's, that's really a foundation for us. And we, we help secure now over a hundred thousand Bitcoin for 10,000 clients, mostly in the us. And and have other products, you know, we can talk about between IRA, we have our own risk investment advisor and and, and other features. But yeah, it's, it's really trying to continue to find that right, knowing where our market is, knowing who our clients are, what are the correct successive products that continue to bring to them.

Stephen: You know, I am curious from a compliance background that we've seen both seen the regulations evolve since

Joe: Yeah.

Stephen: when you started this business. Bitcoin backed loans has not been widely accepted by all governments. Even here in Canada, we had Leadin. They've kind of moved out of, you know, offshore just because of the way we, you know, Canadian regulations treat stable coins and securities and other kind of nuances that make it tricky to play in this space profitably. What is, you know, what were some of maybe your early conversations, whether it was with regulators or even your banking partners, because I'm assuming this is not a product that they were very familiar with. How did you sell them on that and, you know, make sure that your customers were still able to get access to the traditional financial ecosystem while being able to leverage their Bitcoin with your company?

Joe: Yeah. Yeah. One thing that was very clear coming in, again, not without a financial services background was the, the BSA and and anti-money laundering start stuff. That list finance, just like the, you know, it's walking into financial services out of more of a software, data technology stuff. Like you can't really, there's not really a lot of things you can do to go to jail in that, in that world, in much of the Silicon Valley world, but in financial services and once BSA type matters are involved, and suddenly jail is real. And, and we've seen that with, with Bitcoin entrepreneurs in, in the past. So that was a, certainly on my mind, both on personal risk and just also pragmatically.

And I would like to start a, a legal business. So. Some of the first dollars we spent was on a consultant for, for anti-money learning. Bit a ML I'm trying to remember his, his name. I should kept in touch over the years, but they uh, but very helpful just in getting our early program down for that understanding that we're likely to be MS.

Money services business. And so choosing to acknowledge that. Bank accounts you mentioned that was, that was tough. It that it took it took like at least nine months to get a bank account somewhere. It was, it was, it was hard going that nexus of, oh, we, we touch Bitcoin and lending and money business.

Stephen: Yeah, you might as well just say we're a big crypto exchange and that would, that would be a very similar reaction probably by the bank.

Joe: Yeah, totally. And it was that. And there was, you know, choke 0.1 0.0 had already been a thing of just like, you know, sort of antagonizing maybe money service businesses. So it was, it was really tough going, thankfully got a bank partner going that we could get our, our lending activities out of. And you're right, I mean, there's, there's really no precedent there for bank Bitcoin collateralized lending.

There, there, there was some precedent in that, like, I could see and learn from places like Lending Club or SoFi places that were. A national, you know, storefront or web, web application for loans. And, and that had availability sometimes restricted by different states. So state by state licensing regime for for lending was a, was a very early compliance related focus for us.

We talked about lending re regulations, bi Bitcoin in its unique properties as collateral. I mean, I, I find there's a, there's a, a nerdy subject there just about taking security interests in, in Bitcoin.

But that, like, thankfully I'd say there's been more progress in, in uniform commercial code language for how you, you get a security interest in Bitcoin. 'cause a lot of people have tried to fit Bitcoin and that's been there. On the whole journey of unchanged is just trying to, can we fit Bitcoin into like this, this securities box?

Can we fit it into this other box? Or you know, how do you fit it into these things That for really a landscape of legal definitions and expectations that are, that revolve around accounts and intermediated finance. So, really even going back to like what is unchained and what got what. What guides us when we're serving long-term Bitcoin holders, we believe, and many long-term Bitcoin holders believe that best for them, best for Bitcoin is their ability to hold their own keys.

And that's not necessary in all, all cases or applications are for everybody. But still it's a, it's a predominant feature in evaluating feature for Bitcoin for people to be able to do that. So we've tried every, everywhere possible to not. Kind of break or not say like, well, just because we're lending or we're doing this, this classic financial services model, let's treat Bitcoin this way.

We treat stocks and bonds, or we treat these other things. And that's, and that's for a fact. That's what you saw Block five do. That's what you saw FDX do. That's what you saw. Like go look at the graveyard of that era in that generation of financial services firms and they were taking. Old Wall Street assumptions about business models and financial services and just trying to run that playbook here.

