Cantor Crypto 2025

by saying thank you to everybody for participating.

Thanks to all that helped put this together.

This is obviously a very special conference for us.

We had our first crypto conference in November of 22.

In Miami here with many of you guys,

lots changed since then.

We called it the triple storm at the time.

We had a hurricane here.

We had a very tough political backdrop,

post-bite an election.

And we also experienced the crypto storm at the same time.

Before I introduce to the next person

which doesn't need an introduction to Michael Seller,

I just wanted to give some facts and track record

of where crypto has gone since our first conference in 2022.

Facts will verify right now.

Everybody will be pleased that I've had the pleasure

of introducing Michael Seller now several times.

2022 Bitcoin was 20,400.

A year later, up 73%.

November 23, 35,400.

A year later, up 95%.

November 24, 69,200.

A year later, up 60%.

Tonight, hopefully I continue that track record

without further ado, Mr. Michael Seller.

And one year it's been.

This is a very pivotal year, I think,

in the formation of the digital assets industry.

You know, they say the two most important days of your life

for the day you're born and in the day you figure out why.

And I think the extraordinary thing

that's been a lot more than just the way

you're born and in the past 12 months,

I think a lot of us figured out why,

why are we in this industry?

I'm delighted to be with you today

because I want to share my why.

And my why is going to cover three pretty profound topics.

The formation of a new asset class called digital capital.

The formation of a new business model,

the digital treasury business model.

And the formation of a new asset class digital credit.

And I think 12 months ago, we knew that digital assets

were all spacious and we were all very bullish on Bitcoin.

But I really think the past 12 months

have provided extraordinary clarity

about these three topics.

So first I'll talk about digital capital.

I think the emergent consensus in the world

over the past 12 months is Bitcoin is digital capital.

There was some pretty pivotal events.

The red sweep was a pivotal event.

The appointment of 12 pro Bitcoin cabinet members

was a pivotal event.

When the president said we're going to be the super power,

the Bitcoin superpower, that was a critical event.

When David Sacks said Bitcoin is digital gold,

a digital commodity, the global commodity.

It's March of 2025.

When he went on television to assert that Bitcoin was special

and recognized for its commodity status, that was a pivotal event.

And we bandy about this phrase, digital gold,

and people talk about, is it just a store of value?

Can it be successful if it's only a store of value?

Well, there's a theme to that, which

is the bug is the feature.

And I think that the humbling epiphany of the past 12

months is every criticism and every bug

and these asset classes in this industry,

in the Treasury business model, has turned out

to be the feature.

And here, store of value means capital.

Gold is store of value.

And if you are store of value, and if you are digital gold,

and you emerge as digital capital,

then that is a profound paradigm shift

for the entire economic world.

So why is Bitcoin digital capital?

Well, the politician says digital capital.

The banks have embraced it as digital capital.

Now we actually have, we have JP Morgan expressing

support for the asset class.

We have the head of Charles Schwab, that's

announced that they're going to custody Bitcoin.

They're going to let you trade it.

They're going to extend credit against it.

They're going to let you deposit it,

and withdraw it in the first half of 2026.

That's extraordinary.

So what you see now is 12 months ago,

I couldn't get a loan against any kind of Bitcoin

that posted as collateral for many major banks

in the United States.

Right now, Bitcoin is credit worthy collateral

at Merrill Lynch, at JP Morgan, at Charles Schwab,

at Texas Capital Bank, at BNY Mellon, at Wells Fargo,

and at PNC.

And so there's probably a few that I've skipped.

I think City has just announced that they're

going to start to custody and bank Bitcoin

the first half of next year.

So we have basically progressed through the unthinkable.

We've gone from a toxic asset class

that the administration was against,

and the banking industry did not acknowledge

to an emerging asset class that's getting the grudging

respect of half of the major banks in the United States.

And it's spreading like wallfire.

These are the most conservative risk

adverse organizations in the world.

And if they go into a 180 in just 12 months,

that's pretty extraordinary.

And if half of them embraced this asset within 36 months,

I think that's light speed.

So you've seen the banks embracing Bitcoin.

Now you're seeing Wall Street.

Of course, we all know the story of the success of IBIT,

the most successful ETF in the history of Wall Street.

I've tracked it pretty closely.

