Estate Planning | How to Structure Bitcoin Wealth

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Bespoke Group investment advisory services are offered only through Bespoke Advisory,

an SEC registered investment advisor. Everything we share here is just for information and education.

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And as always, investing comes with risk, including the possible loss of principle.

Today I'm speaking to Matt

McClintock, Bespoke's co-founder and today we are going to clarify exactly

Bespoke's relationship to Bitcoin. Matt, when I have been out in the world

and people ask what we do and I say, you know, we're multi-family office, like

I've kind of, you know, figured out how to try to explain what we do without pigeonholing us. And it's like, yeah,

but you know, we're different really because we built around Bitcoin. And then there are all of these

assumptions that are made and they're like, "Oh, okay. So, you're a crypto investing firm." I'm

like, "No, no." And you know, and it's like, "Oh, you know, what crypto is it's so volatile and like you know, God, like

how can you even like build around that?" And I'm like, "Well, you know, it's we're not really, you know, so

maybe what we should do is like explain what we're not and what we're not doing." Um, but also I think a great

way to start is just like Bitcoin came to us, Bitcoin came to you and then we built around it. So, let's

get really specific about our relationship to Bitcoin. Yeah, that's great. I love that. Yeah, I

I wasn't looking for it. I was minding my own business, having a great law

practice with a friend of mine, Jonathan. And um we had an opportunity

to work with a very affluent family who just happened to have a whole lot of

wealth in Bitcoin. And at the time, it was like a record scratch moment for me.

I said, " I'm not sure I even I'm not sure again. This is now eight years. Is

that right? Yeah. Eight years ago, I'm not sure that I had heard the term

Bitcoin. Certainly hadn't thought about it enough to form an opinion one way or the other.

I was just again I was minding my own business, practicing law and doing law stuff. But um we met with this family

and I was intrigued by the prospect of um a family who had a tremendous amount

of wealth in an asset I didn't understand. Um, and that sent me on a bit of a learning

journey. And um, it didn't sit right with me that a family whose entire

legacy, financial legacy, was tied up around this asset that I just didn't

understand and that apparently nobody else that they talked to would even take seriously. It just didn't sit with

didn't sit well with me that they had no options.

And after meeting with this couple, this is one of the rare occasions when I would actually drive to go see a

potential client. I did this as a favor for a friend who had referred the client to me. Uh and Jonathan had come with me,

my co-founder that I mentioned. And um on the way back from that meeting, we

were talking in the car about whether or not we know enough to help this family. And

Jonathan was taking the side that um you know we don't know about this asset.

It's like how can we help these folks? And I said you know I think we I think we have to figure out how to help these

folks because um for the as I mentioned I mean this is the totality of their wealth. And just

because we don't understand it doesn't mean they don't have options. The unlock for me was when I was like an epiphany.

It's like, wait a second. If we can figure out how to transfer the legal ownership of this unusual asset to a

fiduciary structure and have that asset owned by trusts or other structures,

then if we can figure that part out, then everything we've ever done for

anybody else, those options are available. We just have to do some homework and figure out what this is.

get creative. Get creative, think differently, and um

just be willing to embark on that journey, not knowing where it would lead. And um along the

way, I just became really interested in Bitcoin. I that started me out trying to

learn everything I could learn. I read Satoshi Nakamoto's white paper. I still

read it a couple of times every year. Um, but I I had to read it half a dozen

times before I even started to understand what it was, what it was about.

And so that's what that's what started us for. And along the way, those clients once we had done the

implementation work around their their structures, the inevitable question

came, can we pay you in Bitcoin? And I knew the answer had to be yes. I mean,

no, no could not be the answer. Um, and so I said, "Okay, yeah,

sure. Teach me how to do that." And, um, so the clients taught me how to do that.

We, uh, we set that up and they paid us in Bitcoin. And this was, that was, I

that we finished that work. And along the way, we got to know this this family

quite well. And I think they I think they really uh latched on to us because

it seemed like finally they had some professional

advisors in this case lawyers who took them seriously.

That's what I was going to say. They were they were being taken seriously probably from the first for the first time because

I mean at that time and still there is like such such a

not it it's getting better right like there was definitely a stigma yeah

definitely a stigma around it and so um there's a huge stigma around

it to the point where I was very koi at the time talking about that we're

helping this family with Bitcoin. It's like you might as well tell people that you're helping them sell children or

you're you know you're ar you're funding terrorism or things like that. The associations were crazy. Yeah.

Yeah. Definitely. Definitely. But you know we background checked these people. We ran OFAC searches on

them. We checked everything we could check to make sure that we were not doing that that these people weren't

criminals. Um, and by the nature of the structures that we were creating, they

would have to go through a KYC or know your customer type of engagement with

any fiduciary who is going to serve as the trustee of these trusts. And so we had to I mean we had to know these

clients were clean, above board, all that kind of stuff. And so they were it just we were hap we happened to be

helping these people with an asset that very few people understood. And along

the way, as we built trust with these um with this family, they just said they just they wanted

more and more of a relationship with us. They said, "Well, you know, this has been this has been really great, but now we've got all these structures put in

place. Can you help us make sure they keep running properly?" One of the

things that they wanted us to do was manage real estate acquisitions and

sales on their behalf in a way that was highly private. Um, and so we said, "Sure, you know, we can do that. We

we'll figure we'll figure out how to do that. Um, but we're not going to do that in the context of a law practice. Law

practices are subject to regulatory oversight by various bar associations, and I was and still am admitted to

practice law in four jurisdictions. Jonathan's also licensed in California. And so we had a lot of regulatory

oversight that we that we knew that we'd have to be navigating when we're dealing

with non legal services. We're dealing with family office type services for these people.

So that's great though because then you're positioned to like actual like you can work with the the lawyer or the

estate planner now. Now you work with them. I mean that set the that set the course on for where we ultimately are

now because along the way we had you know we had started becoming a family office for this for this family without

I mean I'm not even just like I was so naive about Bitcoin I was naive about family offices. Um and so we would just

they say will you do this? We would say yes. Will you do this? We would say yes.

