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As Bitcoin's utility expands, so does its adoption—but where does it stand as an asset class? Does it move in lockstep with risk assets? Can it serve as an inflation hedge? Chief Investment Officer Tony Roth talks with Alyse Killeen, the Founder and Managing Partner of Stillmark, about the growing Bitcoin ecosystem and its fundamental value.

Mining the True Value of Bitcoin

Tony Roth, Chief Investment Officer, Wilmington Trust Investment Advisors

Alyse Killeen, Founder and Managing Partner, Stillmark

This is Tony Roth, chief investment officer of Wilmington Trust, and you are listening to Capital Considerations. Today, we have an episode that if you have any interest in the very popular topic of cryptocurrencies you have to listen to. We have a fantastic guest, and we know that she’s fantastic because we’ve had her before.

And we’re very proud and privileged to have Alyse Killeen, who is the founder and managing partner of Stillmark, an early-stage investment firm for startup companies in the bitcoin ecosystem. Alyse has been investing in bitcoin and blockchain startups since 2013 and has been a preeminent voice on the subject, appearing on Bloomberg, CNBC, and a wide variety of other venues that are dedicated to crypto and blockchain. She’s also, as I mentioned, one of a few returning guests that we’ve ever had and we’re really excited to have you, Alyse. Thanks so much for joining.

ALYSE KILLEEN: I'm so pleased to be back. Thank you for having me.

TONY ROTH: So, before we dive in, I just want to remind everybody that we’re not making any recommendations on companies or cryptocurrencies today. So, keep that in mind.

Alyse, there’s been a really interesting, I think, kind of evolution of cryptocurrencies in general and I know that your current focus is in the bitcoin ecosystem, but you’re very knowledgeable, of course, on ether as well and the broader set of cryptos. And particularly as it relates to bitcoin, what we’ve sort of seen is that there’s been a very large sort of tracking between bitcoin and what we’d call in the industry equity beta. And beta simply means the benchmark. So, when equities go up, bitcoin goes up. When equity’s down, equities are down, bitcoin’s down but by a beta of higher than one, which is to say that there—it’s more volatile in both directions.


TONY ROTH: And so, that’s been interesting to see. The other thing that I think has been interesting is that as we’ve moved into this environment, which is inflationary, we haven’t seen gold take off the way we have in other inflationary environments. And one of the predominant themes around why that is is that a lot of the smart money, if you will, that is looking for an alternative store of value during a period particularly where we have an inflation situation that those dollars have left precious metals, gold in particular, and migrated to cryptocurrencies, and particularly bitcoin being the largest one.

I think that’s really the place to start is to talk about this behavior that we’re seeing with bitcoin. On the one hand, it is tracking risky assets and on the other hand it’s not actually sort of holding up as an inflation hedge, even though people think that, oh, the money just went from gold over to bitcoin, which would suggest it actually should not be so correlated with equities. Why do you think we’re seeing the behavior that we’re seeing and is it good or bad in your mind for bitcoin and cryptocurrencies?

ALYSE KILLEEN: It’s a big question upfront, Tony.

ALYSE KILLEEN: There’s two important things here. First, you asked about why we’re seeing what we’re seeing in terms of bitcoin not appearing to obviously act as an inflation head or to be decorrelated with other risk assets. And I think that’s just simply a reflection of bitcoin’s state of maturation, where it is in its lifecycle.

So, bitcoin is a technology that was introduced more than a decade ago. It’s about 13 years old and it’s still relatively new. You talked about the smart money, for instance leaving gold and choosing bitcoin as a form of digital gold. And I think and would suspect that that’s indeed true. But the fact that we’re calling it the smart money shows how early bitcoin is in its cycle, because instead of it being the money, it’s the select few that have had the time and resources to really investigate what bitcoin is.

The second thing that’s important about the question is that it’s a way to illustrate how bitcoin’s different from crypto. So, I expect that over the long-term bitcoin becomes increasingly decorrelated from risk assets and that it becomes an obvious inflation hedge, and it uniquely can do the latter because of the properties of both bitcoin and its incentive system. Now, bitcoin, different from other cryptos, has made hard promises to the community that it’s kept. Most important in those hard promises, one of the most important hard promises is that there’s this cap of 21 million bitcoin. Bitcoin doesn’t print more except for a set schedule that was known 13 years ago and has been true for the last 13 years and will remain true in the future.