What's interesting, of course, is it

went from nothing to about $100 billion in less than two years.

But also, if you look at the emergence

of the derivatives market on top of IBIT,

it went from nothing to $10 billion to $50 billion.

And if you look at the liquidity, it went from nothing

to trading $3, $4 to $5 billion a day.

It's really quite extraordinary.

Public companies have embraced this asset.

If it's going to be digital capital,

someone's going to be able to capitalize on it.

There was one company that capitalized on it

in the summer of 2020.

And then there was two, and then there was three.

And we thought that was kind of cool.

And then there were 20 and 30.

There were maybe 30 at the beginning, the middle of 24,

60 toward the end of the year.

And we've gone from 60 to more than 200 in the year 2025.

200 publicly listed companies up from 60 in 12 months

is quite a bit of progress in a single year.

So this is an extraordinary dynamic.

And of course, the marketplace itself, right?

When we see a 700 million crypto believers,

the crypto industry tipped the election last year.

It's becoming the most powerful,

of not the most powerful political movement in the country.

And it's global phenomena.

And if you're going to be global digital capital,

then you probably want to rest on liquidity.

So you're staring at $60 billion a day of liquidity.

But on Friday, I think we had $100 billion trading.

So it's an emerging powerful asset.

It's electrically powerful.

It's computationally powerful.

It's economically powerful.

And it's politically powerful.

And it's never been more powerful.

So that observation, Bitcoin is digital capital.

It's key.

We are capitalists.

The capital assets of the 20th century, equity capital,

real estate capital, credit-based capital.

Most of the world thinks private equity, public equity,

and real estate is primary capital.

The emergence of digital capital is pretty profound

because it represents an alternative to people who don't perhaps

want to store all their wealth in real estate.

There's, as I've said before, there's

really no real estate in Africa.

You probably want to put your family savings

into for the next 100 years.

There are lots of parts of the world

where people just don't want to store their economic energy

for long periods of time.

So the emergence of digital capital is a global phenomenon.

It's also a political phenomenon.

It's also a technical phenomenon.

And of course, if you pair the emergence of digital capital

with the emergence of digital intelligence,

you can imagine that in a world where the billion AI is

talking to a billion AI, a billion times a minute,

they're not going to have a lot of patience

for 20th century ways of doing things.

They're not going to buy sports teams.

They're not going to buy fiat, sovereign, debt capital.

They're not going to store their money in cash.

They're not going to trade gold.

They're not going to want to store their capital

in buildings or cross-trade commercial real estate.

They're certainly not going to be comfortable with securities

and all of the human and legal and political restrictions

to come with them.

So the emergence of digital capital,

the same time as we have an emergence

of digital intelligence, is maybe it's a coincidence,

but maybe it isn't a coincidence.

Maybe it's an inevitability.

So the second point I want to focus on is the emergence

of the treasury model, of a digital treasury model.

What is it?

A treasury company is a company that sells securities

to buy a commodity that it then capitalizes on

and then issues credit against the commodity.

So if you sell securities, raise capital

and then issue credit against the capital,

you've created a treasury company.

There traditionally haven't been a lot of treasury companies

because the SEC 40 act prohibited public-rich-rated companies

in the United States from capitalizing

on securities portfolios.

Everything that I'm going to describe,

you could do with the S&P index or portfolio of magniffs

and seven stock except for the fact that regulations in 1940

put in place by the United States make it illegal.

And so because you could never have more than 40% of your liquid

assets sitting in securities, you find Warren Buffett's

got to continually trim his position in Apple stock.

He's got to sell his securities.

He's always got to keep 60% or more of his liquid assets

in treasury bills.

And it turns out that most of these mathematical methods

don't make any sense if you're using sovereign debt

as your capital asset for economic reasons.

So we inadvertently discovered a new business model.

There's insurance companies, there's banks.

It's all sorts of business models.

This is a treasury business model.

And how does it work?

We sell equity, we sell credit, we sweep cash flows,

we buy Bitcoin, we've done it 85 times.

And we found ourselves with about 3.1% of all the Bitcoin

in the world.

We spent $48 billion to buy it.

It changes value every day plus or minus a few billion dollars.

Doesn't bother me.

Bob, there's other people.

I rather like it.

I enjoy it.

We've gone from an irrelevant company

to the fifth largest treasury in the S&P index.