And that's what you can, you can see is probably causally or, I mean, highly correlated to, to how they failed. And so that's, that's sort of an assumption in and a place that unchain never quite went and back to even just that in part because I didn't know enough, I wasn't a financial services executive or some.

Someone out out of Wall Street that, that come in and saw the opportunity here. It was, it was, you know, almost saved by our, and, and in a way, like we want our principally be Bitcoin native first and then pull in the bits and pieces of financial services. We need to have a, a good solution for clients.

Stephen: Did you have the stats going in? Because I think there's stats that, you know, especially during the last downturn that like 70% of Bitcoin holders never moved their funds. Do you have those kind of stats when you're thinking about offering these projects and services to long-term Bitcoin hurdles?

Joe: Oh yeah, great question. Actually, we, and we were, I think we were some pioneers helping populate popularize the, the statistics the well known one is hollow waves. If you search for that, it's now available in a lot of other data research tools. And we can't take credit for having produced the very first graph.

There's the a well known Bitcoin or John Ratcliffe who published something in like 2014. But as we as we were working on, yeah, as as entrepreneurs and trying to deduce the, the market here, asking the question, Bitcoin is public blockchain, you should ought be able to see kinda the age or how old is, is Bitcoin, how frequent is, is it moving around?

And so we, we produced a more live and up-to-date version of that, put the hot waves name on it, which is stuck. And it's, it's beautiful 'cause you can see these, the, the strata almost like a, like a geology you know, looking at the side of the canyon where there's Bitcoin there that's been untouched for a year, sometimes days, you know, several years.

And, and as those buckets come out, you know, it's been pretty stable. That on the order of 60% of Bitcoin hasn't moved in a year or more. And so that's, that's a lot, that's a lot of the value. That's a lot of this, this long-term investor behavior of people keeping something around. And, you know, many people that, you know, it might be wise system has moved your Bitcoin every few years or just, you know, refresh your keys and whatnot.

But people that hold Bitcoin, I think predominantly still the population are people that intend to hold it for a long time.

Stephen: And that's interesting too, 'cause you hear about how Bitcoin is so volatile and it's like the price of it is volatile, but not so much the people. But in traditional stocks you see a lot more volatility with the people. You know, Ronaldo pushes away Coke, they lose $4 billion within seconds. You don't type, you don't typically see that kind of quick movement.

You know, what we call diamond or paper hands in crypto as you would think. I'm actually interested and I know, you know, inheritance and retirement accounts might not be the most exciting thing, but we also have never had anyone on the podcast talk about these products and services and hey, some of us, you know, original people that have gone into crypto, we're getting older, you know, and these are, we wanna pass it onto our next generation so they're not just like dabbling in meme coins.

When you're, can you walk us through some of the. Use cases are scenarios where customers are utilizing your inheritance and retirement accounts.

Joe: Yeah, certainly. So, yeah, I think it's, it's just trend of kind of growing up. Right. And, and yes, it's, these assets have become worth more and more and, and are significant share of people's household wealth. And they're getting older, they're having kids, spouses. There's the, the need to think about these, these things as part of generational wealth and how they pass on.

IRAs as well, you mentioned, I mean, they're, they're kind of related to this, but they're, they're a good long-term holding vehicle. You're not, not gonna have the same level of tax hit tax exposure especially if you're, you know, trading in and out or those kinds of applications. So, we're, we're well suited for that.

And it's this balance of concerns where I mentioned our vaults are such that clients hold two keys, we hold one and that's great. The client has unilateral control. They can. Move their Bitcoin without unchained anytime. They'd like using any open source wallet that supports multisig as long as they have their two keys.

But you know, multisig is is complicated for a lot of people learning about it for the first time. That's part of our you value is educating them and, and helping them through that. But educating two household members or something, you know, the spouse or others, all at that same time. It's usually just just the one, or usually there's kinda one person that, that manages this, this side of of things.

So. What you want is when that person is knowledgeable, when they pass, how does that next of kin, that inheritor, what steps do they take? You know, oh, there's a key in the backyard or there's a key in the vault, or there's these things like, you wanna have this set of trade-offs that they, they know there's probably some other important set of physical things that need protected that that, that next of kin can know how to access and get to.