And so we said, "Okay, well, we're going to build a company around this because it's a completely different service

model than the law practice. I don't know how to price that for a law practice. It's not like you're asking

for legal work. You're asking for administrative oversight, strategic work. We're not going to run that

through law practice." And so, um, the idea for Bespoke was born. And the

nature of calling it Bespoke is that we were

creating something fresh for somebody that um it was built around their needs.

It was tailored to fit for them. Can you um clarify

um how we look at Bitcoin as an asset

and um the growth potential around Bitcoin?

has changed in just the world. The world has changed circumstances have changed. So we're there there are

different circumstances now that you're looking at um as Bespoke develops in um

than when you first started and we've seen these examples of uh and I'm going

to need you to probably slot it in because I'm I'm going to be using like lay person language to try to describe like this kind of technical thing, but I

you know pe people and finance people and industry has like really built built

or tried to build around Bitcoin or crypto to grow and then it kind of it it

it bursts like it doesn't Yeah. It works when the price is going up, right? And then Yeah. And then it doesn't work,

right? Yeah. When the volatility cuts you the wrong way and then you wash out.

And that's why people are right when they were like, "Well, Bitcoin's really volatile. Like, how do you build around that, you know?" And they're right

because look at those examples like FTX and etc. But I want you to clarify like how we

look at the alpha or the growth around Bitcoin because it's it's really different and I think it's important to

highlight. Okay. Yeah. the well along the way um

and digital assets that are that can serve as a

you know economic value of some sort. You know it's like like a a recording

from a podcast is ultimately a digital asset but who the hell's going to buy that? you know, songs that we that we

access through Spotify or Pandora or that we go and buy the old fashioned way

from iTunes. Um, those are digital assets that are unique digital assets,

photographs that you have on your computer. Those are digital assets. But these blockchains, Bitcoin was the first

and is the longest running successful blockchain. um blockchain technology

created this opportunity to have what they're called fungible digital assets

that can be used for value exchange. And tangible meaning that one bitcoin is the same as any other bitcoin. It's like

a dollar bill in your wallet is the same as a dollar bill in somebody else's wallet. It's the same. The dollar is a

dollar. A bitcoin is a bitcoin. And so that's what I mean by fungible. There's nothing specifically unique about the

dollar bill in your wallet or the dollar bill in my wallet. Um, yes, you may draw a cute picture on your dollar bill and I

may draw a different picture and so they're different in that respect, but as far as negotiability and the value of

that dollar bill, it's the same in your wallet or mine. Same thing is true with Bitcoin. Same thing is true with the

vast majority of other digital assets. And so it Bitcoin created this

opportunity for us for the first time to have this fungible transmissible

um form of value that exists only electronically.

And I thought that was fascinating. And so that sent me around a hot lap that lasted about 5 years of the whole

broader crypto space. Well, if Bitcoin is this, what about Salana? What about

Ethereum? What about you name it? Um, and so I I spent about five years or so,

like I said, kind of exploring the Warren of different digital assets. Um,

and realizing at the end of it all, at the end of that journey, where I kind of landed the last couple of years is that

Bitcoin is truly unique. Um, the Bitcoin is unique in that it was not launched by

a company seeking to raise money. It was launched as a peer-to-peer project

designed to create a medium of exchange, a peer-to-peer electronic cash system

that was free from interference by any intermediary third party. That is that

is fundamentally unique to Bitcoin. Ethereum, which is the second largest

digital asset by market capitalization, by token value, um, started as a project

to raise funds to fund distributing computational power. There's not really

a company behind Ethereum, but there is an Ethereum foundation that pre-mined

pre that that created all of the tokens out of thin air and then started distributing those tokens. And the vast

majority of every other digital asset has a very similar origin story or they

were um they were created at the inception of a company and then sold on

the marketplace or just dropped on the market to create a network effect to then cause the value of the token to

rise in what's effectively a tokenized form of venture capital. And Bitcoin is

not that. And so because Bitcoin has these unique qualities,

that is why it has endured and that is why I believe it will endure is because it is fundamentally different than any

other digital asset. And it it took me, like I said, a 5year a 5-year um tour of

duty, if you will, in the broader crypto ecosystem. And unfortunately,

that's a long journey. It's a technical explanation. And for people who are new

to this type of asset, they think that Bitcoin is crypto and they think it's

all the same. It's like, no, you have to do the work to understand why it is fundamentally different.

So, I want to zero in on this for our listeners. This is this is really about

the difference. I mean, Matt just introduced it. he got into it. But this is the difference between Bitcoin and

other cryptocurrencies and and why they should be assessed and thought about differently and like when

we say or when we were when the reason that we say Bitcoin usually and not

crypto we mean Bitcoin and I I want to like really break that down and get specific because I mean even for Matt

like you know we we've spoken to lawyers like we know that there is just kind of like a just some education that I know

people are yearning for about like what the difference of those things are and you broke down some of them. The

thing the thing I want to ask you about is like so why is the feature why is the feature of there not being

like a third party or a company behind Bitcoin which is unique to every other

cryptocurrency. Am I getting that right? Yep. Why is that so important? I think that's

a critical feature because you don't have to trust in the issuer of the

Bitcoin for the integrity of the asset to endure. The asset is the asset. It's like gold.