You can see the chart will be the number two.

In the next 12 to 24 months, I expect

we'll be the number one in four to eight years.

There's only one company on this chart out of the ours

that has a practice of accumulating capital.

And that's Berkshire Hathaway.

Every other company on this chart

has a practice of surrendering capital.

And so one of the big ideas in the treasury model

is instead of surrendering capital enthusiastically

as fast as you can and bragging about it,

you might want to keep the capital.

Every big bank, every time they have a good quarter,

they increase their dividend and increase their buyback,

as though that's an accomplishment.

Every big tech company increases their dividend,

increases their buyback, as though it's an accomplishment.

It's not an accomplishment to surrender your money.

If you walked into your dining room on Thanksgiving

and told your family that your idea to improve the family

was you're going to give away all the family's money.

That way we won't have a volatile balance sheet.

It's not good for the family, right?

I think intuitive, when you know that it's not a good idea

for you to give away your money.

And you know it's a good idea for your family

to give away your money.

But somehow, somewhere along the line,

the conventional wisdom and corporate finance

is that money is toxic, capital is bad,

and the most shareholder friendly thing you can do

is decapta-lyze the company by throwing all the money out.

Now of course, the irony is the best run companies

in the world are in the business of getting rid of money.

And that leaves the investors to figure out what to do

with the money that's being surrendered

by the well-run companies.

There's a certain irony to it all.

It comes about because they're all capitalized

on the wrong asset.

You can see here in the last five years,

the cost of capital is 14% as the S&P index

turns out the gold is tracking it.

You know, you have two interesting capital assets,

metallic capital, gold, equity capital, the S&P index,

14%, that's your hurdle rate.

Money markets pay you 3%,

therefore you're destroying 11% of your treasury assets

every year that you hold money markets.

Bonds are minus 4%, that's how you bank,

ruptured bank.

The Mag 7s double that number,

Bitcoin's double that number,

our company outperform Bitcoin in the time frame.

If your company is capitalized on an asset

which underperforms the S&P,

then you're negatively polarized to capital.

You're toxic to you.

So you're going to throw it away as the rational thing.

If you're capitalized on a product like Bitcoin

that outperforms the S&P,

you're positively polarized to capital.

You attract money.

In fact, the more money you raise,

the more profitable you become,

the more shareholder value you create.

It's a very simple idea,

flip the polarity from negative to positive,

and then you just get stronger every single year.

And you'll get more powerful.

But as you can see,

the reason that you can't capitalize on the Mag 7

is the SEC 40 Act.

And you can't capitalize on the S&P because the SEC 40 Act.

I guess in theory, you could capitalize on gold,

interestingly enough,

no public company has really done that.

And the point that I make to the gold bugs

is even the gold miners don't do that.

And if the gold miners aren't doing that,

then there must be an issue.

I don't know what the issue is,

but what I do think is the general tendency of corporations

is you throw away your money to the investors

and the investors by the index,

and that's how they keep their economic wealth intact.

And that's good for the investor, right?

That's, look, that's why Harvard and Dalman

and Yale and Harvard and all of these large institutions,

that's why they have a 500-year life expectancy.

They just buy a capital asset, like real estate or equity.

And the reason that your favorite company

lives for five or 10 or 15 years and goes bankrupt

is because they don't have any assets, right?

Just like it.

Again, I've said before, they're like type 1 diabetics, right?

They can't store energy.

Bitcoin is insulin.

It's insulin to the type 1 diabetic, right?

If you're a company, you need Bitcoin.

It's like you're insulin all of a sudden

you can store economic energy.

You're not doomed to decatalyze yourself.

Our companies raised a lot of money.

We raised a ton of money via equity

issuance, a lot of money by bonds.

And in the last 12 months, we've really

rotated to raising capital via preferred stocks

and preferred credit instruments.

And that has taken off.

Now, what is the Treasury business model?

We're really financial engineers, right?

We engage in financial structuring or structuring

of where structured finance company, if you will.

And what you can see here is the raw asset is Bitcoin.

It's got a 51% ARR and a 43 vol over the past 30 days.

If what you wanted was that, you could just buy it.

But what we've done is we stripped the volatility

and the risk off of the asset.

So we stripped a bunch off with strike down to 29, then 18,

and 15.

