{ "episodeId": "SLP338", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "mauricio_di_bartolomeo": { "name": "Mauricio Di Bartolomeo", "role": "guest", "tag": "MAURICIO" } }, "segments": [ { "speaker": "stephan", "time": "00:06", "start": 6.14, "text": "Hi and welcome to Stephan Livera podcast, a show about Bitcoin and Austrian economics. Today, Mauricio Di Bartolomeo of Leden, he's the co-founder and C-SO, joins me to talk about Bitcoin backed loans, fiat interest rates versus Bitcoin loan rates, as well as some of the new products coming around home loans and Bitcoin backed home loans. We also talk Talk a little bit about the opportunities, the risks, the products and structures, as well as stablecoins. Are they essential and what kind of impact will they have on the Bitcoin industry? This show is brought to you by Swan Bitcoin. This is the way to buy Bitcoin and also learn about Bitcoin at the same time. 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Now, this is a great way to access lower electricity prices than what we could have in our homes at residential power rates. Now, Compass Mining have all sorts of content and material which you will enjoy, go over to compassmining dot io to find out more. And now, on to the show with Mauricio. Mauricio, welcome to the show." }, { "speaker": "mauricio_di_bartolomeo", "time": "02:50", "start": 169.6, "text": "Thank you, Stefan. It's great to be here." }, { "speaker": "stephan", "time": "02:52", "start": 172.1, "text": "So, Mauricio, I know you've been doing a lot of things with Letten, and, you recently had a big raise, seventy million on five hundred and forty million valuation Series B. So, really big stuff, and you've got some interesting products coming out, and I'm interested to talk with you a little bit about that, as well as the industry around Bitcoin and finance and how are these worlds colliding? so for listeners who don't know you, can you just give us a bit of a background on Yeah," }, { "speaker": "mauricio_di_bartolomeo", "time": "03:22", "start": 201.96, "text": "very happy to. So I was born and raised in Venezuela. I, that's where I got my education on inflation. Growing up in a place like Venezuela, my, my dad was a very entrepreneurial person, so I always wanted to be an entrepreneur. And I used to think, or I try to think of things in a very pragmatic terms. So when I was really young, I thought to myself, \"Well, if, if I, if I want to build wealth, and if I want to, you know, make money, the first thing I should start by doing...\" Is understanding how money works. I used to believe that if you understand how something works, you have an easier time getting it or, or planning around building something that will get you that. And so in a place like Venezuela, fortunately or unfortunately, trying to find out how money works leaves you with a lot more questions than answers. And as I was going through that journey, I, I kind of became obsessed with getting the right answers for what money was and how money worked. And that's how I ended up, you know, going to school for finance Finance and, and economics, and, as I understood money more and more, I shifted from economics to finance, a-and to sort of around that time it was like economics, I was trying to understand, you know, supply and demand, but then you start understanding there's way more to it, there's, there's bond issuance, and so you start getting into structured finance, bonds, and then how that interlays with equities markets, and how that whole thing interlays with property prices, and how, you know, something as simple as raising the yield on a treasury note can go Trying to understand all of those connections kind of kept letting me through my, my education, and that's why my formation or my education is in finance, and I did my masters also in finance as well. I-, in Venezuela, as the country was falling apart, many families decided to send their most willing child abroad, in case things went south, then your family had a way out of the country, and that was me and my family, and that's how I ended up in Canada. And, in my undergrad, seventeen years ago now is where I met Adam, who, My friend is a co-founder of Letten today, and in fact, many of the people that worked with us at Letten today went to school with us, their peers, our university peers, from Canada. And the sort of genesis of Letten came, or, or sort of the aha moment happened, and it was a collective exercise between Adam and myself because we each brought experience on two different sides of the world that we kind of married to build Letten. And how I come into the picture is in twenty fourteen, when Venezuela was going off a cliff The Communist Party essentially, took over the country by force, they stole the elections, and that, that triggered the greatest exodus in America's, in Latin America's history, which was the migration out of Venezuela. And it was around that time where my youngest brother was graduating university, and I had already made the decision to kind of come spend a few years in Canada because I thought things were going really, really south. But my brother didn't want to leave, he wanted to stay, and he kept pitching my dad on these business ideas to stay in the country. And, it was-- Everyone else was leaving, he was saying, and my dad, my dad could sense that he was getting frustrated, that, 'cause we weren't approving any of his ventures. So anyway, long story short, he starts mining Bitcoin, and this was summer of twenty fourteen, I believe. And Christmas of that year, of twenty fifteen, I saw his machines were doing great, and he was doing great in an environment when everybody else was literally crying and selling and liquidating their assets to, to leave the country. So I started helping a lot of people, when I saw that, many people And through that time, it became very clear that the only way to grow the mine was to sell your Bitcoin, and people didn't wanna sell their Bitcoin. And so we immediately, clued into this idea that there was a big demand for financing products for Bitcoin, for Bitcoin businesses, Bitcoiners, anybody that had contractors, freelancers, anybody that had earned Bitcoin that wanted to access- Some of that wealth didn't wanna sell it. It was a bad decision time and again throughout time, and so we knew that there was a group of people that were very incentivized to not sell their Bitcoin. Adams Side of the equation is he had been financing renewable energy projects for a decade, and he had seen investors not understand renewable energy projects ten years ago to essentially fighting over each other for a two to three percent yield product, at the end to, to finance these deals because they understood the technology and they provided great returns. And so with Adam's experience in financing and my experience in the, in the sort of Bitcoin community and the Bitcoin industry and how we could articulate this value prop to Bitcoiners, we kind of joined forces And built a team, raised a seed round, and we underro-- and our premise was to underwrite Canada's first Bitcoin-backed loan, and we did that in November 2018. And from there on out, we've, we've created a, a plethora of other complementary products, but that's our flagship product still today." }, { "speaker": "stephan", "time": "08:05", "start": 485.23, "text": "Fantastic. And so as you were saying, those of us who are Bitcoiners, we are very reluctant to sell our coins and would much prefer to use fiat where possible. And so in cases where- Where we can access a reasonably priced fiat loan, well, there's a benefit there. And then on the other side, the fiat lender, where, where are you getting that money from? Well, then that, what's the appeal for that person?" }, { "speaker": "mauricio_di_bartolomeo", "time": "08:33", "start": 513.01, "text": "So the appeal for that person is, i-in a world that is starved for yield, is that we can, a company like Lendin can offer, of somebody that funds those loans, a really attractive interest rate at a really great track record. We have zero percent loan losses from our inception, and the lender in this case, the lender of those dollars, is, is basically getting, a yield that is in many times five, seven multiples of what they can get traditionally at a bank with a-- working with a, with a group or with a party That has, you know, I think very sort of comfortable assurances that basically make it, as long as they're comfortable with the risk that they're undertaking by lending us the capital so that we can lend it out to our clients, then they will be earning a much better return than if they would just leave it at a traditional financial entity." }, { "speaker": "stephan", "time": "09:20", "start": 560.12, "text": "As you were saying, in terms of the demand coming from essentially Bitcoiners and people who are engaged in various types of Bitcoin businesses, for example, Bitcoin mining. These are the typical profile or customers that you have, and so would you say this is typically for longer time hodlers or actually is it a mix there?" }, { "speaker": "mauricio_di_bartolomeo", "time": "09:44", "start": 583.94, "text": "There is, so I would say that predominantly the, the people that are using these services are people that have built Bitcoin wealth, whether it's over the last cycle or over the last