It's like who makes gold? Well, God made gold or the big bang made gold or

whatever. It's like mother nature. Mother nature, mother earth, Gaia made gold. It's like um it's like no, Satoshi

Nakamoto is not Gaia necessarily. I'm not making that equivalency. However, the whole reason

that Bitcoin exists is based in purity, not based in capitalism. Nakamoto did

not release Bitcoin thinking that it was I mean, I don't

know what he thought, but he didn't release it to say, "Hey, I want to fund

this new startup company. We're building the most incredible blockchain that's going

to do all these promising things, whatever. It's like, no. If you read the original white paper, Satoshi announced

the creation of Bitcoin as a peer-to-peer electronic cash system. The

specifically, this is very clear in the white paper, this is clear in the Genesis block in

became focused on Bitcoin is because there was so much tomfoolery around the

great financial crisis and the great money printing that was going on. The bailouts of the various banks that were

deemed to be too big to fail by various regulators and governing authorities. Um I mean this is in the genesis block of

the too big to fail. What a line. Yeah. And so it's like, well, if they're

too big to fail, who gets to be the ones that bail them out? It's the taxpayers and it's the customers of

those banks who don't otherwise have the ability to exchange value for each other. And so Nakamoto very explicitly

sought to create a money system that was independent of these too big to fail

banks because they invariably fail. And so the idea of no central issuer and no

central controller, no central intermediary that manages the issuance

of Bitcoin. It's a peer-to-peer electronic system. And the

that has proven to be irresistible. It kind of like breaks your brain a

little bit. Like it kind of it kind of broke my brain. I mean, Matt, we've we've recorded a version of like

we've been having we've been recording and talking about Bitcoin um for months like in my podcast host

training, you know, and I remember like that piece I remember in like one of our first conversations. I'm like, well, why

is it why is that important? Like why is the middleman not being there important?

Um, so yeah, because you have to trust because the reason the reason the reason not having

the middleman is important is because first of all that middleman is getting paid every single time something crosses

his desk and secondly because middlemen fail. Um, and middlemen have ulterior

motives. Um, and Nakamoto thought this

isn't right. And I think it's important. I mean, I think Nakamoto's um I think the mystery of who he or she

or they is or was I think that's important to the narrative because you

don't have somebody out there. You look at every other crypto project out there. You got to know there's Vitalic

Buterine, everybody knows who he is. He's the brainchild. He and Joe Rubin are the brainchildren behind

um Ethereum. You can do the same thing with Salana. You can do the same thing with every other blockchain protocol.

These are fallible human beings that have financial motives that are crystal

clear. Nakamoto is still unknown. I, you know, Nakamoto

may very well be dead. Um, the tokens have not moved. He has not

cashed out. That's part of the beauty of the blockchain. We know where his tokens are. He hasn't cashed out. So

those millions of bitcoins that Nakamoto mined early on before the network really

even became what it is now, those will probably never move. And so

why is that? The It's because I believe Nakamoto had a bigger vision than

enriching himself. His vision was to create a better money and he did that

and that's what Bitcoin is. Bitcoin is better money, it’s pristine money. I think

it's important too and Nakamoto was very clear about this too both in the white paper and in the the hundreds of posts

that he posted on the Bitcoin talk forum in the years leading up to and the in

important to realize that Nakamoto was not claiming that he invented much of

it, much of anything. Nakamoto was able to weave together different solutions

from different cryptographers dating back decades. And he combined those into something new that solved some

impenetrable, vexing problems that made prior versions of a peer-to-peer electronic cash system. uh the he he he

he put them together in ways that would solve for peer-to-peer electronic cash in ways that people hadn't done that

before. And so there so I'm not discrediting him at all. Uh he had the

genius to weave these things together. But so much of what Nakamoto did was a

synthesis of work by David Ch, Adam Back, Hal Fenny, Nick Zabo, and other

people who were there at the beginning of Bitcoin. And so in that in

that sense, Satoshi Nakamoto is all of those people who worked on the Bitcoin

project to get it to where the codebase is and the core developers who still

today, every day, focus their energy on building and perfecting and refining

Bitcoin. Bitcoin is not a static thing. It's a living codebase. And so the core developers that are

still working on Bitcoin, they are also in a very real sense, they are also Satoshi Nakamoto because they are

building and refining and expanding on the network. And I would go so far as to

say those of us who run a full node that's keeping a copy of the Bitcoin

ledger, every transaction that goes across that, we are Satoshi Nakamoto. I think those of us who use Bitcoin as a

medium of exchange, those of us who use Bitcoin as a store of value, we are again kind of living in the reality of

who Satoshi Nakamoto is or was. And so I know that sounds kind of metaphysical or

philosophical, but I think that there's a truth to that. No, it felt very it I did. I was

like, "Wow, I'm gonna sound pretty new-agey here when I say that there's a bit of a spiritual feel to that, right? because it's kind of like this this

source and then there's like the stewards of that. Well, it's and again it's and I don't

want to denigrate I don't want to denigrate new aging, but I also don't want to I also don't want to

diminish this the gravity or the or the seriousness of an asset that Bitcoin is.

Yeah. because uh because you know if we go down a new age bent, people stop taking the conversation seriously and

think we're just going to, you know go drink some mushroom tea or whatever. Um but but the um the reality is that as

this thing continues to live forward um it it it has it has its own

gravitational field. You know, Michael Sailor, what he's doing with strategy, Larry Frink, what he's doing with Black

Rockck, the core developers, the companies like Bespoke that are building around and on

Bitcoin, the clients that we serve who built family legacies on Bitcoin. This

is the first generation of Bitcoin owners. You were saying that um like Bitcoin was

created because we needed a new money. Um, can you tell me I I I wanted you on

I wanted you to unpack that a little bit like what are the flaws of our current money?

Well, I got to tell you, I'm not a monetary policy expert by any means, but um the you know at the if we strip it if

we strip it back to its core, what is what is the role that money plays in a

society? It's to create something with which we can exchange value for goods

and services with each other. What would happen if we didn't have money? Well, we

didn't we'd end up inventing it at some point. But but back in the days before we had a monetary good,

we would barter with each other. Yeah. Yeah. We'd say, "I will perform various services for you, or I will I'm a farmer

and I will grow crops and I will trade you a bushel of cotton for, you know, a

pig or some apples or for you to paint my barn or whatever it

was." And so it's like but what you run into is this idea of non non-parity of

desires you know especially by which I mean let's say that we're not

v this is let's say the internet doesn't exist but we're sitting around a little farming community and I I'm growing all

the cotton I can grow and you're growing all the apples that you can grow. It's like I'm kind of appled out right now

and you've got all the cotton that you need. We see, well, Claire says, "Well, I really need to have some chickens

because I want to be able to grow eggs for my family." I say, "Well, I really need a pig because I think bacon is

delicious." Um, so it's like, well, Claire says, "Well, I don't have a pig."