And if that's just one of these three keys. The benefit is that now there's partly a legal process, or partly, you know, as far as unchained is concerned, the account holder might have been the original person, but you can designate these beneficiaries or trusted contacts or folks that when you know, the, the time that person met their demise or incapacitated that next of kin can contact unchained.

And after our process, then we can sign for them or help, help move the Bitcoin and, and we're there to hand holders that they might be totally new to Bitcoin or had no idea what this key is, but I'm just told this is, you know, worth millions or some, something like this. So, that, that's a key role we can, we can play in around that.

And we, we've done and we have a, a, a valuable estate center on our website that people can find information about that process and how it works and how we support.

Stephen: And I am curious what are, you know, some of the more exciting use cases? You know, people listening to this like, okay, holding Bitcoin for 10 years, 20 years doesn't seem like fun. Right. And it doesn't seem like you're really activating or getting the most out of your money, but you're offering trading services, lending services, using this as collateral that they can do things with their crypto and their Bitcoin without actually utilizing it or spending it. What's the main use case where people are like out there trading on a regular basis? Is it like, are they, you know, lending it out? What are some of the main use cases?

Joe: Yeah, so we, we, we, we've remained conservative and made the products we've offered. We I mentioned lending, starting with lending. Part, part of the conservatism there is we've maintained low loan to value ratios that's helped to protect us and any of our capital providers as well as the borrowers.

So we've never had a loan loss as an institution originating loans, and that's over over a billion dollars of originations. And I'd say that that's, that's one of the principle means we, we do commercial loans. So clients that are starting businesses or making investments or. Acquiring assets like the, the, that kind of activity now that they might have a, a large capital base in Bitcoin that's supported through, through getting a commercial loan through Unchained.

So that's definitely been something people, people use quite a bit. I mean, there's the point that just, just sitting a Bitcoin is boring as it is, is still a great trait, you know, or not, not things or

Stephen: I'm sure they're not complaining

Joe: yeah

Stephen: continues to go up.

Joe: 3% yield or, you know, yield kind of applications for Bitcoin. Have pro problematic characteristics that, that we can get into if we need.

But the you know, increasing like number one behavior for, as we talked about statistically, Bitcoin holders prefer to, to hold it for a, a long time. So it is boring. I like the boringness of it. It's meant we can kind of build a successful company. Not, not in the dark by any means, but not, not in a way that.

Requires spotlight. It requires like doing flashy, risky things pro overpromising things. Good financial services firms are usually built out of the slow accretion of strong client relationships and trust in the brand. And, you know, just behavior that that speaks for itself.

Stephen: Have you seen an increase in education or at least awareness by, you know, financial advisors? You know, like five years ago I was like, Hey, I'd love to remove my retirement into crypto mostly. And you know, every financial advisor without having much knowledge about crypto, saying exactly what you're saying, right? People would just say it's a Ponzi scheme and just kind of setting in, forget it. Have you seen, which is doing a disservice considering their financial fiduciaries, they're

Joe: Right.

Stephen: To lease. Make knowledgeable, you know, recommendations or provide knowledgeable advice. Have you seen this uptick in people wanting to get educated, wanting to offer these solutions?

Especially now that customers are demanding it and there's a lot of options optionality out there to find people that are willing to give proper advice.

Joe: Yeah. And there's, there's a lot going on there. I mean, in, in, in the way that's kept the traditional financial advisor industry. From being as helpful for, for clients maybe around, around Bitcoin. Parts, education, whether they understand it or not. Parts personal opinion, whether they believe in it or not.

Parts compliance. Whether they're compliance people believe it or, or say, or have attitudes about it or not. And then also practically like how does, how do they play a role in it when it's not just like a. Supported asset in the Schwab platform they're using or, or Fidelity and what label stuff they might use.

And then, and, and lastly also incentive how, how do they get paid or like how, you know, if it's not one of those types platforms, can they charge fees on top. So a lot of things are, are happening to create kind of distance there. We certainly would see that, you know, clients over the years would onboard with us and they'd say, Hey, do you know, do you have any financial advisor I could talk to?

I, I haven't been able to tell my, my guy about Bitcoin, you know, or like, he, he, when I first did, he told me I should just sell it. Or, you know, just these, they might be embarrassed or like shy. Now, now this is, you know, 50% of their household net worth, but the far the advisor knows, you know, the person only has the other 50%.