And stretch, we stripped it down to 8% in the last 12 weeks.

Stretch today, it's targeted at 100.

It traded between 96 cents and 107 and 107.

But it's down to trading plus or minus 4 cents or 5 cents.

If that trend continues,

the vol on stretch will go to one or two.

And so what we're really doing is stripping the volatility

off of the pure economic asset.

Where does, there's conservation of energy in the universe.

Where does the volatility go?

It goes to the equity.

If I actually convert 50% a year performance

into 11% performance, where's the extra performance go?

Goes to the equity.

So what we're doing is fairly elementary.

We're just stripping the performance and stripping the volatility

and stripping the risk.

And the extra risk, the extra performance,

the extra volatility goes to the equity.

And that's why a business that has 70 billion in digital capital

can create $3 billion, a very, very low volatility credit.

It's not that different, again, to take a burl a crude oil.

And you take crude oil.

If you distill it to the highest, most distilled form,

you have kerosene.

Kerosene is jet fuel.

Kerosene is rocket fuel.

Now I'm going to make a joke.

If you study the history of science,

it's full of examples of people that

saw breakthrough technology.

But they used the technology the wrong way

because they were conventional thinkers.

The idiom is repaying cow paths.

You invent concrete and you could create a six lane super highway.

And the car could go 90 miles an hour.

But instead, I take the concrete.

And then I put it over a cow path that

was meant for a cow that moves four miles an hour.

And now I've got a paved cow path where

cows can now move four and a half miles an hour.

You got no benefit from the technology

because you used it the wrong way.

Now I'm going to give you an example here.

We invent John D. Rockefeller distilled kerosene.

And you're in the horse and buggy business.

So what do you do?

Well, you create a kerosene lamp.

And you put a kerosene lamp in the back of the horse and buggy

so that your customers can travel across the country by horse and buggy

with a kerosene lamp and read a book.

Or you put a kerosene heater in the back of the horse and buggy.

And you brag that now you've got a warmed horse and buggy.

And you won't be cold while you're in the horse and buggy.

But a dude like Ford comes along and thinks, well, maybe

we'll just create an automobile and we'll

drive with gasoline or maybe Boeing comes along and creates

an airplane and we just fly across the country.

So there's a compelling thing to do with the kerosene,

like rockets and jets.

And there's gasoline and there's cars.

But there's also the trivial application of the technology,

which just makes the horse and buggy 1% better.

And yet, the greatest business people of the era

made all their money with horse and buggies.

And they're going to grab the kerosene,

put a kerosene lamp in the back of the buggy

and they're going to declare that they've

used the technology for the good of their shareholders.

And what I would say here is you just have to think different.

And you have to think much bigger with regard

to what you can accomplish here with this technique.

What we do is we accrete Bitcoin per share.

So our equity investors want more Bitcoin per share.

We started with 56,000 Satoshi's a share

and we added every single year.

We added about 74% more last year and 26% more this year.

There's a lot of ways to do it.

You can sell equity.

You can sell bonds.

You can sell preferred stocks.

You can sweep cash flows.

This is a snapshot of the company's balance sheet.

In essence, we're 1.1 levered.

We're 1.3 times amplified.

And we have 84 years of dividends.

You know, when Lehman got in trouble,

they were 30 X-levered.

And then they went to 50 X-lever.

At one point, they had 15 billion of equity

and 750 billion dollars of assets.

So I get preached to a lot by finance bros

that want to tell me don't get too levered.

But what I want to point out is we're not even 2 X-levered.

And literally, the leverage is going to 1.

That debt is going to go away.

So the interesting thing to do here, of course,

is to use credit that is equity to amplify your performance.

Because if you do that, you can do without credit risk.

And it's very interesting.

Our future is in credit issuance.

What I said, you know, the day you're a born

and the day you figure out why, why are we here?

We're here to sell digital credit.

And the product is the credit.

And so we just got a credit rating from the S&P.

We're the first digital treasury company

to get a credit rating.

It's pretty much the worst credit rating you could justify.

We're starting at the bottom and we're crawling up.

And it's predicated upon the Basel Accord, which

it suggests that Bitcoin is worth zero.

It's zero capital.

So you have a banking establishment that values Bitcoin

as zero, but you have the marketplace

that thinks it's worth $70 billion.