I said, "Well, I don't have any chickens." But Claire says, "I know I know a guy who's got a pig." So, well, I

think my sister probably has some chickens that should be willing to give up. Let's see if we can maybe figure out, okay, well, if I take some of your

apples and I trade those to my sister for the chickens, then now I've got

chickens. It's like, well, can you talk to the guy that you know who's got a pig? You get the pig. Now great, you've

got the pig, I've got the chickens. We find a way to swap around that. Well, that's that becomes extremely

inefficient as far as commerce is concerned. And so we say, you know what,

this whole idea our our non-parity of values means like you don't have what I

want. I don't have what you want. We don't have parity in our relationship. We don't have parity in we we that's

there's a there's a more precise term that I'm that's escaping me right now, but but this idea, you get the you get

the picture. So you see so we say you know what let's let's find something that is reasonably scarce and let's just

assume that we can trade quantities of this thing that's reasonably scarce and that'll be our that'll be our um proxy

for trade with each other. But we let's say we agree that there's this really

pretty rock that we found that's it's rare enough, but we can find enough of

it that we can say, "Okay, well, we can create a quantity around this." It takes some work to get to it. It takes some

work to polish it up and make it pretty and and usable in this medium of

exchange. And then you say, "You know what? Um, maybe it's time for me to get

some more apples, but my cotton product is, you know, I've sold all my I've sold

all my cotton to somebody else because they're going to give me a whole lot of these shiny pretty rocks for my cotton.

Well, you say, you know what? I'll take a stack of your shiny pretty rocks in exchange for these apples.

Great. We've now created a monetary good. We've said okay well now we've created this medium of exchange that's

not cotton it's not apples it's not pigs it's not chickens it's this thing that

we have agreed as a community we have agreed that this has value

value and so it's it's a it's an act of faith it's an act of network ascent that we

all agree that this thing has value and so that's how money starts to form and

then um governments rise, empires rise. You have the emperor, you have the king,

you have in our in our world now, you have democratic republics that have

treasury departments. And so they centralize the decision about what is

money. Uh and so they say, well, we will produce a certain amount of this money.

And by the way, because we have a military, we will enforce the use of

this good as money. Um because you know we you know we will this is the only we

can we can we can decree that this type of money is the only money you can use in our jurisdiction.

And so that's how fiat monetary systems get created. Those they

are forms of money that are issued by and at least punitively backed by the

issuer who says what they're worth and who can decide how many to produce

and it creates this me it creates this machine that then says okay well

ra you know I don't think it's a surprise to anybody listening that you're an employee of mine and so and

I'm an employee of our company too. It's like, well, we get paid in dollars. And so it's

like, well, okay, so now Bespoke has an electronic ledger at the banks

that we choose to bank with. And then every month we debit that ledger an

amount to pay you, an amount to pay me, an amount to pay every one of our team members, an amount to pay all of our

vendors, and then it gets credited with the dollars that our clients pay us or

that we otherwise earn in markets. And so it's just becomes this electronic

ledger of dollars that don't even really exist in the real world. It's like

there's not like paper dollars going hither and yawn. They're just moving from one ledger to another ledger.

Yeah. Um through centralized intermediaries. So the banks that we store our

money, the banks that keep our ledger get paid to keep that ledger. When the

bank moves it from Bespoke ledger to

your ledger or to my ledger, the bank gets to take a piece of that. If you

have a different bank, even if you have the same bank, you get another bite at that. Well, what happens if we're not

doing it in dollars, but let's say that we're paying with a debit card or a

credit card? Well, not only are the banks now involved in the transfer of

this value between Bespoke and you or Bespoke and me or Bespoke and our clients, um, but let's say that we're

paying with credit cards on this. Okay. Well, now you got merchant service processors who like this is Visa, Chase,

Mastercard, um, American Express, whatever, they

they want a piece. Usually two to 3% of every transaction,

every every time you swipe your credit card or debit card, the merchant service processor is taking a piece of all those

things. And it's and it's in percentages. It's not like in fractions of a percent. It's like it's like it's you know you

figure it's going to be a minimum of 2% for every transaction you went to you went to the coffee shop bought yourself

a coffee with a credit card or a debit card 2% 3%'s going to the merchant service

processor and the various banks that are involved in that. Well that's the way centralized fiat

monetary systems work. Well, what Satoshi Nakamoto solved for was what

could what would happen if we just blew that whole thing up? Yeah. What would happen if we could just

operate truly peer-to-peer without centralized intermediaries and

we could trust in the finality of the transaction. He solved that through math

and cryptography. And so uh he said the way what he solved for was the ability

for you and me to transact directly in a

monetary good. In this case it was called Bitcoin. transact directly with each other with the as a monetary good

without having to go through JP Morgan or City Bank or Visa or

Mastercard or Schwab or Fidelity or anybody else and just go strictly peer-to-peer and rather than lose 2 to

3% on every single one of those transactions, the independent

distributed miners all around the world would compete with each other to then see who can prove prove that I made a

transaction with you. And the reward that they would get for expending energy

and resources to compete for those transactions is the mining reward. It's

either the block reward for solving the block in the blockchain and or they all

you know if the miner that establishes the first is the first one to create the

block in the blockchain which is the bundle of all of these transactions of Bitcoin that take place during the

course of any you know 10-minute period of time is how it works. They not only

get the block reward but they also get all the transaction fees. But we can and

have sent many, many millions of dollars around the world on the Bitcoin blockchain for pennies. Pennies, not

percentages, pennies. It makes sense to me how why all of this stigma would be, you know, and how all

of these the this fear is kind of created is because it's essentially like really shifting like power and control

balances that are challenging like systems that have been like pretty confident and in control. So

yeah. name a more powerful name a more powerful force than the

global financial industrial complex. No, no, literally. No, literally.