And so there that, that actually led us to start about 18 months ago our own subsidiary, registered investment advisor called Sound Advisory. That does tax planning and financial planning and some portfolio management for traditional securities and, and portfolios to kinda answer that need.

Thankfully though, we, we've also seen there is a cadre of folks that are independent advisors that don't have then that you compliance department, they're dependent on or they can kind of be boom, more forward with their personal opinions and beliefs that, you know, bitcoin's a great. Asset in a, in a household portfolio.

And then, and then especially I think people that were early enough to see that as advisors and, and were, you know, principal thinkers they recognize also the value of their clients having self custody. And so they, they can use unchanged, some pretty unique ways. For instance you know, you, you probably know well as an advisor, you can't custody assets for clients.

You can't, you know, it's, it's gotta be at a custodian or an account. You may have some administrative privileges too, but. There, there are rules against you also holding the investment positions you're putting your clients into. So in, in Bitcoin's case, it's, it's the same thing, but our, our multisig model does create some, some richer varieties.

So now, you know, on chain it's always holding a key, but instead of the client holding two, they might hold one in, their advisor will hold the other. And so as far as on chain's concerned still the uh, the client's, the account holder. They have the account with us. It's not the advisor's Bitcoin, but kind of behind the scenes or just underneath how it, how it works.

The advisor holds a key and already even back to those inheritance scenarios where households probably really already has deep trust with this, this advisor and the role they might have to play in any estate planning and, and transition type scenarios that this kind of leverages that relationship that's already there.

And so I think that's that's where we, in the frontier wrong, we always live a, this fusion of. Traditional financial services. I think some of the great qualities of traditional financial services are the relationship driven, driven parts of it, and some, even just the relationship driven accountability.

I do well for you, you're gonna send more of your money to me to manage or to help you with, and, and just that, that, that's a virtuous cycle for that, that kind of thing to happen and beyond. So when we, I think get kind of start to productize or treat the clients. If they're trading flows or whatever, it's that, as, as that's the product or that's the thing.

And then you sort of sacrifice some of those, those client relationships and things that have made a lot of financial services business is also very successful. The ones that prioritize this.

Stephen: I am curious with Genius Act, clearing, clarity Act, and more market stabilization regulations coming in the us, does that impact your business? Probably in a positive way because you're like, Hey, more legitimacy, more guard. More guidelines by regulators versus kinda operating, you know, on the fringes. But I'm assuming it also adds a lot of competition, right?

Every traditional investment house or you know, advisor is kind of like flipping on the Bitcoin neon sign now and saying, Hey, we do stable coins, we do Bitcoin. I'd love to know your perspective, especially since you've been in it, you know, battling for since 2016.

Joe: Yeah, all told is in that positive. The, and, and the effects we see are certainly in, you know, relationships with very regulated institutions like banks. You know, it is sort of like in that, in that area that I, I call it like the dogs have been called off, you know, the uh, examiners, the, the bank examiners and regulators that are in there, you know, every quarter or, or for every annual exam.

I think that there's just less less push from their superiors and, and the political climate in Wal, and sorry, DC to really investigate and, you know, choke out this the crypto related activities. So BA banks are starting to, to, to come in. I think that's good that that provides more capital.

It provides potentially more safe counterparties for, the, the ecosystem un unchanged, less affected by things that are, I'd say stable Coin specific or token specific or security tokens and those things that, that dominates A lot of the conversation place I'm particularly interested in and passionate about and know our clients are too, but is the the self custody provisions that are in the, the Clarity Act as well as provisions to protect developers of non-custodial software and platforms.

I mean, unchanging an interesting hybrid case or there's there's certain things we do as a financial institution, but we are also non-custodial. For the majority of Bitcoin, we help secure. We, we don't control, we don't have a un unilateral control. So that's always a, because we we're, we're not trying to be an open source software development company or anything like that.

We're, we're already admitted to be a financial institution. We just implement in a non-custodial way. The non-custodial pieces don't affect us, but I do think the. The affirmation of the right for clients, for American individuals to self custody using software and hardware wallets. I think that's really important.

I think that's a great check and boundary to draw with the legislation that I think Underst advance or, and, and keep it American, the lead around around this asset. It's important.