Over time, we will rectify that, just like with accounting

standards, we're able to rectify that.

And as that gets improved, and our credit ratings will move up.

But the significance of a B credit rating

is that instead of having access to 2.8 trillion worth of capital,

you'll now have access to another 4.9 trillion.

So we three acts the addressable market

for credit instruments that we're selling.

And the most important thing is to allow fixed income

investors and insurance companies

to allocate to that part of their portfolio.

So we thought that was all spacious.

Our ambition is just to continue and improve the credit rating

until we're an investment-grade issuer of credit.

And that takes me to the product.

The product is digital credit.

Did it exist a year ago?

No.

We invented it.

Necessity is the mother invention.

Why do we invent digital credit?

Because traditional bonds are too risky.

We tried traditional bonds.

We tried asset-backed borrowing.

We found that either the bond market wasn't large enough

or wasn't stable enough.

And pairing traditional short duration credit instruments

like bonds with an asset like Bitcoin, which is highly volatile,

creates a very dangerous situation

where you might get forced liquidated

or you might get yourself into a credit crisis.

That's not good for the equity.

And so over time, this is the conundrum

that every financier has.

How do you go bankrupt?

You lend long, you borrow short.

A bank has overnight deposits and puts out 30-year money

and then people want their deposits back.

And you can't call the loans.

And so you get a run on the bank.

When Lehman went out of business,

they were borrowing $700 billion for 15 days.

And then they were invested in mortgage-backed securities

in real estate with a 5, 10, 20-year duration.

So obviously, you don't want to mismatch your durations.

If your goal is to buy an asset, what is Bitcoin?

Bitcoin is a 10-year duration asset.

If you're going to buy a normal timeframe

with 10 years, 120 months.

So what you want is a duration on your liabilities

that is comparable to that duration of Bitcoin.

So how do you get to 10-year duration money?

You can't do it with five-year loans.

So we started thinking that what we'd like

is to get 10 to 20-year duration.

And the way to get that is with preferred equity.

And so we went to the market and we thought,

we're going to sell preferred equity.

And we found that the market wants

a higher dividend yield for preferred equity than for bonds.

And our first reaction was, oh, that's bad.

That's a bug.

And then after a while, we realized that's actually

a feature.

If we're paying 200 basis points more

than we thought we should pay, then our credit just

became the highest yield in credit in the world.

And when you flip it from a bug to a feature,

then you start to see something different, which is the credit

that we issued from 2020 to 2024 was tactical credit

in order to amplify the equity.

We were trying to, the product was the equity.

And the credit was the tactic.

And what happened in the last 12 months

is an inversion of the business model

where we realized that the credit is the product

and the equity is the afterthought.

The equity follows from the credit.

And the real product is, what if I gave 10% dividend yield

to a billion people taxed, deferred,

and stripped the risk of it?

Well, that's a product.

That's a product that would appeal to everybody.

But maybe more and say, that might be the best product

in the world.

Say that again.

That might be the best product in the world.

If you can give someone 600 to 800% of additional yield

over the risk-free rate and a non-volatile instrument

in the currency of their choice, you've created

maybe the perfect product because that's what everybody wants.

And we tripped over that.

And we started by doing a convertible preferred strike.

We over-collateralized it.

The effective yield was nine.

But we realized that it was going to be tax deferred.

So the actual adjusted yield goes to 19.7%,

which is just off the charts.

And then we did, we did another one strife.

But here I'm describing stride.

Strides, the junior credit instrument,

the effective yields 13%, but it's a rock dividend, which

means you have tax deferral to it.

So the actual effective tax equivalent yield is 21%.

It's the crappiest thing in the credit stack.

It's the lowest grade one.

It's 4.2 times over-collateralized.

There's not an investment grade company

that you can find that's four times over-collateralized

in the conventional traditional credit market.

So we actually have something which is thought

to be junk bond or distressed debt.

But it's actually an investment grade risk.

Once you start to study it, and that's, again,

a profound insight and a breakthrough.

And so depending on how you look at it,

it's anywhere from two to three times better.

And we created the senior instrument, which

is seven times over-collateralized.

It kind of sets the cost capital.

And that's 9% effective yield and about a 14% tax

equivalent yield.

And then we ran into a brick wall

because we wanted to do some credit issuance in Japan and Europe.