And governments that issue currencies. I mean, it turns it all upside down.

Yeah. So, and some of the stigmas, some of the stigmas, you know, were warranted. I mean, Bitcoin went through its phase of

funding things that were illicit on the black on the Silk Road. um to a certain degree there are still

transactions that are settled in Bitcoin that are illicit transactions you're getting around sanctions or dealing with

narcotics or cyber crime and stuff like that. But the more we understand about the

blockchain and how the blockchain is this transparent immutable ledger

meaning that every transaction in the history of time is preserved forever.

It's like okay that's a really dumb place to conduct illegal activity.

Yeah. And the and the more the more we understand about the blockchain, the more people understand that reality

because of the the arrests, the seizures, the forfeitures that have come

through understanding illicit transactions in the blockchain. Matt, I'd like to ask you about custody

and privacy and kind of piggybacking off of what you're mentioning. I read

recently, I was actually shocked to read this, that um that you that the Bitcoin targeting we

it it was or was thought of as only being for people with significant amounts of wealth in Bitcoin, but

actually it's affecting people with even smaller amounts. Like we're not

talking millions, but maybe hundreds of thousands, which surprised me. But I know that you know and this is also how

understanding for Bitcoin holders um kind of like about some of the risks

that are coming along with the with the the mainstream I'm making up word mainstreamness but I guess what I should

say the mainstream adopt adoption of it all like the you know and and being private and and being safe like this is

a real concern for Bitcoiners with a lot of Bitcoin which are who who we work

with and so is there is there anything you can you can you shine some light on how you how we look at custody how we

look at privacy and how we support you know folks in in that situation

yeah I mean I think that the first thing to realize is I mean privacy it's you're

it's opsec really it's operational security but it's it has to do with the

first I think the first line of defense is just not being a dumbass. The um it's

like the if you are walking in a rough

neighborhood with a lot of jewelry around your neck and you are putting

yourself out there, whether it's in social media or just walking around glitz and glamour all the

time, it's like you're making yourself a really high profile target. Yeah. Um, and so the first order of

business, I think, is just understanding the risk and being modest about how you live your life.

You'll never see me wearing a Bitcoin t-shirt. We don't tell clients to walk around. We we we suggest to clients,

don't walk around with your, you know, to the moon ball cap on. If you want to,

if you want to do that at a Bitcoin conference, I suppose, you know, that's fine to some degree, but don't go to the

baseball game with Bitcoin sticker on your water bottle or

a vanity plate that says crypto bro or whatever. It's like I mean you're just being stupid at that point.

Yeah. You know, but the the and I that sounds like it's glib, but I think that that's

a way to start the conversation. And um

I think beyond that the um

the idea to my mind is that you shouldn't put all of your eggs in one

basket knowing that you know because basket handles have a tendency to break.

And so you want to spread around your Bitcoin holdings just like you would

spread around anything of tremendous value, whether it's tremendous value in

real terms or just meaningful in your own personal economic terms. If you don't want it to be taken away from you

at the end of a $5 ranch attack, then don't keep it all with you. Um, I think,

you know, feel free to keep some, but if it's if it's economically meaningful for

you and if it would really suck if you were to lose it, then it's worth

segregating into different buckets. And then if we start getting into some tax structuring and some family legacy

structuring or some charitable structuring, then that requires a totally

an even more advanced construct for where do you put your Bitcoin holdings.

Yeah. And um and this makes me think about the sovereignty paradox. For those

listen listening, Matt has a white paper called the sovereignty paradox, managing a Bitcoin legacy, where you shine light

on um a paradox that exists within the the what would you say the the Bitcoin

ethos, I guess, or the f kind of the origin story. Yeah. Just probably like the it's part

of the you know, it's a bit of a paradox in the Bitcoin narrative, I think. Yeah. And so, and so, um, you know, for,

again, I I I I do believe especially for those who are listening to this, like who are ready to like they like they

they've gotten over the hump of like, you know, holding your uh, not your keys, not your coins, like might could

be limiting or a bit more risky than they want. and you know they're sitting here curious about those um yeah those

ownership structures that uh that actually do give you like more control and sovereignty sovereignty in this kind

of like paradoxical way. Do you want to introduce introduce that a bit more and the difference between transactional

sovereignty and uh and legacy sovereignty? Yeah, I mean thank you. I was kind of

alluding to that a second ago, but the idea

the idea behind this sovereignty paradox um came from again my 8y year journey

now in the Bitcoin space because for so long and it's and the narrative persists

even today this whole idea of not your keys not your coins if you don't have unilateral control over your Bitcoin you

cannot trust that you know where it is and there's there's

validity to that. I mean there's that's you know I don't want to diminish the reality that um

giving control over Bitcoin is a surrender of some level of sovereignty.

That's legitimate. That's fair. My but the point in this in the

sovereignty paradox is that when you know that that narrative around not your

keys not your coins really took hold in the era leading up to and then the

fallout from Mount Gaus which was a famous Bitcoin um exchange that was

800,000 bitcoins were lost forever from the people who had their Bitcoin, their

Bitcoin sitting on an exchange at Mount Gaus. They didn't have self-custody of

their Bitcoin. It was stored on the exchange. And so the exchange got hacked. The Bitcoin gets drained. The m

the Bitcoin is lost. And so that's that's really where the not your keys, not your coins narrative

starts to become very popular. And then we see that again and again and again

through three arrows capital through Celsius through BlockFi through FTX.