Stephen: Curious of any plans of expansion? You know, we see jurisdictions within Latin America, you know, around the world that might have similar or maybe even different regulatory. Um. Legislation then, you know, then the US will have now once they build out this comprehensive regulatory plan. Any plans for expansion or do you still see this market grossly underserved? As you know, even though more and more constituents are, you know, bringing in their s service provider offers and products and solutions, what thoughts on expansion versus like really servicing the US.

Joe: Yeah, I think our focus is still the us international has, yeah, there's like jurisdictional challenges that, you know, some places don't recognize non-custodial things. You touched Bitcoin here. Or this virtual currency something. So, um, you know, that's, uh, that's challenging, that's expensive and the US is a bigger, big enough market.

And I, I'd like to see on chain succeed here. Feel, feel very well secure here and maybe go international or, or you work on international partnerships really just over the next few years.

Stephen: I'm curious your thoughts. You know, we've been at probably similar conferences where crypto Bitcoin was all about banking de unbanked. We

Joe: Yeah,

Stephen: that happen. Even in the us, which is, you know, one of the strongest financially powerful companies or countries in the world, we're still seeing, I think 5% of people are still unbanked or underbanked in the us.

What are your thoughts about that, especially being in the financial advisor space, seeing this, you know, this generational wealth that you do. Is there anything that you think crypto will be able to unlock for some of the under service in the country?

Joe: I think it's inevitable. I mean, you know. Always, throughout all history, there's some marginalized portion of society by some standards and financial services is, is one version of that. Especially in the modern era with, with how finance and money works. I think there's, there's always more progress to make and I think that, even the attention or the way that service like Unchained for instance, we work with people that already have Bitcoin or have, have some, or have means to acquire. And about a requiring, you know, enough amounts to make it, it significantly enough that you want a multi-six set up or you want something more robust than you're keeping $500 on your, your phone in a mobile wallet, for instance.

So. But I think out of this, out of like any big trend or any big technology, that there's a lot of capital investment that creates assets and things that are around for other people to use. And that, and to cheapen like marginal costs for others that maybe can't afford the, you know, the first computer that costs $10,000 back when $10,000 was a hundred thousand.

You know, like these things, like, it just sort of, it all comes down a, a curve. And I think that's great and, and you are seeing no evidence, there's a great article in Bloomberg yesterday about Bitcoin use in Bolivia, and I actually didn't know, or I hadn't really tracked that story, but it's they've seen 25% annual inflation there.

It's a real problem and there's very credible, as a journalist did a great job surfacing of storefronts and the scene there of Bitcoin and some other cryptos kinds of things of merchant adoption. Local adoption by people. And so what, I don't know what other better examples. You, if you look for them, you, you'll find 'em.

Right? And so it's, I think it's also who's taking the perspective and how, how deep are they really looking if they want to criticize or feel like the industry's made no progress. 'cause it's, it's definitely non zero.

Stephen: You've had some great insights on your blog and on your website. I'm curious what your thoughts, you know, we both have heard, you know, blockchain, not Bitcoin, you focusing on long-term Bitcoin holders. What are your thoughts on that? Has that we've seen that evolve over the years? Have you seen it being a conversation where it's, you know, and versus, or.

Joe: Yeah. I do think, it is helpful that everyone continues to, to recognize the differences that make Bitcoin different in its inception, in its use of certain things. It's, it's as version of peer-to-peer cash or like cash or money. It's like the best application for the things blockchains are there to solve.

I do think there's a, there's a tremendous frontier of other, other things being tried in applications, but. Really backstage my roots as an entrepreneur and the, the mistrust I have for and from my own personal experience of trying to take a technology and then make it suit a pro a customer.

It's like that's a more, like, that's a one out of a hundred thing versus, you know, you pick the right customer and you do things for them that they need. That's, that's a 99 out of a hundred, you know, kind of, we have much more successful odds kind of taking things that way. But I think there are pieces and there's things we'll kind of compose out of the technologies that come out out of this kind of blockchain thing.

I think one, one example, I think to also put a finer point to it is I think just the adoption of cryptography. There's kind of the story that Bitcoin is built on, the cryptography from the previous century that we've got the advantage of, and. We, we were kind of there throughout the nineties that there, that's his, that was its own kind of compliance story about the threats to cryptography and whether it was gonna be allowed as private citizens to, to use cryptography.