two years, they have done relatively well and they now want to very, be very effective and efficient at how they manage that wealth. They wanna be tax efficient by taking out a loan, they wanna make sure that they continue to earn on those assets by putting them on a savings account, potentially, now we have a product like the Bitcoin mortgage, which we can get into later, but people can essentially use their wealth to- To essentially diversify their asset base and improve their, their quality of life, right? And so that is the, the baseline of our clients. These are predominantly long-term Bitcoiners that are here to, you know, trying to manage their wealth. Increasingly, and as you, as you know, you know, Stephan, being here for many cycles, Bitcoin and other crypto assets get these sort of waves of retail interest that, that comes in whenever there is, you know, say a halving cycle or somebody like Elon Musk Spice, Bitcoin, et cetera, you get these sort of waves of interest that are people that are lo- looking to build their wealth with Bitcoin, right? They don't necessarily have built their wealth just yet, but they're trying to get in and, and DCA over time and slowly kind of build that pie so that they can take a loan. So we, I think there's a mix of both. There's a mix of, you know, active Bitcoin businesses and Bitcoin contractors, Bitcoin-- people that get paid in Bitcoin. Those are our, you know, everyday clients. They A lot of their needs, but we also have this steady base of people that want to build Bitcoin wealth, and that are slowly essentially trying to do that on the platform. and we have products for both. You know, the savings account would be a product for somebody that wants to doesn't need a loan, but wants to earn more interest over time and build and earn more Bitcoin. We pay Bitcoin interest on Bitcoin, and so it, it gives you that. And on the loan side, this is somebody that has already built up wealth, they have a potential capital gains built up on their Bitcoin And they're better off taking out a loan than, than selling some." }, { "speaker": "stephan", "time": "11:46", "start": 706.27, "text": "Of course. And so then they have to also think about the risks as, as well, and they probably in their minds are thinking primarily about aspects of custody and aspects around getting liquidated. So I guess they're probably the main things that people have to consider when it comes to using these kinds of products. And so what are some of the main ways that you see people managing those risks or at least mitigating those risks?" }, { "speaker": "mauricio_di_bartolomeo", "time": "12:12", "start": 732.18, "text": "So on the, on the- Assets and then the custody side, what we're very transparent with, we are a custodial service, so in order to provide our services, we need to have, the keys to the Bitcoin that's being placed as collateral. And obviously for our big, I was a Bitcoiner before we started lending Bitcoin, so, we understand the importance of holding keys and we understand, you know, the, the trade-offs and the, and the importance of that from a, from a practical level and from a philosophical level, right? There's, there's two, things there for Bitcoin community. And where we've always, wanted to stay true to the don't trust, verify ethos. And so for people to, to, to give some of that comfort to our clients, we were the first lenders to do approval reserves at the stations on an ongoing basis. And so that is one of the things that we do to provide some comfort and some assurances to some, to our clients on the loan side that we're doing what we say we're doing. And what that means is we have an accounting group that comes in every six months, they look at our assets Look at our liabilities, and they say our assets surpass our liabilities. And every single client gets an anonymized hashed ID that they can then verify on the accountant's website that we in fact gave the accountant their correct balance at that time. Time, because the only way that this exercise can be broken is that we lie or we misrepresent our liabilities to the group and then we, you know, it looks great, but by our-- by giving our clients the ability to check that in fact we did tell the-- give the, give the accountant the right balance, it basically crowd-funds the liability side of the equation, right? And we expose ourselves, so that people can verify that we in fact are doing what we say we're doing. Other things that we do on that side is we work with qualified custody, so our custodian is Bitcoin, out of the US, they have a, you know, the, an insurance policy on their cold facility, and we are obviously in conversations with our regulators here in Canada, to essentially, be fully regulated as a lending company, and I think that's- That's where, we want to continue evolving in terms of transparency to give that, that comfort and that transparency to our clients, and so that's on the, on the custodial side and on the liquidation side. So on the liquidation price risk, this is something that we, we are very, very upfront and transparent, to our clients with. The last thing we want is for anybody to, anybody's loan to be required additional collateral and then that person not able to respond and we end up having to close that out A loan. So what we suggest to our clients, when they are entering into these loans, is that they should always look or take into account that there might be additional collateral required, when we experience drops like the ones we're experiencing in the last few weeks. And so whenever they are thinking about using their Bitcoin to access cash, they not only need to think about that initial Bitcoin, they need to think, risk-wise, you know, six months, one year down the line, if this is the horizon where you wanna keep this money, you should have enough of a cushion on Bitcoin Withstand these thirty to forty percent drawdowns that we have seen from time to time in Bitcoin. So what we do to, to sort of try to get ahead of that is we try to be very upfront before they get the loan. During the loan, we try to, we continuously, produce and, and proactively send out content on how you keep your loan healthy, how to top it up. whenever a market drops five, ten percent, you'll see us tweeting, \"Check your loans, check your loans,\" and our system actually sends courtesy emails to clients once their LTVs reach seventy percent and seventy-five percent before that eighty percent threshold. So unfortunately, we can't control how fast Bitcoin moves, right? And our risk and our liquidation thresholds are based on price more so than on time. They're not based on time because nobody-- we can't predict how long Bitcoin's gonna take to go from one level to the other. We also can't predict once it's here, how quickly it's gonna go back. So our job as risk managers is to Have to execute on those sales when those thresholds are breached. And so the best thing for our clients is to proactively maintain those thresholds and, and don't let them get there." }, { "speaker": "stephan", "time": "16:17", "start": 977.39, "text": "Yeah, and I'd, I'd love to talk about some of the various levels and what kind of collateralization you normally go with for customers. And then, and then let's chat a little bit about the home loan product. But first, if you could just talk through just on the standard loan, what's the default or the recommended collateral level, and then what's like the normal, I guess, margin call levels" }, { "speaker": "mauricio_di_bartolomeo", "time": "16:38", "start": 998.0, "text": "Yeah, so we issue our loans at fifty percent loan to value to start. So if you come to us with ten thousand dollars worth of Bitcoin, you can borrow five thousand dollars, equivalent, and you place that under collateral. So your loans always start out at fifty percent loan to value. You get fifty percent of what you place in, in collateral. The courtesy emails to send additional collateral, get sent at seventy percent LTV, so that equates to about a twenty-nine percent drop from the price in which you took the loan, and then we give a second courtesy warning at seventy-five percent LTV so that you understand that it's now, it's getting worse, essentially. And then our system has to do an automated sale once the, once or if and when the LTV reaches eighty percent. And that's essentially, you know, those are the main thresholds to, to keep, in mind if you're considering borrowing with your Bitcoin. And obviously the, the main one, if you have to remember just one of them, is don't let your, let the V get to eighty percent. That's Your main one that you should be, your north star, I guess, in terms of when your loan has to get closed." }, { "speaker": "stephan", "time": "17:45", "start": 1065.06, "text": "And so I think those are probably the points where people have seen, I guess, comparable products out there, right? And my sponsor is Unchained Capital, who also have a, a competing product on that. But I think the new one that is, yeah, out there now is the Home Loan product. So let's talk a little bit about this. Where did the demand for this come from?" }, { "speaker": "mauricio_di_bartolomeo", "time": "18:05", "start": 1085.29, "text": "So we at Latin, we've always been building, or we try to build for, for what our clients want. Of course, that sounds simple, but it was every, what every business wants to do. But, you know, we, we work very closely with our clients and, and we try to listen. So what we started seeing, at some point or midway through last year, you know, some, maybe, maybe even earlier actually, but what we started seeing last year was many of our clients were coming to us to take out very large loans to buy real estate, and they I was, I hate my bank. For whatever reason, I, I can't qualify for the mortgage for the house that I want. I have X, you know, thousands or millions of dollars worth of Bitcoin, and I just want my dream home. And I'm gonna take a Bitcoin-backed loan, and I'm gonna buy this property, and I would really, really love if I could make the property part of the loan, so that would minimize the amount of Bitcoin that I have to put as collateral for this loan. And we saw that, and, you know, one request came through, two requests came through, the third request came through, and so we started saying, \"Okay, there's, there's an opportunity here. can we start working with some of these clients to structure a product?