And beyond not printing more bitcoin off schedule, its policies, its money policies haven’t changed, nor have its security policies. Compare and contrast that to Ethereum, for example, the number two on the crypto charts, and Ethereum just went through a merge which fundamentally changed both the security of the system and the monetary policies of the system. But bitcoin doesn’t do that.

Instead, it’s sort of this slow progress to creating increasing efficiencies in the protocol, the underlying technology that support BTC, the asset. And through those small efficiencies, we get more utility in bitcoin.

TONY ROTH: So, one of the questions that I feel almost beholden to ask because it’s a question that comes up in almost any conversation is where does the value come from? Why does bitcoin have value? I'm going to loop back to the beginning of our conversation, which is if bitcoin had value that was in some way correlative to strong fiat currencies, the euro, the dollar, maybe even the yuan, then potentially you would expect it to behave in a way that acts as a hedge to inflation and in a way that’s not correlated with risky assets.

So, what’s your reaction to that, to those observations, you know, ones that we started with, but I think are really important in understanding where bitcoin is on this maturation cycle and maybe where it needs to go to start to manifest those kinds of characteristics?

ALYSE KILLEEN: Yes. So, we think about this all the time because, in fact, this is related to our work in backing companies that build on or with bitcoin. So, historically we’ve seen bitcoin’s price appreciate as adoption grows and as utility expands. So, what can you do with your bitcoin as you’re holding it? What can you do with the underlying protocols, including Lightning Network, the emerging, the nascent sort of payments protocol built on top of bitcoin? And, of course, as utility expands, adoption grows.

The second thing that’s driven adoption, and we really see a lovely setup going into our next bull run, is the introduction of new familiar onramps so that when a population, when a demographic can access bitcoin in a way that feels safe to them and that feels like a repetition of a prior behavior, that opens a new market for bitcoin and that drives adoption.

And then finally, just the sort of bull market like enthusiasm cycles has also driven adoption. And so, with all of that you see bitcoin progressively appreciating in its exchange rate against USD over the years. That’s sort of how we think about where bitcoin price falls.

Our work at Stillmark should expand bitcoin’s utility and also drive adoption. And so, we’re measuring our work, of course fundamentally, as any traditional venture capital firm would from a simple ROI perspective. But also, if we’re helping companies create sustainable value, we should also see these supplemental benefits, which is bitcoin in the hands of more people—that's, of course, related again to the increase in price—and bitcoin with a broader set of, a broader utility set.

TONY ROTH: Okay. So, that sounds good, and I think that until the last year-and-a-half perhaps, I think there was probably a good case to be made that bitcoin was, in fact, its price, its exchange rate with the dollar was, in fact, a reflection of the breadth of its adoption and the depth of its utility. But something seems to have broken down. It’s almost as if it’s gone backwards in that it’s now trading as a high-volatility equity. So, what happened–and how concerned are you about it?

ALYSE KILLEEN: Well, I’ve been in bitcoin since 2013, as you said upfront. And so, I, this is my maybe third or fourth bear market. So, you sort of get less concerned as you see each cycle happen.

So, I suppose what we have to acknowledge is that when we’re in a difficult macroeconomic environment that people are going to move out of their liquid assets and into cash and that people also will have less money to sort of play around with. And bitcoin of course to some, especially a subset of new adopters, is a bit of an experiment or a toy and that’s how people learn.

And so, in a bear market, which we’re in now, along with a difficult macroenvironment, we see people less enthusiastic about bitcoin. But the flip side of that is that it sort of gives the companies building in the space room to breathe and grow and prepare for the next bull run.

So historically, how bull and bear markets have been defined is that leading up to bitcoin’s halving event, which is really just an event that’s software encoded which reduces the amount of BTC rewarded to miners by half. Heading up to that you start to see bitcoin’s price appreciate and that sort of kicks off a bull run that lasts for about half of the four-year cycle. And then we have sort of like this bitcoin or crypto recession. After that two years, approximately two years of bull market, then we enter a bear market and that’s, again, where companies building in the space get this time to breathe, build infrastructure, and prepare their teams for the next new influx of adoption and excitement.