And thank goodness. 'cause now it's, it's part of the backbone of the internet and backbone of all the banking and stuff we get to do thanks to encryption. But that experience, you know, never translated into email, never traded nothing to something like. You know, the stakes didn't quite feel as high. So it's obviously high in financial transactions or how we authenticate into web services, but, you know, sending an email here or there, we, we didn't care enough to like adopt like PGP and contr encryption for email.

But our, our Bitcoin is valuable enough. We care a lot about it. Value. And then you've seen the coincidental creation of harbor wallets, ledger treasure devices, gold card. There, there's now, there's now multiple of 'em. And that's, that's, I really feel that's this consumerization of. The experience of using cryptography, using these keys?

Probably, probably like, that's, that's just a learning curve. That's just like stuff that people still don't come out you know, of high school, like understanding. So, there, there's some onus there on entrepreneurs and, and product creators and builders to create experiences that people understand and will use.

And then we can kind of all advance a little bit together in the in the state of the art Of technology and adoption. So, yeah, I'm, I'm optimistic because I, that's kinda my answer to say I don't, I, I'm still un set along with it. Like, we'll see a, a blockchain for anything that lasts longer than 20 years.

That's not Bitcoin. Dunno, you know, I think we're still like the, the next oldest, if it, if it's Ethereum, it's still only like a 2014 artifact, or maybe not even 10, 10 years or barely over 10. So. Okay, well last, another 10, you know, dunno..

Stephen: They just celebrated their 10th birthday, I think, last week. Right.

Joe: Yeah. From probably the, the, yeah. The, the main net launch or something like that. So, tough to say, but I think a cryptography that, you know, there, there's a, there's a Lindy thing there. It's been around for forever as far as many of us live are concerned. And then the, the application of that, you know, just, you know, security and au authenticating human level.

Decisioning. I mean that's also important just in the context of the AI agent era and like where, where that, that type of trend is going. And thank God we have Bitcoin cold storage, you know, keys and, and, and capabilities now. 'cause that's one way you can keep your Bitcoin out of the domain of the bots.

Stephen: I am curious now that you know, you're having Bitcoin backed financial products, but now we're seeing more financial products just go directly on chain with real world asset tokenization. What are your thoughts on that? How does that impact, does that get people, you know, further away from holding their Bitcoin, using their Bitcoin? even with Bitcoin ETFs, we're, we're further away from that underlying asset of Bitcoin. Powering it. What are your thoughts on Bitcoin ETFs tokenized real world assets?

Joe: Yeah. It's two things. I think the,

I think time will, and I think people will have to, people will continue to kind of measure a lot of those things or, or it'll be coming on them to measure it against Bitcoin or what if I, the, the dollar I did with this, you know, real estate investment or this thing tokenize or not over the next five years, you know, how did that perform or will they put that dollar, like just in Bitcoin kind of a thing?

So it's, Bitcoin is just a a monetary yardstick. You know, continues to embed in the psychology for people. I think that's always like the hurdle rate or always the thing that like these, these other investments have to have to try to clear. And then I think also just from a real infrastructure perspective, we prove out the value.

I think there's, and there's a narrative that, you know, stable coins on blockchains are gonna reduce. Payment rail costs from the amount of intermediaries there and for instance, the Aach H system or credit card transactions, those kinds of instances. But it's, you know, that that impact of like the consumer is gonna be felt like day one.

You know, it's just kind of, it's gonna look like a lot of 'em more are the same. But once more of the network and of acceptance and, and, and utilization for perhaps exchanging dollars. But the rail is a blockchain where stable coins are, are moved around on can that lower the cost by 10 to a hundred x for traditional finance?

I don't know. I believe that's probably a. That, that would be one of the, the leading hypothesis though for some of that, that impact over time. And I think the real world asset side, that's, that's just a, that's kind of seeing I think, what is a active capital markets or like people are investing in doing things in this digital area, that it's new and it's easier to get attention in and trying out new things in.

Can get you, you know, dollar flows or, or like investment flows. The same kind of thing happens in Wall Street or at like, all up and down Manhattan as people chase trends and like pitch new financial products around there too. It's it's own capital market. So it's, I think like, just kind of the same thing.

It just happens now more transparently and on the internet in a way that you know, but whether and if like real world assets on a blockchain actually has a 10 x to a hundred x benefit, yet to be seen. I'm open-minded, but those are the challenges.