\" That would enable us to do this. And so as we thought more and more about the product, we said, \"Okay, well, this actually is a, is a great product for many reasons. One, it allows us to make the collateral pool way more stable in terms of the volatility and price of that collateral pool. And then the second one is that it allows clients to obviously post less Bitcoin as collateral to diversify into another wealth-building asset, which is, has great wealth-building attributes.\" And by making the collateral pool more stable, we can be more generous in terms of the margin call timing and the thresholds and the processes, because we have a, a half of the collateral is this very massive stable pool that, you know, has shown to grow over time. And so when we started thinking of the product as a package, we realized that it had a lot of great attributes and benefits that went above and beyond our existing product. And then we quietly started working with a few of our beta clients to kind of bring this product to market. They started, you know, getting some interest from their friends, and then the interest just started snowballing, even though we weren't really actively promoting this. And then we clued into the fact that there was a great deal of interest for this type of product, and so we made a, a concerted effort to, to structure the deal and to kind of make it a reality. we announced the product, last week. Or sorry, not last week, two weeks ago or three weeks ago, mid-late December, and, we're scheduled to essentially close the first deals in Canada this quarter, and the plan is to bring the product into the rest of Canada and into the US throughout, twenty twenty-two." }, { "speaker": "stephan", "time": "20:47", "start": 1247.21, "text": "And so what structure are we looking at here in terms of valuation? So as you said before, in the standard loan case, it's fifty percent. What's it working, what, what does it look like in the home loan or mortgage case?" }, { "speaker": "mauricio_di_bartolomeo", "time": "21:01", "start": 1260.6, "text": "So in the home loan and mortgage case, it's Essentially fifty per-- the, the LTV, the total loan to value of the loan is the same, it's fifty percent loan to value. The collateral is made up of fifty percent Bitcoin and fifty percent real estate. And so to give you a clear example, if you have a million dollars worth of Bitcoin and a million dollars home, you can get a million dollars worth of a, a loan essentially. And the product is designed primarily for people that either already own the property and the Bitcoin and don't have a lien on either. Like they don't have a loan on either the Bitcoin or the house, and they just want to essentially, take out this, this loan to either diversify into a new property, which we've heard people that wanna do this, 'cause they already own a property free and clear of liens and Bitcoin that's free and clear, so they wanna take some of that liquidity and purchase another property. And then there's also the case for clients that say have a million dollars worth of Bitcoin and want to buy a million dollar house. And so in this case, it's a, it's the, the But essentially that's the, the V one of the product is designed for, for people in this situation. And one more thing I wanted to add is that what, what we wanna do with Letten is, is help people buy houses at their most efficient cost of capital relative to their financial situation, right? If a person, and just to be very transparent, we are a, a Bitcoin-backed lending company and we're getting into financing home loans and, and mortgages. As you, as you and many others in the space know, the cost of capital is very different Between the two worlds. The cost of capital to finance a Bitcoin-backed loan is very different than the cost of financing real estate, especially in places like the US and Canada, where the governments are heavily involved in keeping those mortgage rates, perhaps, I wouldn't say, I don't wanna say artificially low, but, very attractive. And so, of course, we wouldn't want to, make somebody that can get access to one percent financing Have to take one of our loans, like, that wouldn't really make sense for somebody that can get access to that great cost of capital. If you have Bitcoin and you wanna leverage some of that for your new property and you qualify for a loan, we will work with you if you wanna do a down payment on the house through a Bitcoin-backed loan, and we will help you through our mortgage brokerage partners to get a traditional mortgage so the combined cost of capital for your property purchase is as low as possible. But our goal here is essentially to assist you In purchasing that home, using the tools that, you know, are right for you or you would choose, and obviously minimizing the amount of Bitcoin you have to put at risk at any time and optimizing your cost of capital. That, that's really what we want here." }, { "speaker": "stephan", "time": "23:43", "start": 1423.19, "text": "And so structured in this way, instead of that person having to, let's say, put up two million dollars of Bitcoin worth of Bitcoin in order to borrow, in order to buy a one million dollar home, in this case it's one million dollars of Bitcoin That they already have, and they're bor-- and they're borrowing the money to purchase the one million dollar home. And so that's an important difference. And so I guess while we are here, could you just comment on that difference that you see between the interest rates? So obviously the, let's call it the fiat home loan rate, and then let's say the, the standard, you know, Leighton rate, and then let's say what's the rate at for the Leighton mortgage rate? What kind of rates are we talking about here?" }, { "speaker": "mauricio_di_bartolomeo", "time": "24:24", "start": 1464.46, "text": "Yeah, so it'll be pretty much in the middle Rate will be pretty much in the middle of our Bitcoin back loans and the Fed traditional mortgage rate, probably closer to the Bitcoin back loan rate to start and increasingly move closer to the real, the, the sort of Fed's rate as the product progresses and matures, right? because the, the same way we did with Bitcoin back loans, when, when these loans got out of the gate, you know, you can look around and, and, and look at the, the historical rates that people were charging for these loans, but they were up in the twenty percent, you know, eighteen to twenty Loans first came out in the market, we, we know this because we priced them at that, you know, three years ago, two years ago, and that was market. And right now, those rates are at nine and a half and two, and so they've, they've come down dramatically over the last two years, and I think that trend will continue as you continue to see lenders like ourselves and, you know, and others that are having great track records, zero percent loan losses, and we still offer very attractive, dollar yields. Deals to the people providing the capital. And so I think what you'll see as we get bigger and better is that that cost of capital, our cost of capital will get bid down. I don't necessarily think that we'll converge with the Fed rates, just, you know, for reference, people think about the mortgage rate in the US as this, this free-floating rate, and it's, it's not really that market-driven. Like, you know, I just wanna point out that the Fed has been adding forty billion dollars in purchasing forty- thousand dollars worth of mortgage backed securities over the last, like, more than six months. And so they've been deliberately doing that to keep those mortgage rates suppressed and to keep the, the, the real estate market active. And so as big and as important as the treasury markets is, there's a lot of noise in those markets from the own central banks that, that have an optical mandate almost to keep the, the curve looking a certain way." }, { "speaker": "stephan", "time": "26:25", "start": 1584.58, "text": "It's correct to point that out that we have central banks all around the world world, acting as lender of last resort, we have legal tender laws, we have capital gains tax laws, all of these impositions into the market, and in the case of the US, obviously the existence of Freddie