And we were running into some impedance.

And so I thought, what can we do in the US?

And we started thinking.

And we realized that what we hadn't done

is a monthly short duration money market instrument.

And so a lot of people complain.

They're like, well, we want monthly dividends.

And we don't want volatility.

And we want no principle variation.

So we started thinking, how can we do this?

And we used AI.

We designed this product stretch.

We took it public in July.

It's the biggest IPO of the year.

By the way, we've done five IPOs this year.

Five, right?

I don't think anybody's ever done five IPOs.

The joke that I made is I came up with $1 billion

by the idea in my life.

And then I spent 20 years trying to find the second billion dollar

idea.

I couldn't find it.

And then for the point we found Bitcoin,

we found the second, the third, the fourth, the fifth, the sixth.

And we started finding billion dollar ideas every eight weeks.

And that's what happened when you combine digital capital

with digital intelligence in the right world.

So this one came along in July.

And the idea is basically you set the dividend

every month and you try to stabilize the principle at 100.

And it was well received.

And then the deal we did last week is we launched a version

of strife.

We launched a perpetual 10% yielding instrument in euros in Europe.

And it was about 700 million US, about 620 million euros.

And right now it has an effective yield of 12.2%.

But a tax equivalent yield just south of 20% of your 37% taxpayer

if you live in Florida.

This is how stretch has seasoned over the last 12 weeks.

So what you can see is it started at 90.

We jacked the dividend.

And then we took it up 25 basis points twice.

And then over the past eight days are locked in.

Today it traded plus or minus $0.5.

And today if you look at your quote,

it closed at $100 and zero cents.

And it was traded with one penny spreads.

And what we told the market is we're not

going to sell it below 100.

So if someone wants to offer it to you below 100,

you should probably buy it because we're going to get it to 100.

And then we're not going to let it drift up above 100 either.

So this is our most aggressive piece of financial engineering.

Because what you see represented in stretch is us saying,

we're going to strip 120 months of duration down to one month.

We're going to strip 50 vol down to one if we can get there.

We're about eight now, but probably we're five or three

in the next week or so.

We're going to strip that to one.

We're going to convert the basis currency from BTC to USD

and take away the currency risk.

We're going to take out the delta.

And we're going to over collateralize it five or six to one,

which is the same as stripping away about 98% of the risk

from the instrument.

And then we're going to hand that to you as a high yield bank account.

And then we're going to take it public,

give you a four letter ticker, and let you trade in and out of it

in the market.

And if there's a caracene for Bitcoin,

this is the caracene.

This is the jet fuel.

This shows a picture of our digital credit

stack over the past 12 months.

You can see when I spoke here a year ago, none of this existed.

What causes to exist?

Necessity is the mother invention, opportunity

in the form of capital and intelligence, not mine, AI,

digital intelligence.

I argue with the AI and I fight with it.

And we learn very, very quickly.

And I can get answers that would take 37 accounts

and lawyers a month, and I can get the answer in 10 minutes.

And so I can iterate something like 100 times faster with AI.

So the liquidity in these things has gone from $70,000,000

to $180,000,000 in a few weeks.

And let me try to illustrate this different way.

The preferred stock market has normally

been a garbage market.

Most of the securities are garbage that they go into a portfolio

and people wait to die.

They're sold via 144A transactions, which

means that it's illegal for the public to buy them,

unless you're a qualified investor.

When they're sold that way, they trade 100,000 a day

with a bit of a spread that might be 300 basis points wide.

If you take one public, they trade a million a day.

The first set of digital credit instruments

we created traded 20 million, 20x that.

And then when we finally got it right with stretch,

it trades 100x that.

And this is 12 weeks old.

So our goal here is to get this to a billion a day.

And it's a chicken and the egg thing.

Like, why would I want to trade it?

Well, if it's a heterogeneous low yielding instrument,

there's no reason to buy it.

There's no reason to trade it.

Because these are perpetual, they're

going to last forever.

That meant that we could put a shelf registration on them

and we could grow the AUM in the same way

to you micro a proprietary credit ETF.

And that was always our vision for this.

Now, we discovered the putting Bitcoin together

with preferred stock, together with an IPO,

together with a shelf registration was an innovation.

But then we tripped over this next point, which

is we discovered that all the dividends that we pay out

are tax-free for you.