TONY ROTH: Remind us, where we are in that cycle again? It sounds almost as if, Alyse, it just so happened that the softer part of that cycle corresponded with some softness in the equity market.

ALYSE KILLEEN: Yeah. That's exactly right. So, I believe that the next halving event is in 2024, midyear, late in the first half of 2024.

The way that we think about it on the private, you know, equity side is that in those bull markets there’s more attention not just for BTC the asset, but also for bitcoin companies. And so, it affects valuations in my space. And so that, that’s sort of how we ourselves need to prepare for those periods where there’s more venture capital dollars paying attention to crypto and to bitcoin because the prices are up, and everyone feels like if they don’t pay attention they might be missing out.

But it’s really in these bear market periods that the wins are happening. And so, our opportunity is largely to take best advantage of this quiet time.

TONY ROTH: So, if I have it correct then, we should be moving into a period really now or very soon where there’s a pretty meaningful tailwind to bitcoin because we’ve been in a period now where there’s been a lot of incremental progress made from a utility and adoption standpoint that hasn’t really been reflected yet in the exchange rate. The reason that bitcoin seems to have value is because it has utility and the reason that it has utility is because of the blockchain and its ability to act as a marker or indicator of ownership of value in some way. And as that ecosystem builds and builds it becomes sort of self-perpetuating in terms of it having more utility and value.

ALYSE KILLEEN: That's the fundamental value.

TONY ROTH: And it’s as simple as that.

ALYSE KILLEEN: Exactly. So, the value of bitcoin is that it allows for a transaction ledger to exist and to be referenced by anyone without an intermediary.

So, some of the drivers of the next bull market, both in terms of adoption and the expansion of utility of bitcoin, will be things like the maturation of the payments network and new protocols introduced, like Taro. Taro will be the ability for other digital assets besides BTC to be transacted and traded on bitcoin’s Lightning Network. What that means, most importantly, is digital dollars transacted across borders, peer-to-peer, basically for free, basically instantly 24 hours a day/7 days a week. Not only is that useful, broadly useful, but it also addresses an acute need for a population that’s underserved by traditional finance and, frankly, by bitcoin until you can get stable assets on bitcoin’s Lightning Network. So, there’s these really progressive developments happening in bitcoin that prepare us to see a significant jump in adoption and expansion of utility, even ahead of the next bull market.

TONY ROTH: One of the things we talked about last year when we spoke was the importance of the Lightning Protocol Network, which as you mentioned earlier is built on top of bitcoin.

As I understand it, essentially when a transaction occurs, if it’s a transaction of a smaller amount that’s in bitcoin, that’s in a fraction of a bitcoin, rather than having to put it into the master ledger that bitcoin consists in, we can put into this Lightning Network, which is in a sense less secure but secure enough for these smaller transactions. And El Salvador, which tried to, with some success and some failure, use bitcoin as sort of a national currency, is very much relying on the Lightning Network to enable legal tender to occur at the size of a bubblegum transaction through bitcoin. So far, do I have that pretty much right?

ALYSE KILLEEN: Yes. I might fight with you on the less secure.

TONY ROTH: Yeah, please. Please.

ALYSE KILLEEN: So, just to be very clear to the audience, what bitcoin prioritizes—this is not different from Lightning Network, by the way—what bitcoin prioritizes is security and it’s—there’s two ways to look at security. It’s, one, going back to the hard promises I talked about at the beginning is can you buy bitcoin, hold it for 10 years, pay no attention to it, and then come back and find that bitcoin is governed by the same rules as when you left? Is your value secure in that way? Yes.

That's thing number one. Number two is, are the protocols secure? Can they be hacked? Can they be breached? Will they fail? And Lightning Network might be less secure relative to bitcoin’s core protocol. But relative to other protocols in the alt coin space, it’s been very successfully secured.

So, when we see all these sort of defi hacks or the collapse of what they’re calling bridges between protocols, and this is happening in the tens and hundreds of millions, we’re not seeing the same in bitcoin. That's never happened. And we’re not seeing it in the Lightning Network either.