Mac and Fannie Mae that also help subsidize these home loan rates. So arguably, it is quite true to say that these loans are fiat artificially subsidized in, in a way. And so w- it remains to be seen where exactly that goes, but I think it is totally fair to point out that over time, as the- Market matures and as the understanding around Bitcoin grows and more and more people start to see, let's say what you and I and many Bitcoin people are saying, so as we speak today, that interest rate for the, for a Bitcoin loan, standard Bitcoin loan, is, something around nine or ten percent, isn't it? Nine" }, { "speaker": "mauricio_di_bartolomeo", "time": "27:16", "start": 1635.81, "text": "and a half. Nine and a half percent. Yeah, nine and a half and two, two, two percent admin, nine and a half interest rate, and you only pay interest for the days you have the loan open." }, { "speaker": "stephan", "time": "27:24", "start": 1643.8, "text": "I see. Yeah. And so the hope then More e-players entering the market to provide that fiat funding side will then bring that rate down over time. And so this might end up being a way that bitcoiners can access cheaper cost of capital than they otherwise would be able to, and I think that's probably the important point. Well, I, I think that brings me to the next question as well, because if a person wants to take a standard fiat loan, just go to the bank and get a normal home loan or car loan or things like that, they will assess you In terms of things like serviceability, they'll ask you, \"Stephan, what is your income? You know, what is the pri- you know, and based on your income, you're allowed to borrow this much.\" How much of that is going to come into play in Lendens products? And, and I guess one other point is, do you see that as being an opportunity there where maybe you would say, \"If we do more serviceability assessment, we can maybe give you better terms or a better rate,\" or do you see that more like, \"No, part of the reason we do this is for the less friction.\" How do you see, how do you see that?" }, { "speaker": "mauricio_di_bartolomeo", "time": "28:32", "start": 1711.89, "text": "That, that's a really great point, and I think you hit the nail on the head, Stefan, which is that it's, the more, diligence, a lender can do on the borrower in terms of serviceability, in terms of how long you've been in your job, in terms of, you know, when was the last time you got a raise, how do I know that this is the money? So like, you know, if you get into the weeds of a bank application, that is what they make you go through. They make you check your tax statements, they make you check your pay stubs, they make you check your letter of employment, all sorts of things, personal references," }, { "speaker": "mauricio_di_bartolomeo", "time": "29:09", "start": 1749.34, "text": "That, right? In the case of Letten, what we're trying to do is, we understand that if a client is, considering a Letten loan, they've probably exhausted some of those options in terms of trying to get that very low cost of capital, right? And, and for whatever reason, right? Like people fall through the, fall, fall off the bank rails for the, the silliest reasons, like, if you have a personal company, you know, you're gonna, you're gonna have a really hard time if you're a contractor, if you're In the bank, a history of, of employment and a history of this, if you have your own small business, if you have a Bitcoin business where your revenue is in Bitcoin, like there are many reasons why people don't get approved by a bank, and many times they are, in our view, they are, is, they're just looking at it in the wrong way. They don't even consider Bitcoin an asset, for God's sake. And so, we are trying to take a different approach in that What we wanna make sure is that your Bitcoin wealth can service that part of the loan. If we can get comfort and we can get enough of your Bitcoin wealth and enough of that collateral To give us comfort that we can extend you a two-year term, on this loan, then of course, you know, that's the, that, that's the value prop of our product is that we give you access to that property by looking at your profile and your wealth in a different way than a bank would, right? The, the closer we get into looking at your servicing capacity and, and diligencing you more and more, the more it becomes like a bank, right? And so the, the, the harder it becomes For us to compete as we get closer into this realm, right? So at the beginning, we wanna start catering specifically the Bitcoiners, and like I said earlier, if we believe or if you believe as a borrower that you can get, a lower cost of capital through a traditional bank, and you just wanna use us to finance a down payment on the house, we'll help you look at that option, right? Because what we want is for you to be a happy buyer and for you to come back next time. We don't, we're not gonna try to push you into a product that may" }, { "speaker": "mauricio_di_bartolomeo", "time": "31:16", "start": 1876.36, "text": "With us in the long term. And so, I, I went off a tangent. I'm not sure if that answers your question." }, { "speaker": "stephan", "time": "31:21", "start": 1880.86, "text": "Yeah, no, well, essentially I was asking about how you and the company see that trade-off balance, and I think you, you essentially you have answered it around, as I would summarize then, and you tell me if I'm summarizing this wrong, is it, is that essentially you're remembering that this is meant to be a Bitcoin, a company that speaks Bitcoin natively and therefore understands that aspect of it, that there may be customers who don't have income that Credit on and serviceability and all of those aspects. So I think that part of the trade-off may mean you pay a slightly higher interest rate, but you get maybe more accessibility, let's say, that more customers can come and use you, as an example. And so actually I'm curious then as well, maybe taking that slightly one step further, is how does it work then if there's a customer who has literally no income? Can that customer still take out a loan, borrow against it, and then in that case, what's the presumption that they- They are going to be doing to repay, to make interest payments, or is the presumption that they could continually borrow and roll over? Like, how are you seeing that?" }, { "speaker": "mauricio_di_bartolomeo", "time": "32:25", "start": 1945.49, "text": "Yeah, so the, the, what we're gonna assess, the, the V1 of the product, what it's assessing, it's the, it's the bitcoiners' bitcoin wealth relative to the property they want to purchase, and we will, you know, we will, do our diligence to get comfort that the person has enough bitcoin wealth to essentially, satisfy an additional- Pop up requirement, et cetera, if need be. Obviously, we don't wanna get into a situation where, for us, closing a loan is the worst thing that can happen, both for us and for the client, because it's a terrible experience. Both the client and I are invest-- and I start investing a tremendous amount of time and capital to kind of make this happen, and nobody wants to have a poor experience. So what we're really trying to do is protect both of us and making sure that we can come out on the other side happy and, and continue doing business together." }, { "speaker": "mauricio_di_bartolomeo", "time": "33:16", "start": 1996.32, "text": "Could potentially have circumstantially no income at this time, but if you have a hundred million dollars worth of Bitcoin and you can give us comfort that that's gonna be available to, to meet a, a, a top up and you wanna buy a five million dollar house, then we can structure away with you that we can get comfortable, right? Like it'll be, it'll be somewhat case specific, when it comes to that. But the idea here is for the, for us to use your Bitcoin wealth as a ma-as a means to assess the property you wanna, you wanna purchase. And, You know, the, the, the loan is structured in such ways that, it, you know, when clients that are, you know, are engaging in us through this conversation, like it'll become evident as, as more people get to see the specific, Details of the loan, but that, that's really the intent, right? Is to say we wanna help Bitcoiners access property and improve the value prop by requiring less Bitcoin, by giving you more time to top up, by allowing you to use your Bitcoin wealth, and that has benefits over the standard Bitcoin bank loan. You know, that, that's kind of the idea. It won't replace the traditional mortgage if you can get it, it's, it's basically in the middle." }, { "speaker": "stephan", "time": "34:19", "start": 2059.12, "text": "Back to the show in a moment. Lend at HodlHodl is a peer-to-peer Bitcoin-backed lending platform where you can lend or borrow stablecoins globally and anonymously. Now sign up in just 30 seconds and borrow stablecoins without verification, deal directly with other people controlling your collateral through that whole deal with all the interest paid at the end. On the other hand, if you have stablecoins, you can earn extra on them, you can lend them out at the highest returns. These are issuing overcollateralized loans with full interest guaranteed. Lend at Hodl HodlHodl lend and borrow stablecoins on your terms at your desired interest rates. There are no