Stephen: You know what's interesting about Unchained is that you've taken Bitcoin and you've. Created, you know, scalability to it with lending products and you know, other products where we didn't really have that. That was Bitcoin's huge problem.

Joe: Yeah. Yeah.

Stephen: this emergence of like orals and NFTs on Bitcoin and DeFi and Bitcoin.

What are your thoughts on this like layer two Bitcoin ecosystem and does Unchained plug into that, wanna play with that, or, you know, can still help service those long-term Bitcoin holders by accessing some of these DeFi protocols?

Joe: I keep open mind, open ears and eyes on that stuff. It, it would be distracting for unchained in our, in our clients to think, you know, weigh them in or, you know, do. Information sessions on what are ordinals or, you know, are, are NFTs on Bitcoin, the next thing for, you know, it's just not it's just noise.

Uh, I think ultimately it's just, it's like short term perturbations of, you know, thinking that the best thing we can do for our clients help 'em not lose their Bitcoin over the, the duration they're holding it. And once that's there, then yeah, I, I. Then we kinda layer the, the, the things out that are next.

I, I, I, we love lightning. I'm interested in kinda taproot, lightning's, you know, taproot asset. These are things that I, I do think about and kind of the productive use of some of the, the technical infrastructure that's there in Bitcoin. And what does it. Enabled from like the layers of application's point of view.

That's actually a, a place. My, my co-founder Drew spends a all the time thinking and writing about, he's, he's publishing things and poking about things on this this kind of application stack for Bitcoin. So that's, that's I'd say where, especially from a company view closest to how we see it where it, it's interesting, not in many cases though, almost all, not yet ready for prime time, not ready for, you know, a company with, its.

Brand and relationships and things on the line to say, this is what you should do with your Bitcoin next. This is the next, you know something. Again, most things, that's just not the case.

Stephen: I'm curious, you mentioned, you know, lightning Network. We saw a big push when they introduced Lightning. I believe it was in El Salvador as part of their wallet system, but we haven't really heard much about it. Doesn't seem like the adoption's going crazy. What are your thoughts on lightning? Is it just like kind of that technology like, you know, H-T-T-P-S or whatever, like where you, it's there, it gets you to one website to another, but you don't know anything about it and it's working in the background?

Or is it just haven't quite picked up the way maybe you and me and others thought it would.

Joe: I think it's a mix. It's I'm a fan first of all, of just what is trying to be accomplished there, like the, the, the, the admittance that we want. Ability to send Bitcoin to and from each other faster than the 10 minute block chime and maybe do it in smaller transaction sizes. So, and it's the right thing.

And then fortunately, unfortunately, to get there is really complicated. Really a system that's, you know, kind of men buying, bending, but also like involves, you know, just principles of back to just how do you have a network that's in sync with each other and then, you know, settles into this bitcoin blockchain underneath. It's cool. I also think it's something not always known as like there's multiple imple implementations for lightning. And you know, lightning Labs is the, the by name and like one of the early pioneers and that, but there's others. Blockstream has a, I think a Sea Lightning.

So the just kind of, even just as a as a network, it, we understand, I think that, it's always had growth. There's been consistent growth. Not always in just Bitcoin, that's in channels like that you can see publicly, but also in, in people using it and applications for it. And I think that, I think it's already bigger than like Tor or like, you know, things that are like, like the Tour Network is kinda a version that of decentralized file sharing and, and information hosting kind of a thing that's like widely used and been around for decades, but like to already have.

Then, or kind of eclipse or have bigger usage patterns than a, than a tour network, which I think, I think Lightning has by, by nodes. That's cool. That's interesting that, you know, from a utility and measurement of a network that that's there. So I think it just takes time, if that's a, that's the interesting part, this stuff.

I heard someone put it that as well, it's just like, you know, checking in. You could almost say it's about Bitcoin. Just Bitcoin is so loud right now, but your comment about Lightning makes me think about it. It's like, in the early nineties you'd ask somebody like, Hey, what about email adoption?

It's only, you know, it's only a million users now there's only 1.2. Like, is email that, you know, dude, it's 93 or like, you know, give another 10 years? No, no one's upset really about like, you know, having been in that first third of emails, you know, life has like that. It's just that I think that the, from adoption inevitability point of view.