TONY ROTH: Okay. So then, you talked about Taro, which sounded something akin to Lightning in that it was something that was somehow derivative of bitcoin that allowed for smaller transactions. How does Taro add to Lightning? How is it different?


ALYSE KILLEEN: So, I want to link this to what you said about El Salvador just to illustrate what Taro is.

TONY ROTH: Please.

ALYSE KILLEEN: In September 2021, bitcoin was introduced as legal tender and the government of El Salvador accompanied that with a BTC air drop into people’s digital wallets. So, what that meant was if you were an adult, if you were a Salvadorean adult, you had $30 in this new digital wallet in the form of bitcoin. Now, bitcoin’s volatile. You—we opened the discussion by talking about bitcoin’s volatility and correlation with high-risk assets. That's fine for you and I and for people of privilege that have many to invest and wait for it to appreciate in value. However, if you’re in El Salvador making $400 a month and your family requires $400 a month to survive or to thrive, then bitcoin’s volatility is less amusing, right, and it’s actually not tolerable.

So, El Salvador from Lightning Network’s perspective was incredibly successful. It did two things for Lightning Network. One, it tested it at scale and Lightning Network succeeded. Lightning Network was up, available. It wasn’t breached. It was secure, functioning at scale in El Salvador. And, in fact, Tony, it served more than, during that period, just that period, it’s grown since, but during that period it served more than three million Salvadorans, which is more than are served by the local banks. By any measure I think that’s an incredible success, more than we could’ve hoped for.

The second thing though it did was it provided the set of KPIs [key performance indicators] about how Salvadorans would use bitcoin and how they would use the underlying protocols. And so, what Lightning Labs was able to discern, not just from El Salvador but from other developing markets including those in Africa, was that the local populations were incredibly interested and excited for and had an acute need for Lightning Network because they don’t have credit cards, they don’t have debit cards, they don’t have other banking tools. Even just to engage with their local brick-and-mortar retailers, Lightning was helpful. But they didn’t have the ability to tolerate bitcoin’s volatility and so that was a pain point.

So, when people got their $30 air drop, instead of saving it, hoping for it to appreciate, what they did were the things you would expect them to do. So, they went grocery shopping. They took their family out to pizza. They went to the pharmacy to pick up medication for their children. Those were the things they did. And that makes sense if you don’t have the ability to wait for bitcoin to appreciate.

So, Lightning Labs took that insight, the data gathered from this project, interpreted it to imply that Lightning Network needed stable coins in order to really serve the needs of people in emerging markets, and their CTO [chief technology officer] introduced the concept of Taro, which is a protocol that allows for stable coins to be transacted on Lightning Network. What that means is that stable coins then have the sort of properties that are advanced by Lightning Network and that the transactions can have final settlement on the bitcoin blockchain as they need to. And so, this opens up an incredible-like expansion of bitcoin’s utility and for a different demographic than was already served.

TONY ROTH: And a stable coin is a type of bitcoin where the risk is hedged out essentially, right?

ALYSE KILLEEN: Well so it can represent any sort of fiat dollar, of course. But what we see most popularly exchanged on crypto protocols is digital dollars. There’s different ways of representing a digital dollar. But it could even be that there’s a dollar in a bank and the company, you know, in exchange for that dollar in the bank represents it as a digital dollar on a protocol.

And how this has happened historically is that trading activity of digital dollars has moved to where traders could get the most efficient transaction experience. So, where were transactions quickest and where were they cheapest? So, when the most popular stable coin, which is USDT, Tether, was introduced, the first sort of arena of exchange was on a protocol built on top of bitcoin’s blockchain called Omni Protocol and the trading activity of digital dollars and BTC was happening there. Then Ethereum came and it was quicker and at that time cheaper. And so, the volume of activity of USDT moved there. But that was short-lived, because of course the transaction prices of Ethereum were, you know, very bumpy, right, based on what sort of trading or gambling activity was popular at the time.

So, activity moved to Tron, and it was always seeking this easier, more efficient trading environment. And what Taro does is it actually brings that environment back to Bitcoin. So, there’s nothing cheaper or more efficient than free and instant.

We’re in Testnet now. But when we’re in Mainnet, what we expect Taro to do is to bring USDT activities and trading activities really back to a bitcoin-native environment and give traders this better experience of execution.