It's like how many times do people have to h leave their Bitcoin or then in the

broader crypto space leave their crypto on an exchange somewhere or entrust it

to some third party who either gets hacked or turns out to be a fraudster or

is otherwise unreliable. and they lose their Bitcoin. And so the

the whole idea of not your coin, not your keys, not your coins. There's there's it's got a very strong gravity

well. So the paradox is that this begins to break down as the value of the

Bitcoin becomes more and more economically material to the owner of the Bitcoin. Because the unfortunate

reality that we have to hold up for people is that you this Bitcoin

um still exists in a world that is governed by fiat rules. You are still

subject to tax. You are still going to die. You will still ultimately transfer

the value and the bitcoins themselves, but the value of with those bitcoins, you're

going to transfer that to somebody at some point. It's going to go to your spouse or your partner when you become

incapacitated or to die. It's going to go to your kids. Bitcoin is a very complicated asset. Are they prepared for

the technical sophistication it requires? And even more so, are they

prepared for the economic weight that comes along with inheriting a tremendous amount of wealth that they didn't build?

So, it's like I get the whole not your keys, not your coins. There is legitimacy behind that maxim.

the but where it starts to break down is in the grim light of our own mortality

and the fact that and and just the the the grim reality of human frailty because if I transfer

hundreds of thousands or millions of dollars worth of Bitcoin to my children,

will they have the technical skills to manage it? And more than that, will they have the maturity and the good luck

to be able to prevent themselves from getting divorced or getting sued and having the wealth that

I have transferred to them, Bitcoin or dollars or real estate or anything else?

Will they be able to receive that in a way that helps them become the best

versions of themselves? And so I think this is this is the I

think part of the paradox is just this awkward adolescence that Bitcoin is going through right now. It's like wait,

we're all just like yoloing crypto bros doing the whole cyber cipher punk thing.

Give it to the man and whatever. Um and it's like we don't have to play by those rules. Like oh wait a second. Yeah, we

I still have to play by those rules. And then this we we start to try to unpack

the fact that these rules can actually work to your advantage. But it requires

a more nuanced understanding of what sovereignty means. It's not just

transactional sovereignty. Be able to go and buy your bit buy your cup of coffee or your round of pints or your bag of

weed from whomever without any intermediary knowing. There's that transactional sovereignty.

But when we apply a more sophisticated form of sovereignty to thinking about, you know, how do I how do I invoke all

of the rules in my favor so that the wealth that I pass on has an

impact in a meaningful way. I'm trying to reframe sovereignty into a more

expansive definition of what sovereignty means. It's not just controlling the change in your pocket. It's controlling

the totality of the circumstances that govern your wealth. I want to pull on some some threads that

I found in there that that require

um trust. There's this, you know, when we talk about custody and kind of where the

mindset came from with bitcoiners and and really people who were who were not

as, you know, getting involved with Bitcoin because they wanted to get rich, but getting involved with Bitcoin because of like the like just the

fundamental values. Yeah. That disintermediated

this the freedom side of it. Yeah. And and you know now, right, like

we're watching institutions that we kind of like can't trust.

Mhm. Infiltrating a bit or or maybe it's posturing, I don't know, or or kind of

coming in and absorbing this asset. And so then that that's that must I mean

I'm I'm not a bit I I don't have like substantial Bitcoin so I can't I I can

only imagine or try to put myself in the shoes of somebody who is in Bitcoin for the values like the challenge that it is

to identify who in the space right like you can trust what companies you know

organizations that are building around Bitcoin Can you trust, you know, and this is a

this is Matt, this is a a big question and I don't expect you to have an answer for it, but maybe a way to a way in um a

way into that is I'd love to hear how you, you know, as you've been building

Bespoke and as you've been growing with the Bitcoin space and in this world,

like how do you vet partners and and assess, you know, tr

and trust. Yeah. Well, I think the first of all, I

I don't mean this glibly. I think that you don't trust anybody in this system. I think the I

think that by which I mean it has to be transparent. That's the beauty of the blockchain is you can see the address on

the blockchain where Bitcoin sits. And so I think you have to you have to

require transparency to the address level to see that the Bitcoin that you

believe is there is actually sitting there. It's like don't trust verify. Um

the your dollars aren't sitting at the bank.

your dollars are hypo rehypothecated out across the global financial system. And

the reason I know this, I mean, I know this firsthand. Um, when I wanted to buy

a car a few years ago, this is a constant theme because I know we've talked about me buying other cars in the

past. This is a different car. Um, because I bought a I bought a car with

Bitcoin onchain. This is a car I wanted to buy with dollars. And the seller

insisted on dollars. Wouldn't take an a. Wouldn't

take a cashier's check. He wanted dollars. And so I had to go to a bank

and get a little bit more than $40,000 in cash to go buy this vehicle from this

guy. It's like, really? you need cash. And so that

exercise in I mean I I had the money sitting in my account but when I went to

the bank and said I want to I want to withdraw $43,000 worth of

cash. I said uh I don't think we have $43,000 worth of cash.

It's like you got to be kidding me. I know. I've got the money and you're a

pretty good size branch. It's like I need $43,000. Well, the first question is,

why do you need $43,000? Wow. And as a as a Bitcoiner,

My immediate response was, "It's none of your damn business why I need $43,000.

It's my money. Is it not my money? It's in an account that's got my name on it. Why do I have to get your permission

or tell you why I want to get this cash?" But being an obedient guy in some

cases, I told them, "I'm buying a car." I said, "Well, let me ask the manager."

So, they go back and ask the manager and say, "Oh, you're in luck. We got a delivery of cash today." And so I waited

while they counted out $43,000 in $100 bills, double checked it, and

then I had to walk out of that bank with $43,000 in envelopes in a backpack,

feeling conspicuous as feeling as feeling as conspicuous as you could possibly feel.

Yeah. It was like that's a very cinematic moment. It is. So it was Yes, it was stressful

for sure. Was it? It was. Um, and so I I made that trek

and that transaction and I bought the car and I still have that car and it's, you know, I love it. But

If those who have been spending enough time with us here, you'll you'll know that Matt loves cars.