Tax deferred, technically.

Basically, the bug was, oh, you're

funding the dividends by selling equity.

And you don't have cash flows to fund the dividends.

Well, the fact that we fund the dividends with equity

means that it's return a capital, which

means that all the dividends become tax-deferred.

And that means that you don't pay New York City tax.

You don't pay state tax.

You don't pay federal tax.

You just get the dividend and the basis

and the instrument is reduced.

And so a rock dividend is 0% effective tax rate

until your basis goes to 0.

Then it becomes like a qualified dividend, which

is a long-term capital gains tax.

And what it isn't is interest income, which

is what every bond would be and every money market

or every bank credit instrument would be.

We thought about it.

And then we first we thought, well, is this true for all

the instruments?

And then we said, why is it true?

It's true because we don't generate substantial earnings

and profit, E and P. And then we thought, well,

it will continue to be true.

And then we thought, well, yeah, the credit's the product.

This is going to be true forever.

And so the business model is an interesting one.

It basically is a triple tax-deferred business model

once you understand it.

And so you sell the credit.

The credit creates the amplification on the equity.

And that's what actually creates the equity value.

The more credit you sell, the more Bitcoin per share

you create.

And that's how you outperform Bitcoin.

And the trick is people have known you could do this.

But the trick is to do it without credit risk.

So if I go and I borrow money for 12 months,

then I've got a massive credit risk.

Five-year money is a credit risk.

But if you borrow the money with intention

and never pay it back, there's no credit risk.

How do you borrow money with intention

and never pay it back?

You sell preferred equity.

So I would love to tell you that I just sat down

and we invented this digital credit.

But the truth is we stumbled upon it

because we kept running into headaches,

or problems we wanted to solve.

And we started, we created digital credit

because we started with digital capital.

We started using Bitcoin as the collateral asset.

And so most credits based on an appreciating asset.

And Bitcoin is appreciating assets.

So if you build on top of an asset appreciating 10, 20, 30%

a year, the credit risk is falling exponentially.

That's the first breakthrough.

The second breakthrough is its transparent homogeneous risk.

When you have a credit instrument

based on 87,000 home loans, you've got heterogeneous risk.

You've got discrete risk.

You might have hurricane risk.

You might have fire risk.

You might have political risk.

Corporate credit, sovereign credit, bank credit.

They all have opaque heterogeneous discrete risk.

But on the other hand, Bitcoin's transparent homogeneous

continuous.

So on our website, we update the credit model

I'll be 15 seconds.

You can literally go plug in the price of Bitcoin,

your volatility forecast, your performance forecast, anything.

And you can get the credit model to spit out in seconds.

And that's a breakthrough.

You cannot do that with mortgage-backed securities.

You can't do it with junk bond portfolios.

You can't do it with any kind of commercial real estate

portfolio.

The third big innovation is digital credit.

Or sorry, in this particular case,

it's digital credit based on equity and based on debt,

bank credit is bank deposits or liabilities.

The bank has to give back the money.

And the worst type of liabilities, because they're

overnight liabilities.

You have to give back the money on demand tomorrow or today.

Whereas debt is a liability that you've got to give back the money

in 1, 2, 3, 4, 5 years.

The normal duration of corporate debt

is like four years.

So it's four-year money.

But preferred equity isn't a liability at all

on the balance sheet.

It's an asset.

It's an equity instrument.

It doesn't amplify the risk.

It mitigates the risk.

So if you raise $10 billion of preferred equity,

you're never giving it back.

There's no $10 billion principal refinance risk.

You've got to divot in.

But the divot in is a shock absorber.

Because literally, the definition preferred

equity is the company's board of directors

can't approve the dividend if it would put the company in peril.

And so when you're actually funding with preferred equity,

you're putting an asset on the balance sheet,

a mezzanine equity asset, it mitigates the risk.

And then of course, not all preferred equity is equal.

You could have a refinancer or a put obligation

embedded in the preferred equity

would make it shorter duration.

But if you make it perpetual preferred equity,

then the capital is permanent.

And if it's permanent, that means you're

not going to have any credit default event,

not in five years, not in 50 years.

And those are all reasons why you might want to do that.

But of course, the next thing to do is take a public.

And so most credit, if you think about private credit,

it's a liquid, it's unbranded, it's local,

it's difficult to access.