hidden fees, the terms and conditions are transparent, and users control the keys in the deal in escrow. Go and check it out at lend dot hodl hodl dot com. If you are looking for a Bitcoin hardware wallet, my favorite is the Coldcard by CoinKite dot com. Now, CoinKite have been in the industry for a very long time. In recent years, they have been focusing on hardware security. They've got all sorts of new things coming down the pipeline, such standard that they've been working on. It's a great tool, very versatile. You can use it as part of a single signature setup, you can use a passphrase, you can have a Duress pin or a BrickMe pin, and you can use it as part of a multi-signature setup. So if you're new, just plug it in directly and use it with wallets like Specter, Sparrow, or Electrum, and if you're advanced, use the micro SD card for air-gapped transactions. So go to coinkite dot com and get a discount on your cold card by using the" }, { "speaker": "stephan", "time": "35:49", "start": 2148.8, "text": "failure, and with Unchained Capital, you can easily create a multi-signature setup, what's called collaborative custody. Now, you can set this up for free on the website, bring two hardware wallets and set up. But if you want some guidance, they also have a concierge onboarding program which is becoming very popular for listeners, so go and check them out. You can take away those single points of failure and give yourself some more comfort and ability to sleep soundly at night knowing that you could still make a mistake without necessarily losing your coins. So Unchained dot com slash Select the concierge onboarding program and use the code Livera to get a discount, and you will be guided into setting up your multisig setup with Unchained. And now back to the show with Mauricio. What kind of loan term are we talking about here? Because in the fiat world, people are typically doing, it could be twenty, twenty-five years of a loan term. How does it work in the Letten mortgage case?" }, { "speaker": "mauricio_di_bartolomeo", "time": "36:40", "start": 2200.34, "text": "The, so the Letten mortgage case is just a, a two-year term in this case right now. It's an interest-only product, so there is no, As the current version of the product, like this may change, but the word that we're basically working on now, there is no amortization period. It's really just an on-- it's an interest-only loan that is basically getting you to purchase the property and, and getting you in the property, right? We do expect as this product evolves, and the, the interest that we have received on this product has been astronomical, like it has surpassed our own expectations, so we, we, we have-- we feel very confidently that this product is gonna continue to grow and evolve. And like I was saying to you now, right now it's a two year term, interest only, there's no amortization. The idea is for you as a bitcoiner to get into the house of your dreams. And obviously as the product, as we iterate on the product, we wanna ex-extend the time horizons, allow people an amortization schedule, and, and hopefully, you know, continuously improving on the product. But, you know, transparently, in Bitcoin terms, it's, you know, two years of Bitcoin is like, you know, a thirty As we, as we move from these Bitcoin financing cost of capital and, and custom of capital, 'cause Bitcoin is used to turning around in three months, six months, year topped, now we're getting into like two year terms. So this is all part of an exercise of basically maturing Bitcoin's time horizon and, and almost like pushing out the, the lender's time preference on Bitcoin, right? And getting more comfortable with, with, financing Bitcoin over a longer period." }, { "speaker": "stephan", "time": "38:15", "start": 2295.08, "text": "And so if the loan period is two years, is there- Going to be a rollover facility because presumably if not, that customer is now at the end of that two year term would have to find some other loan if they can't get a rollover with you, right?" }, { "speaker": "mauricio_di_bartolomeo", "time": "38:29", "start": 2309.19, "text": "Yeah, and so what, what we're tr- on the first few pilot loans, what we have, worked with our clients is to let them know that, and, and obviously these are clients that we are assessing that if we can get to that end, they'll be able to do this, but essentially, I don't foresee this product winding down, call it, at the end Exponentially from here, but we have to plan for the worst and prepare, you know, for the best, right? Like as long as, you know, if, if we are prepared for the absolute worst case scenario, then the best just takes care of itself, right? And so what we're doing for the first pilot cases is ensuring that at the end of this two-year term, these few people that are entering into these loans would have the means to turn that loan into a standard Bitcoin-backed loan Like in the, at the end of the two-year term. So basically just enough Bitcoin to make up for the house portion so that the loan can be rolled over. And this is in the unlikely scenario that the Bitcoin mortgage would, for some reason, not be able to be renewed, right? and so that, that's the, the, the way we're looking at that. Like I said, you know, I, I think that hopefully how I would like this to continue is that, you know, clients take out the loan, the loan continues to grow, we receive interest from investors that continue And then at the time of renewal, the client can take out a better interest rate with a longer period, and amortize it, and sort of gradually over time as they renew and terms get better, the client can take the benefit of all of that." }, { "speaker": "stephan", "time": "39:53", "start": 2392.78, "text": "And when it comes to margin calls, so we spoke about the process in the standard Bitcoin loan process, what does that look like in the property case? And does that imply-- obviously, we all know, you know, it's easy to see the price of Bitcoin, and obviously it's quite volatile. What about in the case of the property? Market, does that require regular valuation of the property to sort of say, \"Oh, okay, look, the property price has gone up or down?\" Or how does that come into it?" }, { "speaker": "mauricio_di_bartolomeo", "time": "40:19", "start": 2419.2, "text": "Yeah, so this is a, this is a really good, good point because I think this is one of the biggest differentiators of this product. So obviously to get comfort on the value of the property, we have to do an assessment, like a property assessment at the, at the start of the loan, and that will be at the cost of the, of the borrower at, at the time of the application" }, { "speaker": "mauricio_di_bartolomeo", "time": "40:40", "start": 2439.87, "text": "At the one year mark, just to ensure that the property value has been maintained. And, when it comes to the Bitcoin piece, I think one of the most interesting things in this product is that When the top up for Bitcoin is required, in the case of the home loan, we're, we're actually able to allow the client two weeks essentially, to top up that additional amount, and it is, i-i-in that sense, it is a time threshold, versus in our standard Bitcoin-backed loans, it's not a time threshold, it's a price threshold. So, you know, from seventy to eighty, as we all know, unfortunately, can happen in a matter of hours. Right? getting from seventy percent LTV to eighty percent LTV in a traditional Bitcoin-backed loan. Now, in, in the case of the property loan, we will be, you know, once the Bitcoin price drops such that the top-up is required, we'll ser-we're still able to give you two weeks, right, to, to come up with that difference. And the reason for that is that we have this other massive pool of collateral in that loan that hasn't dropped in price, right? Like as dramatically, typically as, as Bitcoin. Bitcoin does, and that gives us that flexibility to pass through some of that extra time to the client. So that's, that's what, that's, I think, one of the biggest differences in terms of, because anybody that's borrowed against their Bitcoin probably has gone through some of these, you know, moments where you need to send more Bitcoin and, you know, you were either out of your house or, you know, it just, it, it, it cut you at a, at an inconvenient time. A lot, a lot of our borrowers have actually moved to the proactive approach" }, { "speaker": "mauricio_di_bartolomeo", "time": "42:18", "start": 2537.94, "text": "We're gonna be away. And so that behavior actually is, is impressive how, how smarter borrowers get and, and how less and less of them, you know, are impacted when, when you have these." }, { "speaker": "stephan", "time": "42:28", "start": 2548.5, "text": "Yeah, a-and I think it's an interesting point because this product tends to work best for people who have already been around in Bitcoin for a while and have therefore accumulated, call it, hundreds of thousands or even a million plus dollars worth of Bitcoin. And so they need to have that survival mindset to have made it that far. And so potentially that's, that is there. But of course, it's always possible that people overextend and maybe borrow above their head and beyond what is a conservative and prudent amount. So that's always a, a tough conversation and something people have to really consi-consider for themselves. But all things said and done, it could save people a lot of money in terms of what they would otherwise pay in terms of capital gains taxes, and they might rationally think, \"Well, I would rather take out a loan and I would rather pay interest than pay this capital gain.