TONY ROTH: How do they hedge out the risk of the underlying cryptocurrency, because they’re essentially transacting in cryptocurrency, but the volatility is not reflected of the underlying cryptocurrency in the token. That volatility is hedged out. So, it sounds like there’s some kind of derivative going on or there’s some type of way that if the underlying value of the cryptocurrency were to collapse or were to appreciate, you don't participate in that. How is that functionally happening?

ALYSE KILLEEN: Right. So, there’s two types of stable coins. This is probably a really important point, but to make it not technical we’ll just simply divide stable coins into two categories. And there’s more, but the primary categories that have been tested are stable coins that are backed by dollar equivalents. So that would be one USDT issued on Taro, say, and in the bank or in the issuer’s holdings would be a one-dollar U.S. dollar equivalent. So, you know, it’s just it’s one for one. So, there’s really no crypto exposure there.


ALYSE KILLEEN: There’s been experimentation recently in the crypto community around algorithmically secured stable coins, which basically means that you would trade between different cryptos to assure this, sort of semi-balance of a stable coin. But, in fact, we don’t believe that those are fundamentally sustainable. And so, a collapse of an algorithmically secured stable coin, like the LUNA/Terra situation presented, I believe was actually foreseeable. And as we’re evaluating these frontier technologies, Bitcoin, Lightning Network, other cryptos, what we need to keep in mind is that just because there's a new technology we are still governed by the laws of physics and the same rules of science and math apply here as they do in other spaces.

And so, there’s certain things that are possible, certain things that are not. And Bitcoin adheres to those rules. That's part of the culture. Other spaces can sort of become untethered from this reality and we saw that with what happened with the collapse of Terra.

TONY ROTH: Right, got it.

ALYSE KILLEEN: And the fiasco with LUNA. And if we’re realists in evaluating the tech, we can avoid those sort of events.

TONY ROTH: So, one of the other things that is going to potentially govern this ecosystem is potentially some type of U.S. federal regulation. And I know that a lot of the participants have taken the high road and said, well, we welcome regulation. We want certainty. We want to understand what the environment’s going to look like.

What are the reasons that the government has been so slow to get involved and why are they starting to get involved now?

I sort of understand it’s maybe it’s now it’s big enough to matter and—but it’s still somewhat surprising that it’s only now that the regulation is really starting to seriously come into play. So, I'm curious to get your take on why it’s taken so long and what do you expect to happen over the next few years from a regulatory standpoint?

ALYSE KILLEEN: Yes. It’s dangerous to opine about these things. So, I’ve been surprised that it’s taken as long as it has. But I think that Bitcoin would be particularly benefited by seeing a maturation of regulators’ understanding—now I'm talking about U.S. regulators’ of the space.

I don’t have any specific inside knowledge of where we’re moving. But I will say that what’s, again, different about bitcoin and other cryptocurrencies, of course, is that there is no governing or sort of like founding body in the bitcoin space that is organizing lobbying efforts that is marketing or, in a centralized way, building a story to sell bitcoin to others. And that’s different from what we see in other communities where a founding group is intact. They’re deploying capital to lobby and they’re marketing their coin often as bitcoin 2.0. This is bitcoin, but better.

But ideally, I would like to see regulators say, hey guys, let’s slow down and make sure that in our promotions of what we’re doing that there’s some level of honesty and transparency of the rewards and incentives we’re receiving for the promotions that we’re advocating for.

TONY ROTH: What is the market cap today of whether it be bitcoin or whether it be cryptos in total?

ALYSE KILLEEN: It’s just under a trillion. So, the global crypto market cap is $925 billion approximately…


ALYSE KILLEEN: ...and bitcoin is 40% of that.

TONY ROTH: Right. Okay. So, half a trillion dollars, although it’s roughly at a third of its value from its peak. So, it could be—it’s been over a trillion, I think, at different times.

And if you think about those assets, are most of those assets people that are, or players or participants in the system that have said, okay, I have this value and, boy, I could put it in the bank, but instead of putting it in the bank, it’s a lot easier just to put it into bitcoin and that’s what I'm going to do? Or a stable coin that’s derivative off of a bitcoin? Or are they are essentially investors? Are they participants that have concluded, no, it’s not that I need a place to put my money that’s safe, but I want to make money and I believe that by putting my value into bitcoin I’ve got a good chance of making money? So, it’s a speculation essentially. Do you have a sense of, you know, what the balance is of the participants in the system?