The, this stuff will continue to steamroll and and snowball.

Stephen: Speaking of interesting. You know, as we end the conversation, what's new and interesting happening at Unchained? Any new product service offerings that you're excited about near the end of the year? Or just even maybe just the new year, like where regulations coming in where you see, you know, new entrances to the space that you can help service.

Is there a new wave of next gen Bitcoin users? You know, I know Bitcoin seems like a baby. It seems like the baby boomer cryptocurrency technology. But you know, you know, everyone's into meme coins or NFTs. Where do you see yourself positioning yourself and newcomers to the space in 2026?

Joe: Yeah, well, one big recent development we secured a trust company charter in the state of Wyoming. That's our trust company called Cannet Trust. And again, it will allow us to do things like provide qualified custody on top of the arrangements we already do in collaborative custody. It'll also enable gat to be a, a trustee.

Some, you know, good, good fraction of the Bitcoin that people secure with unchained are held by trust. Trust being a distinct entity that's not a company, not a person but a distinct type of legal entity. And that's valuable for, it can be any number of reasons, tax planning you know, just asset sort of sheltering for just, you know, inheritance kind of thing.

So there, there's a lot of reasons you want. Potentially utilize trust as part of the growing up narrative that we talked about, just maturing as an asset is you know, when you are someone building hustled wealth and now are, are presenting a plan around your state and what happens trusts are, are one of the main options people will use.

So, can, it can play a role for people that are going down that path. That's very exciting. It's back to just how do we merge? Traditional financial service utility with, with Bitcoin native approaches. And then other than that, you know, we spend time talking to more and more I think bank partners, traditional wealth managers, finding ways to work together to continue to educate their clients and their, their stakeholders on how we do Bitcoin.

I'd like to see that I think that, you know, some of the real tension or, and real opportunity for Bitcoin is as an asset. You can self custody, ask 'em that you can hold your own keys for. That teaches you something. It's kind of a, it's an opposite of how so much of the traditional financial experience works while you're assets trouble with somebody else, all the money you think you have at the bank is not quite always yours or not guaranteed to be available when you want it.

And so this, this process of, I think being a a well respected financial institution wrapped around the self custody experience and be able to, you know, self custody pill. More and more people. I think it's great that that's, that's the privileged place on chains in and what we're always excited about.

Stephen: I love it. Are there, is there anything your customers, partners, banking partners are asking about or you know, saying, Hey, can you come up with this product or solution or offering that maybe Unchains not quite there, but you're like, oh, this is kind of interesting.

Joe: I mean, things like yield always come up. That's just the, again, that's just the big danger zone of and Bitcoin doesn't have. A truly scalable credit market or a place that, like there's Bitcoin bonds, a trade at this, these things. There's, there's just a, and there's a lot of factors for why. So I do caution people a lot in thinking about trying to get yield or, or Bitcoin return strategies.

But we, we keep an open mind for when or if something is ready. But yeah, that, that's, and that's always the top. Otherwise, it's, it's just really the, the. Partners we align with most are the ones that understand the parts about financial services that rely on good relationships over the long term.

And so when we find financial advisors that are working with families or others that, yeah, these are people they will be working with for decades there's good alignment to like, say, how, how can our application help you in the, these custody formats that we mentioned? How can if you just need somebody to help lead education sessions or walk your clients through.

Through their Bitcoin custody options. Happy to do that. And so that's, that's most of what I'd say is increasingly also coming o over my desk lately, which is great. Yeah. Traditional wealth advisors at, at large banks that are finally have the clearance from compliance, have the, you know, enough percentage of their clients are asking about this or, or they're really important clients now that it's clear.

They, they, they have already had Bitcoin and I'm not smart enough about it, so let me try to find good partners that can, that can help.

Stephen: Joe, where's the best place to that the audience can find you?

Joe: Cool. Well, my email's joe@unchained.com. Welcome to email me there. I'm also on X at Joseph Kelly. Our company counts at Unchained. To follow us on any one of those and, and reach out.

Stephen: Awesome. We'll put all the links in the show notes. Joe Kelly, thank you so much for taking us down the road of custody, self custody, everything to do with how you can leverage your Bitcoin for the future of finance.

Joe: Thanks, Stephen.

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