\" And I'd rather retain my exposure to Bitcoin because obviously over time, number goes up, and so I wanna retain my exposure to Bitcoin and use fiat loans as much as possible could be the thinking, so long as they can do it prudently." }, { "speaker": "mauricio_di_bartolomeo", "time": "43:31", "start": 2611.04, "text": "I think you nailed, nailed it on the head, like that, that's essentially been our approach or our thesis, I guess, from, from the early days, is that, you know, as Bitcoin continues to grow and become this reserve asset and people continue to use it as a tool to build wealth, it just makes sense, if you look at Of, you know, how wealthy individuals have perpetuated their wealth over decades in Europe and North America, it's typically borrowing against their assets. They don't sell their assets, 'cause their assets get, get inflated away whenever the fiat units get printed, right? So since the fiat system has been in existence, there's been this boon in, in asset backed lending, and, and it's largely because it's a product that people understand that assets rise up with inflation. It's like the, you know, when the, when the tide's going up, like your, at least your boat is floating higher And you're not losing that purchasing power. And so, you know, our view was that the same way people in North America and Europe have used properties to borrow against them and take out these massive five x shorts on the dollar, using their houses, because that's what a mortgage is. Like, you can think of a mortgage as you're borrowing dollars to be long property, but I look at a mortgage as you're shorting dollars to the tune of five x and you are, the position is anchored by a property. Right? And over time, your dollar short does great, and you double up on it, which is called the refinancing of the property, right? Like you, you've built up equity, you take more, and you short even more dollars. In some ways, what we are doing, even in the standard Bitcoin-backed loan product, is a mortgage for your Bitcoin, right? Like we're giving you a loan, and you're not having to sell your Bitcoin, and you still keep the upside on that Bitcoin. So the thought of this was that if we can underwrite dollar loans for Over the world, they could, we could help them perpetuate some of their wealth, in the same way that home mortgages have helped North Americans and Europeans kind of perpetuate their wealth, build their wealth over time." }, { "speaker": "stephan", "time": "45:29", "start": 2728.74, "text": "It's also quite common that people use similar kinds of products, but against their equities portfolio. So they're borrowing against that, and so this is essentially taking that into the Bitcoin world, and you can think of it like it helps hodlers huddle. However, there are some important, I guess, caveats there. Obviously, there's a custodial- trade off. There is a liquidation risk, but so long as the hodler is comfortable with that, they may enter into this scheme or plan and end out ahead in Bitcoin terms. I guess that's the ideal, ideal case. So I wanted to switch up a little bit and talk a little bit about stablecoins. Now, obviously, you know, most of us are hardcore Bitcoin only, believe the world is going to a Bitcoin standard and so on, but it seems to me that whenever I talk to people, especially from Latin America, They often mention how popular stablecoins are and in their view how essential it is, and I know obviously coming from Venezuela, you'll obviously have some insight into this. I wonder what you can share there, it-- how essential, how necessary are stablecoins? Do you see them as a bridging thing or how do you view them?" }, { "speaker": "mauricio_di_bartolomeo", "time": "46:38", "start": 2798.23, "text": "Yeah, I think stablecoins are incredibly important, and, I guess it's, it's hard for, I guess someone like myself or other people in LATAM, when, when- Whenever we try to communicate the impact of them to somebody that hasn't lived in these markets, it becomes a bit challenging because a lot, a, a bit of it is having experienced it. So maybe just to, to draw a few analogies that other people can potentially draw on, if you've ever tried to buy anything, like if you go to alibaba.com right now, what are goods priced in? Dollars. They're not priced in RMBs, they're not priced in your local currency, they're priced in dollars, right? If you try to order anything from any supplier in any part of The world, chances are you're gonna get an invoice in dollars, and it's gonna give you a dollar number and a bank account information that you need to make a payment. In many places, a-and the reason they're set up that way is because the buyer, the marginal buyer, most often comes from the US or comes from a market or a place where you can pay in US dollars. But there are very real cases, like the cases of Venezuela, Turkey, Argentina, Nigeria, you name it, that the government actually makes it impossible for- Or for whatever reason, if they don't let you hold a dollar bank account locally, if, if they do, it's a, it's a scarily draconian surveilled bank account that nobody wants to touch. Most people have had their savings in their local banks wiped from existence. So even if you did get comfortable with your government, you still think there's too much risk in having your dollars sit in a local bank, right? What stablecoin gives you is this self-custodial way of digitally holding your dollars, and not only that, it al- Allows you to-- until stable coins, and this is something that may, you know, some people don't think about it this way, but until stable coins, it was very difficult for somebody in Mexico to send dollars to somebody in Colombia. It was very, very difficult, very difficult. You'd have to convert your pesos to dollars, and your dollars would be converted to bolivares, and you would have to pay x percentage to this person and x percentage to that person. And the worst part is they just wanted dollars. They didn't even wanna go through their conflic- complicated rails. But their governments forced them to, and it makes it, you know, artificially difficult, right? And so for, in a place like Venezuela right now, where people have decided not to use the bolivar anymore, Venezuela is a fully dollarized economy. Like most businesses in Venezuela will accept dollars or bolivar payment. And so to me, stablecoins are hugely important because they've allowed essentially dollar banking to the emerging world. Listen, the other piece that I wanted to say is that- For you and I, Stephan, Bitcoin isn't scary. We've been in this for years, we understand it. We, we look at the volatility and we rejoice in it. Like, we, you know, it's-- For a person that is just coming into Bitcoin and they have very limited wealth to protect, ten, twenty percent volatility can be daunting. But when, when they see that they can now all of a sudden hold these dollars in a, in a similar, similar to a bank account, transfer them, sending and receiving them, access interest accounts, earn interest, and they're treat-- getting treated way better than their local banks, and they're just being able to do way more for cheaper, they will themselves go into the next stage. So like they will themselves say, okay, what else, you know, what else can I buy in this ecosystem? Where else can I invest? And I think in many ways the stablecoins are a bit To Bitcoin, and part of me does feel like there will be hyper dollarization before there is hyper Bitcoinization, in, in many ways, because if you look at, you know, when the domino falls, when a local currency fails, what usually makes up for it is dollars, the, the economy becomes dollarized, it doesn't really become Bitcoinized. So I, I see that, for example, Turkey fell dollar economy, Venezuela fell dollar economy, every so often, economies have fallen and never been able to revert themselves. So like Panama For example, dollar economy. Peru has like a fully legal dollar sole system. Ecuador trades at a one-to-one pair, so it's, a lot of them have slowly-- El Salvador, perfect example. And so the dollar is this, is the reserve asset, and, rightfully people are the refer-re-reserve currency. So I think it'll be the place that people will go first before they go to Bitcoin, as the currency fails." }, { "speaker": "stephan", "time": "51:01", "start": 3061.03, "text": "Now, one criticism that I can hear some- The listener is saying is, and maybe some of this is coming from almost association, right? So it's like, oh, some of these stablecoins are started by shitcoiners, or they are used by, you know, or they are operating on shitcoin rails, as an example. Or the other criticism I might have heard from talking to people is, oh, look, some of these people, they just wanna do trading, leverage trading, that's why they want all the stablecoins. If they just held Bitcoin, they'd be better off, right? So, a-and I'm not That's what some people might be thinking. What would you say to those kinds of