ALYSE KILLEEN: I think it’s very mixed. And, of course, my friends and family network is going to be quite different than others. But here, if we’re looking at people in the bitcoin space that have a deeper understanding of bitcoin’s history and perhaps are better able to project what will come of bitcoin and its value proposition, people are both expecting an appreciation of BTC the asset and very much value being able to opt into a system where the rules are stable and unchanging. They want to be able to be their own bank and they want to be able to go to sleep at night peacefully knowing that, you know, sort of the rug can’t be pulled out from under them in terms of how the system operates.

So, that’s bitcoin. The rest of it feels to me a lot like speculation. We know that people believe that the way to drive their crypto community’s growth is by selling the belief, the hope, that the asset will appreciate.

Because we’ve used Ethereum as an example, I’ll go back to this. Ethereum had made a couple changes this past 12 months that were really about sort of becoming what they’re calling ultra-sound money. One would think that having these hard promises about what your money is, who secures it, how you access your money, and how you access and interact with the ledger that assigns or accounts for who has what, one would think that a stable rule system there would be linked to the soundness of the tech and the soundness of the money. But, in fact, as they’ve made these changes in the protocol, they’ve promoted it as an advancement towards ultra-sound money.

Contrast that to the development of other technologies. So, in the bitcoin space when we have these protocol advancements, we talk about what they do in terms of how they create better security or transaction throughput, so efficiency in bitcoin’s protocols. And then from there, sometimes there will be the ancillary benefit of expanding utility.

So, to contrast, for instance, what we saw in Ethereum’s merge where Ethereum changed the way it secures its ledger, so a fundamental change to the system, to contrast how that was sold as an advancement to becoming like bitcoin 2.0. And, by the way, after that happened Ethereum’s price started dropping relative to bitcoin. So, I'm not sure the market perceived, you know, the marketing message in the way that it was intended. But contrasting that to bitcoin’s last major upgrade, which was Taproot, which was sold to the community as a way to enhance privacy at Bitcoin’s core protocol layer and to increase throughput. But what also happened from Taproot is that you could get more sophisticated smart contracts on bitcoin as well as on Lightning Network. Emergent from that was opportunity to introduce Taro.

So, that’s sort of how things progress in the bitcoin space is this really scientific approach to how can we make changes that maintain and strengthen the fundamental value of the protocol without changing the security of the transaction ledger and what does that mean in terms of the ecosystem of activity that can happen on top of these protocols? And Taro is an example of the really incredible impact of these changes that are only getting sold as privacy enhancements or efficiency enhancements. But from there, you can get so much more.

TONY ROTH: Right. So, you’re basically drawing, you’re doing—I think that part of the conversation you’re trying to accomplish two things. One is to talk about the distinction between bitcoin and some of the competitors, in this case Ethereum, but trying to highlight that bitcoin is, in a sense, a more pure, a more mature technology in its sort of core thesis to protect and to be efficient. And then, secondly, making the point that as a result of this, hopefully it’s positioned vis-à-vis regulators in a better place given its inherent strengths. Does that sound right?

ALYSE KILLEEN: I think so. And also, of course, we’re excited about the opportunity for bitcoin to create more equal and fair access to a better-connected financial system, right, to a better-connected economy. And so, one of my concerns in the absence of regulation is the way that things are getting sold to people without adequate time to research them.

So, to take an—just to use a toy example, not a real token—we’ve often seen that after a period of high adoption in a developing market, so let’s take emerging market A. Emerging market A, after it hits an inflection point of bitcoin will often see a rush in of new token projects. And then, you’ll start to hear from the taxi drivers or the person running the shop on the corner that they found a new coin, Banana coin, that’s going to, that’s trading at $2 right now, but one day it’ll be where bitcoin is, $20,000 today, and they bought it early and are super-excited.

But that person with the corner shop doesn’t have the time to really dig in and look at what’s different, including in the distribution of tokens between Banana coin and Bitcoin, and start to understand what that means about how they’ve been sold Banana coin. And so, in the absence of, you know, regulatory guidance it feels like the Wild West and the people that are most likely to suffer are the people with the least resources.