Yeah. But it's like that

is that was a lesson for me that you cannot trust

the intermediaries who are entrusted or who are even paid to custody your

assets. like I could see on my ledger in my bank account that I had the money,

but I didn't have visibility to where the money is stored

to be able to actually pull that money out. Bitcoin is very different. When you

see the ledger in the form of your wallet ID address, that address shows

you the quantity of Bitcoin that's held at that address. Um, okay. Okay. So now I want to ask

about custodians like uh digital asset cryptocurrency or bitcoin custodians

because there is a process that I'm that I'm I'm making the assumption that you have that you have vetted our custodians

and there you you did a thorough vetting you did your due diligence and then you came to the the decision this is this is

the right choice. Um h why it has to do with um

choosing the what's the right way to frame this? the

least bad option perhaps or the um and I don't mean it I I don't mean to sound I

don't mean that to sound as negative as it sounds because I think there really is no

purer form of Bitcoin ownership than unilateral control but again as I

mentioned that breaks down as the value grows and as we get old and die and

whatever and when you're a re like when and when you're a a I don't I don't know if a realist is the right term, but when you

recognize the circumstances in which like where we are currently and when you're pragmatic, you know,

there are some sacrifices that I guess have to be there's just trade-offs. You have to make trade-offs. And so it's like but

yeah how we go how we go about vetting qualified custodians really goes to the

security profile of their key management system

and their regulatory posture the regulatory profile of these of these

entities. There are there is a growing number of what are considered to be qualified

custodians and that's a definition under the investment advisors act. Um it's a defined term. Um but even

beyond what makes the what satisfies the defined term there are grades of

sophistication when it comes to these qualified custodians and there are levels of regulatory oversight. We seek

to use the qualified custodians that meet the very highest standards.

In the United States, for example, there are some qualified custodians that have a federal banking charter as opposed to

just a state banking charter. So there's a number of state regulated

qualified custodians that meet the statutory definition and they are backstopped by the banking commissioner

of the state that regulates them. New York has some qualified custodians that are backstopped by the New York division

of banking. There are some in South Dakota that are backstopped by the South Dakota banking commissioner.

Then there are some that are federally regulated digital asset banks that are

backed not by any particular state but by the federal office of the comptroller of the currency. So rather than rely on

the New York State Banking Commissioner or the South Dakota State Banking Commissioner to ensure that the assets

are properly managed and available in the event that custodian were to become

insolvent for some reason, we prefer to rely on a custodian who has the backs

stop of the United States government as opposed to any particular state. And so

That's one of the criteria that we measure qualified custodians against.

And so whether they're based in the United States or based abroad, we look for the qualified custodians who have

the highest level of regulatory oversight so that they are less likely to fail.

And if they were to fail, they've got the biggest backstop that exists. But

the we don't we don't really believe that people should put Bitcoin

necessarily in qualified custody if there's not some other reason to put it there. And by which again we we get back

into the tax structuring. We get into the family structuring. We get into the planning for this eventual

death or decline or whatever. And so that this is again this is part of the sovereignty paradox. this notion that

you should have sovereign unilateral control over the amount of Bitcoin that you are willing

to die with. And then the stuff that you would rather not die with, do something more

structured with it. And then that means at least multi-IG. And if you want legal predictability,

you probably need more than multi-IG. You probably need a trust of some sort or an entity inside of a trust that then

has qualified custody to know that when you die, not only is the Bitcoin there,

you can see it sitting on chain, you also have the reliability of

generations, in fact centuries of legal precedent that tells you how trusts and

fiduciary relationships work. Stack those things up in your favor and then you have a higher probability of

successfully transferring that Bitcoin to the people that you care about in a meaningful way.

Matt, this reminds me earlier we were talking about alpha. Is there anything else that uh you think might be useful

to cover when it comes to how we address all of the unique investment challenges

that Bitcoin presents? I know we kind of we touched on it earlier, but I I I wonder if there was anything else there

to round that out. Yeah, I mean, Bitcoin is notoriously not income producing. I mean, it's it's

a right in some cases, it's I mean, aside from its market volatility and and what it

does on a day-to-day basis, just the beta of the asset, there's no additional

accretive income that Bitcoin spends off. Nobody's going to rent Bitcoin. it

doesn't yield an income stream. Um, and so there is a temptation

understandably for people to seek additional sources of income

to extract additional value from their Bitcoin. And I think the times will I

think the time will come when there are proven and reliable and trustworthy ways

to get there. Um, but Bitcoin is inherently a very patient type of asset.

And the beta on Bitcoin has been so good

over the course of I mean, not just 17 years, just over the course of the last five or six years, Bitcoin's

beta has been amazing. And so,

you know, why are you wanting to squeeze something and the income? The alpha is only going to come with the

assumption of some risk. It's like you're going to have to you're going to have to then

put your Bitcoin into something that is generating risk because the alpha is

hopefully reflective of the additional risk that you're taking on with the asset. It's like there's there's some

you have to put that Bitcoin into commerce in some way through through a lending facility or something in order

to be able to get additional income off of that. What's very very common is that

people with Bitcoin will place that Bitcoin with a lender. This

is what Celsius did. This is what BlockFi did. This is what other companies have done and failed and still

do and still succeed. They, you know, they then aggregate bitcoins

and then they lend those bitcoins to miners who are mining bitcoin and then

the miners will use those bitcoins, sell those bitcoins at market um and then

repay. But the lenders who are sitting here in the middle, the intermediary who

is sitting here in the middle of this transaction, yeah, they're getting paid maybe 10, 12, 14%.

On their loan, they're paying you 8% 6%. But then if you got another

intermediary like an aggregator fund, they're taking their 2 or 3% and they're going to give you one to two 2% of all

of that. It's like it's again we are introducing intermediaries into a

disintermediated peer-to-peer electronic cash system. And so all these intermediaries present risk vectors,

right? Because they now have to have custody. How solvent are they? When when the minor

goes bankrupt and fails to pay back the loan, who's going to pay the depositor back?

like there this it's still just it's it's too new I think for us to be able to trust it at scale right

and but but these are lessons that I personally learned on a much smaller

scale participating in BlockFi and Celsius before those things blew up.