ideas?" }, { "speaker": "mauricio_di_bartolomeo", "time": "51:39", "start": 3099.38, "text": "So my experience has been very different because I've, I've lived through the stablecoin demand on my client's side. I experienced this from our clients, and let me give you a couple of cool stories, not cool actually, but a couple of stories that highlight how important stablecoins are. When we started dispersing loans into Latin America, which is where most of our loan clients still are today, and we are very active in that part of the world, in a place like Colombia, for example, when you receive Any type of transfer into your bank account, the bank treats you as guilty until proven innocent, and what that means is they will treat that income, that wire in as income, and they will want-- they will with-withhold it, and they will want you to essentially show them that it's not income, okay? These were loans that we were transferring to our clients, and what, what ended up happening is that many times we would have to send them the, the loan agreements, 'cause they would have to set up these meetings with people in their banks. They would have to show and verify that these were in fact loans so that they could get the money released, and it became this very burdensome process for them to access wealth that was rightfully theirs. And so some of these clients, after several times of this happening, they were like, \"Guys, I just don't wanna put up with this anymore. Can you please send me the funds in stablecoins? I can get everything done here locally with stablecoins, and I just don't wanna go through my bank anymore. I just don't wanna deal with it.\" And so we said, okay, that makes tremendous sense why you would want that. Then we started getting clients in, Venezuela and other parts of the world where they were saying, \"I don't, I can't have a local dollar account, I don't, I don't have a local dollar account, I don't wanna get this into my local currency, it's going crazy. Please just send it to me in stablecoins. Like, I can, I can, you know, send it to me in stablecoins, I'll figure out a way to spend them, and I'll just, And so this came on again and again and again and again, and today we'll still see actually a greater and greater deal of our loans, more and more of them become dispersed in stablecoins rather than in fiat, because it's, it's instant settlement, stablecoin transaction gets sent and received within minutes, and you don't have to wait through the three days or four days or, god forbid, a weekend in the traditional banking system, you know, it's five days that, that you lost your money, or that you don't have your money. And And not to mention the fact that, you know, if you look at it from a remittance standpoint, the fact that stablecoins can run on digital infrastructure are a huge step up for banks, 'cause the other thing that people don't realize is that in many of these countries, there aren't remote branches for these banks. And many of these banks don't have the ability for you to onboard digitally to open an account. And so stablecoins are also helping a lot of people on the fringes that, you know, are lucky enough to, to have somebody that teaches them about the technology, but they don't necessarily live near a bank or near a big city, but they can still kind of be connected to the, to the system by being connected to the internet." }, { "speaker": "stephan", "time": "54:32", "start": 3272.19, "text": "Any thoughts on where stablecoins are going regulation-wise? And one example that I'm thinking of is that typically stablecoins have KYC, Know Your Customer, on the entry and exit points, arguably, but perhaps on these intermediary steps, it's not really, and that's part of where the frictionless nature of them comes. Do you see a change to that coming from, say, US government regulation or any other kind of government regulation?" }, { "speaker": "mauricio_di_bartolomeo", "time": "54:59", "start": 3299.35, "text": "Yeah, I think that's gonna change. I, I don't know Not necessarily to your point, the mechanics of the KYC checkpoints, you know, where those will land, but what I do think will happen is the stablecoins will get regulated. In fact, I, I wrote some like twenty twenty-two predictions as, as I was ending the year, and I think one of the ones I wrote was there will be regulation for stablecoins. They will either get regulated as banks or partner with banks, in my view, to, to keep their offerings compliant. I think Lynn Alden made a fascinating point, not too long ago, which is that the- The United States is very incentivized for stablecoins to do well because it's a way to monetize treasuries, right? Like a, a stablecoin treasury facility, if the United States can say stablecoins can only hold Cash and cash equivalents and those cash equivalents are treasuries. Well, all of a sudden you have, you know, God knows how many billion dollars worth of asset pools that are now having to go to treasuries, and they are desperately looking for marginal buyers in treasuries. So I do think that it makes a lot of sense, that there will be, per-perhaps reserve requirements on these stablecoins, because I think that's what freaked them out. It's the fact that they all claim to be dollar backed, but they don't know that they are in fact all dollar backed. And so if the United States Treasury or whatever regulator ends up overseeing them, can put their hand over their hearts and say, \"I can oversee those accounts, these people have an account at the Fed, I see what they have, I see the liabilities, I can get comfortable with these operators,\" then I don't see a reason why, you know, they, they, they shouldn't continue to flourish. Mind you, you might see a bit of a bifurcation between regulated stablecoins and unregulated stablecoins, and, you know, some might be used for more thing, for- Different use cases, right? Like perhaps it'll be difficult to start seeing the regulated stablecoins that interact with DeFi and some of this anonymous protocols in DeFi, and, and you'll start seeing the unregulated stablecoins be used for more of that flavor, and the sort of regulated ones to be more bank settlement information, like when you have to pay your, your Visa with a stablecoin, it'll be a regulated coin, that kind of stuff." }, { "speaker": "stephan", "time": "57:09", "start": 3428.72, "text": "Essentially summarizing then, the, you believe regulation is coming, but it might actually be positive for stablecoins, and in some weird way, Positive for the US government, because think about it from this point of view, everyone wants more bag holders, right? If I'm printing money and I've got lots of bag holders of my coin, that's good for me. So if I'm the US government or I'm a beneficiary from that system, I want more people to be bag holding my treasuries. And so you can sort of see there's an incentive there that if you're in the US government or you're thinking from a American exceptionalism point of view, you might be thinking, \"Yeah, that's great, let's have lots" }, { "speaker": "mauricio_di_bartolomeo", "time": "57:47", "start": 3467.48, "text": "And it disperses inflation, like it takes away some of the-" }, { "speaker": "stephan", "time": "57:51", "start": 3470.83, "text": "Yeah. Like, not to excuse it, but just to look at, this is what the incentive of the system is, right? Obviously, I'm anti fiat money, anti central banking, all of that, but I'm just kind of thinking out, what do the players in this game want? What do they want? So-" }, { "speaker": "mauricio_di_bartolomeo", "time": "58:05", "start": 3485.47, "text": "One hundred percent." }, { "speaker": "stephan", "time": "58:06", "start": 3486.19, "text": "One other question I've got for you, and I don't know how closely you follow this space, do you have any thoughts on where stablecoins are going technologically? So as an example, there are ideas like this idea of a DLC stablecoin or a stable channel it might be called, or I know there are other projects, I think one in LATAM, I think it's called Money on Chain, and others like that that are trying to achieve it in a more technological fashion. Do you have any thoughts on that?" }, { "speaker": "mauricio_di_bartolomeo", "time": "58:30", "start": 3510.34, "text": "Yeah, I think, you know, my, my thoughts on, on stablecoins, especially around tech and all this stuff, is that ease of use and simplicity will win, especially on stablecoins, because look at how difficult it is to get people to run their nodes on Bitcoin, right? Like, it's very difficult. Most people just wanna be tourists of the service, right? Like, they don't wanna be the contributors of the service and maintain the integrity of the network. Most people just wanna be clients. They just wanna, you know, be able to use it and not have to worry And, and how that stuff works. I think this will be even more so true for stablecoins, because in stablecoins, what people are really using them is for, you know, the, the one that, the, the one that has the most convenience, the one that has the most ease of use, the widest distribution network, and the one that people can get comfortable around, I think that's the one that's gonna win, because at this point, I think it'll come down to accessibility and simplicity, 'cause the people using-- You can sort of expect somebody that wants to get into