TONY ROTH: –We’re running out of time unfortunately, Alyse. But I want to remind everybody that Stillmark is a company that essentially raises capital and deploys that capital on behalf of its partners into companies that are early stage within the Bitcoin ecosystem.

So, you would be a perfect person probably to ask the next and final question is if a client wanted to invest in this opportunity, and I'm going to define the opportunity very narrowly because from your perspective, of course, you see the opportunity broadly and rather than just buy the coin, you’re buy, you're buying the ecosystem and you’re buying the growth and the development of the ecosystem by buying into these companies that are building it out. But if a customer, one of our clients, wanted to just invest strictly in bitcoin, how would you do it?

ALYSE KILLEEN: So, going back to what I said earlier, I think that because so many onramps have opened up that people can really find bitcoin where they’re already comfortable.

So, how I would do it is this is a portfolio company. I would go to—it’s a trusted company in our network. I would go to Casa, So, we would set up a Casa account. We have—buy bitcoin on the app and then secure it with Casa software. Now, the reason why I would do it that way is because, one, it’s easy, but also because we’re optimizing for security.

So, when we’re thinking about how to access bitcoin, the most important thing is that it’s always available and that we have control over it. And so, that’s why when someone tells me that they’d like to buy bitcoin, especially if it’s for the first time, then I want to know what institutions they’re already partnering with and see if one of those institutions that’s familiar to them will allow them access to bitcoin, because I think that’s the best way to get started.

TONY ROTH: And is Casa in some way an alternative to Coinbase where you’re buying, you’re opening an account, you're holding it directly? And, if so, is it less expensive than Coinbase, which is notoriously very expensive in terms of the fees?

ALYSE KILLEEN: What’s very expensive when you’re participating in the Bitcoin ecosystem or broader crypto ecosystem is when you lose access to your crypto or to your bitcoin and that can happen when you’re using an intermediary to secure your funds. And that’s happened, even with very close friends and family of mine when they’ve used other custodial providers, and Coinbase is an example of a custodial provider.

TONY ROTH: And just to remind everybody, we are not recommending, we being Wilmington Trust, we are not recommending that anybody go out and buy bitcoin using Casa. We’re not saying you shouldn’t, but we’re not saying you should. How long has Casa been a commercially viable and open-for-business resource?

ALYSE KILLEEN: We invested in them in 2019, which was early days there. They were a leader, like I said. But just to offer other examples of companies that can provide something similar, there’s a company that does very much the same called Unchained Capital. There's a company local to me in Los Angeles called Swan Bitcoin that people use. And there’s this really sort of robust set of tools for people that want to acquire bitcoin and secure it themselves or better understand the rules. And so, we’re really about making sure that people know their options and understand what they’re buying.

TONY ROTH: Okay. Well, Alyse, we’re going to have to stop because we’re out of time. But we could go on. This has been a great conversation.

I want to frame a takeaway, which is bitcoin continues to, I think, grow up in what appears to be—I mean we’re going to be cautious in saying this—but what appears to be a constructive direction. And that is to say that it appears that bitcoin is sort of the dominant type of cryptocurrency in today’s world. Cryptocurrency seems to be here to stay. Bitcoin seems to be here to stay. And certainly, it’s increasing by leaps and bounds as it relates to its core raison d'etre, which is its utility and its adoption as a result of its utility, and there seem to be more and more ways to gain access to this, whether it’s as a store of value and/or speculation.

I think at Wilmington Trust, we continue to study, very carefully, cryptocurrency, stable coins, and Bitcoin.

So, that’s sort of the takeaway, Alyse. And if you have any final concluding thoughts, love to hear them. If not, either way it’s just always great having you on the show.

ALYSE KILLEEN: Likewise. Thank you so much. It’s been really fun.

TONY ROTH: So, thank you so much. I want to remind all of our listeners that we have a full roundup of our latest thinking on the environment, inflation, where the Fed is going, whether we’re going to have a recession or not at wilmingtontrust.com. Thank you all for listening and we’ll talk again soon.




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Alyse Killeen
Founder and Managing Partner, Stillmark

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