It's like, but you kind of, you know, you put your hand on the stove,

you know, a couple of times, maybe you start to learn that the system's not

ready, you know. Totally. Yeah. And so, I think the time will come. I just, you know, my perspective

and Bespoke's broader perspective is that Bitcoin is too precious of an asset

to put at risk in these types of ventures. I want to zoom out kind of for

maybe the remaining remainder of this conversation. And I want to I want to zoom out

and again when I said at the beginning of the episode I'm coming back to that um is Bespoke's relationship with

Bitcoin and cl and clarity on that and so yes it is true that Bespoke we've

built around Bitcoiners but we are not Bespoke is not only suited to manage and

be a multif-family office for Bitcoin wealth. we are positioned um for

regardless of how you built your wealth. And I think it's interesting cuz I think that there are some like values

that have kind of rolled they've it's kind of like it's like rolled off the back of like the Bitcoin um like that

that was our foundation and then it but they apply to other kind of our approach

with other assets. So, you know, I I think this this this conversation, I know, is going to be

super helpful for, you know, any lawyers or CPAs who are trying to understand

kind of this asset who might be having clients who are, you know, coming to them with questions. I think that this

conversation really clarifies our perspective for the Bitcoiner who has a ton of um a ton of Bitcoin. But I I want

to add something in this conversation for um I think the wealth builder who

built their wealth not in Bitcoin. Yeah, I think that's great. I think that

I would say that Bitcoin is Bitcoin was the

um the bridge that got us to where we are. But that's not what started this

journey. regardless of the source of wealth where it's whether it's Bitcoin or whether it is a successful company or

whether it is inherited wealth whatever it is I think what makes us very

different is the origin story from a a p a law practice that was built around

generational wealth preservation that lens through which we look at the totality of a family's wealth just you

know Bitcoin just happened to be the impetus that brought us to where we are um because We we saw

we saw a massive need that was unmet for some people that we liked and that we

felt deserved better than what was available. And so um I don't think

Bitcoin is at I mean again I I don't want to diminish the importance of

Bitcoin as a superior form of money and as a superior asset and I am dedicated

fervently to Bitcoin and Bitcoin's success and at the same time um

the way we view Bitcoin is the way we view everything.

It's an asset. It's a type of it's a

form of wealth that usually means something to the whole the

owner of it. And we spent

the better part of three decades where our focus was on helping families with

significant wealth. protect that wealth, maintain privacy around that wealth,

achieve some level of reasonable tax efficiency around that wealth, and

create a form of scaffolding that will support their family as their family

grows through time. That's what estate planning is in in our

view. I mean, estate planning takes the form of various trusts and other LLC's

and partnerships and other entities, all that kind of lawyer stuff. But there's a

there's a mental framework that you apply to create scaffolding to protect

family wealth as it grows and to make sure that as that wealth continues to grow both in economic terms and in human

capital terms as generations rise um that the scaffolding is there to protect

it. And that's the wealth strategy side of our business. And

that's what defines how we look at

wealth, whatever it's based on, whether it's again inheritance, Bitcoin, private companies, crypto, doesn't matter. Um,

we happen to have specific expertise and a passion around Bitcoin because Bitcoin, like I said, is is what brought

us to where we are. But a lot of what makes us very different is that we didn't start out as

an investment company. We didn't start out as a wealth management company. We didn't start out as a bunch of wealthy

dudes who pulled our money together and started doing all this kind of cool venture stuff and that started to take

off and we started selling subscriptions to other people and say, "Hey, come co-invest with us. We got great deal

flow." And all that kind of bull crap that so many other family offices air

quote claim to be around. It's like no that we don't do any of that [ __ ] It's like we build family legacies and that's

that is what our core is. That's why we built what we built. We happen to build it in the shadow of Bitcoin for this

first family. And because of I suspect because of my outspoken

passion for Bitcoin and the fact that I'm uh I'm kind of hard to shut up

sometimes, it created this flywheel. And so the more I talked about

Bitcoin, the more I talked about legacy, the more I you know, there's nobody in the Bitcoin space talking about what

we're talking about. And so that just created the momentum that built Bespoke

to where it is. And along the way, those families that wanted to take their wealth seriously and wanted to build

scaffolding around the family wealth, they say, "You know what? This Bitcoin

has been really great to us, but there are some things we can't do with Bitcoin. We can't necessarily send our

kids to college with Bitcoin. We can't necessarily invest in other companies with Bitcoin. Bitcoin doesn't

necessarily directly fuel my philanthropy. And so, you know, how can

we take this Bitcoin that's a significant part of our family wealth

and start to peel that off in intelligent ways and then either

reinvest in things that we also believe in that just aren't Bitcoin or that are

um that are part of the foundation of building the world that we want to see.

Maybe it's a cleaner world. Maybe it is a world of greater equity, whatever that

is. And how do we how do we use the wealth that we built in Bitcoin to then

do those other things? And it was around that need that we built the investment

company within Bespoke. And that's what fuels the philanthropy work that we do

with our clients. But it's, you know, it's it's it's the fact that um we

didn't start out we didn't start this journey saying, "Hey, we're going to become this multi-billion dollar wealth

management company." No, it's like we're just a bunch of people who are kind of

gathered around this singular purpose of serving clients who who need service and

helping them as comprehensively as we can, as creatively as possible, as

authentically as possible, and help them become the truest versions of

themselves. Build the scaffolding that as their wealth grows, it helps the rising generation become the fullest

version of who they are. Um, that's what we built around. Matt, thank you. It was a pleasure to to

talk about all of this today. As always, I'm left looking forward to the next conversation. Um, but thank you.

Absolutely.