Bitcoin to When, when you know, be a little more technically inclined. But stablecoin users are gonna be everyone, right? Like anyone and everyone, and you're gonna have to make this- App tool, whatever it is that you're gonna viralize the, the use case of Bitcoin or, or on stablecoins, it has to be very simple to use for the layman. Like, you know, it, it has to be a very simple wallet or a very simple interface. I don't know that it'll be through a coin itself. I think it'll be more of a centralized entity, perhaps or an app or something that, that viralizes it, just 'cause at a protocol level, it'll be very hard for the marginal user to interact on a particular protocol or not. Be driven by somebody making a really, really sleek, easy to use app and then abstracting out the backend and that app kind of gaining, gaining popularity. I think, you know, that, that's how I would see it. I, I don't necessarily see a world where someone in LATAM is, you know, choosing to receive a stablecoin over the other, because of fees or something. I think there, there will be kind of one big winner, in the stablecoins. That's kind of how I see it." }, { "speaker": "stephan", "time": "01:00:34", "start": 3634.87, "text": "So essentially in your view, it's like Game, let's say. Now, one other area I wanted to ask you about, and actually to, in your fairness, you did point out about the proof of reserves and the idea of having regular audits, but around the ecosystem just broadly and this idea of going fractional, right? And so historically, everyone knows the story, or most people know of the story of Mt. Gox going fractional, and obviously that was part of that blow up. Do you see further risks in the ecosystem there that potentially if, let's say- Years and years down the line, everyone gets onboarded into this sort of custodial or onto a platform that they think they're using Bitcoin, but really they've got an IOU. And do you see that as like a potential risk that people all go down this fractional reserve system or pathway?" }, { "speaker": "mauricio_di_bartolomeo", "time": "01:01:28", "start": 3688.05, "text": "Yeah, I think The, I think, you know, if you look at what's happened in Bitcoin and obviously like the, the quadrigas of the world and the mount gosses of the world, you know, you, you can very quickly point and say, you know, we need to make sure that this doesn't happen again. Okay? We do that as a community, but I think wh-who's job it is to really do that is the regulators, right? That's the, that's who we've be- who we have designated as a society to, in some ways, protect investors, right, The act, the actions that they have taken recently, they have clued into the fact that these companies are becoming very popular. So lending companies like ourselves and others have grown tremendously in popularity. You know, we're holding billions and billions of dollars of assets on the platform, and there's a clear demand for people using these services. And mind you, these are all fully KYC people. You know, we're gonna report everything to our tax authorities, et cetera. Like these aren't people looking to do anything bad. These are Simply people to look access services that they, so they can benefit, that they can benefit, that they're benefiting from. They wouldn't be using them if they weren't. So what I think regulators are trying to do, if you look at some of the actions, for example, we have filed a regulation or our, our application to the Ontario Securities Commission, which is the Canadian equivalent of the SEC, there's been action from the SEC and other regulators, you know, asking for, trying to better understand lending companies on their side of the world, and I think this year you're gonna see a A result from this exercise will be that regulators are gonna want anyone that is offering these types of accounts to issue account statements to their clients to make sure that, you know, they have their compliance taken care of, the anti-money laundering procedures taken care of. They're gonna wanna see great balance sheets relative to the, the size of your business. And so I think these are all the-- and then to your point, they're gonna wanna see, you're gonna have to be audited, you're gonna have to have proper reserves at the stations. There'll be a series of, of- Thresholds, and, and process requirements that are going to be created, and I think that's part of what you will see in this year. I also think that there's a good chance, 'cause right now, for example, there's almost two worlds. There's, there's the centralized lending and there's decentralized lending, and then centralized lending, you have to have a compliance officer and, you know, all these other things, do KYC, but all, you know, all of a sudden, if you just do some magic clicks and decentralize your business, then boom! Then you don't have to know who your counterparty is and you don't have to do KYC and you don't have to have a chief compliance. I think that gap is gonna get closed, because I think that, you know, you, like, I think regulators are, are, are going to get to DeFi and they're gonna try to better understand it, and I think they're gonna wanna have this, they're gonna want to see the same things from lending protocols that are decentralized from the ones that are centralized. And I think right now there's a bit of a thesis that in You can have a decentralized platform, but be a centralized entity and have an office in the US and, you know, and, and, and do all these cool things. I think that, that pieces might get challenged this year as, as you see potentially regulators move, closer into the space." }, { "speaker": "stephan", "time": "01:04:43", "start": 3883.24, "text": "It will be fascinating to see what happens. I, of course Remain anti-regulation myself, but I think it is one of those things where we have to also assess what is the likely outcome, right? I, I may not want that, but in terms of what are the regulators looking at and what are they likely to go and focus on and what are their likely actions, I could see that kind of scenario taking place. but I think nevertheless, the broader theme of what we've been speaking about today is, again, Bitcoin finance, taking loans against our Bitcoin instead of spending that Bitcoin and using loans. Rather than paying capital gains tax. And so I think those are interesting things for listeners to think about, because you might end up net ahead with taking into account certain risks that are there. so I guess final question for you, do you have any, thoughts for listeners there about how they should think about, loans and the fiat system, especially for maybe some listeners who might be thinking, \"No, I'm anti-fiat, like the whole point is just stay Bitcoin.\" What would you say to that sort of- Person." }, { "speaker": "mauricio_di_bartolomeo", "time": "01:05:47", "start": 3947.98, "text": "I would look at fiat as an instrument, as an economic instrument, as any other instrument. You know, the, the second you start putting feelings on an instrument that, that doesn't have feelings or that isn't really a, a being, a living being, then you, then you-- it's hard for you to think clearly, right? And to really assess the value of potentially using or not using that tool for your own benefit. I, you know, prior to Bitcoin, there was, you know, you could only finance, you know, as- Assets within other assets or other currencies, and I personally did really well, shorting the bolivar, long the dollar. Right? So, sometimes you just have to think of an asset for its properties and how it's, how it can behave in the mechanics of how it works relative to the goal or the-- Mind you, yes, of course, there's like philosophical goals that you might not agree with and others, and that might lead you to act differently. But I would encourage people to look at a dollar as just an instrument that is just It is part of this whole ecosystem and that it is, that interacts and interplays with Bitcoin as we try, as we all as a society try to decide what we wanna use as a reserve currency, right? And, and because there's just so many of us out there in the world, it's-- I think it'll be difficult to, for the entire billions of people to consolidate on one reserve asset. There will probably be more than one dynamic or forces at play as, as this happens, and so I would encourage people to see if and how they could benefit potentially from using, financing with, with an instrument like a dollar, to, to grow more of their Bitcoin wealth." }, { "speaker": "stephan", "time": "01:07:21", "start": 4041.98, "text": "Excellent. Well, I've enjoyed chatting with you, Mauricio. I think it's been a very intellectually stimulating conversation for me. So thanks for joining me, and of course, where can people find you online?" }, { "speaker": "mauricio_di_bartolomeo", "time": "01:07:32", "start": 4052.35, "text": "Yeah, definitely. our website is ledn.io, l e d n dot io, and, you, our, our social media is at hawthorn with ledn, and my social media is at kryptonomista," }, { "speaker": "stephan", "time": "01:07:46", "start": 4066.84, "text": "Thank you, Stefan. Get the show notes at stefanlivera dot com. If you're enjoying it, make sure to leave a review and share it with your friends. That's it from me, thanks, and I'll see you in the citadels." } ] }