But public credit, liquid, it's liquid,

it's stric, it's stretch, it's got a name, it's stride,

it's got a name, it's global, it's branded,

you advertise it, friends tell their friends about it,

people go tell their mothers, their fathers,

their sisters, their workout partners,

you should buy some of this.

It's easy to access.

There are four credit instruments you can buy on Robinhood,

there's STRF, STRC, STRD, STRK, there are credit instruments.

So this idea that you want to actually take it public

is a big idea.

Now how do we learn that?

Well, we learned it by watching our own convertible bonds,

not trade in the market.

We had equity trading four billion a day,

and we had convertible bonds not trading for three days.

And it occurred to us that there's something not right

about that market, and we wanted to fix it,

and the way you fix it is you take the things public.

And then the other point that I make

is digital credit is better because if you buy $100 million

of digital credit, we can sell it to you in 30 seconds

and we can create it.

We create the back-end collateral for the credit in real time.

So if we get a billion dollars of credit orders,

we create the billion dollars of collateral

and we stay synchronized.

You can't create a billion dollars worth

of home mortgages overnight.

You can't create a billion dollars

worth of commercial loans overnight.

So you cannot create conventional credit

and synchronize it in the same way

that you can create digital credit.

That's why banks have 50 story buildings

and 27,000 employees.

We can create billions of dollars of credit with six people.

It can be a billion, it can be 10 billion,

it can be 100 billion, it can be a trillion.

Still the same six people.

It's extremely efficient, instant, automated.

And when you put all that together with the last observation

which is its tax-deferred income,

this is how you go from a two or three percent yield

to a 20 percent yield.

Those are the innovations that make digital credit.

And here, the fortunate happenstances,

we just discovered the Bitcoin Treasury model.

The Treasury model is just triple tax deferred.

We raise billions of dollars of capital

by issuing securities that's tax deferred.

We generate billions or tens of billions of dollars

of income through appreciation of the asset tax deferred.

And then we can pay billions of dollars of dividends

as return a capital tax deferred.

Rinse and repeat.

I would say that we have inadvertently created

the most scalable tax-efficient fixed income generator

in the world.

The digital treasury model is the most tax-efficient

generator of fixed income.

If your goal is to generate large amounts of after tax

or tax deferred fixed income,

and by the way, who would want that, like everybody?

If that's your goal, then this is the way to do it.

There's no other company that's going to tell you

they can generate $100 billion of dividends tax deferred

as rock dividends.

They can't do it.

If you look at the entire structure, return a capital dividends.

They've been utilized, but normally by pipeline companies

and real estate companies and oil and gas companies,

and they're basically using depreciation credits

in order to get to negative ENP.

And maybe you can pay 3% dividends,

and maybe you can pay 3% against a very fixed amount

of physical capital.

But there's no way to pay 10% dividends

and to grow the business 20, 30, 50% a year

because the physical capital won't support it.

The depreciation won't support it.

So to do what we're doing at the scale we're doing

and grow the way we're doing, it has to be digital.

So what is it we are?

We're basically a digital credit factory.

The way to think of it is,

credit investors want US dollar yield,

and then equity investors want BTC yield.

So we're doing a perpetual swap.

We're swapping.

I'm going to give you 10% US dollar yield forever

and I'm going to take back the Bitcoin,

which is an X percent BTC yield forever.

And since the equity investors want the Bitcoin per share

and then the credit investors want the yield,

everybody gets what they want.

And because we do it with preferred equity,

we do it without credit risk.

And so if you've studied the swaps market,

you can see what's going on here.

Now, we just started doing it in euros.

So obviously half the world wants to use dollars,

but there's a big market for a euro yield.

There's a big market for JPY yield.

And so you can apply this pretty much in any currency.

How important is it to pay rock dividends?

Well, if I take 100 bucks,

and I pay 10% dividends on $100 in your tax rate's 50%,

you have $164 after a decade.

But you can see that when that tax rate goes to 37%,

you're 14% up,

when they become qualified dividend distributions,

you've got 35% more money,

and if you've got rock dividends,

you've got 64% more money.

So it's pretty substantial to any retail investor

or small business.

So what are the digital credit opportunities?

Well, this is stretch yield versus other credit instruments.

And what you see here is that even if you don't pay taxes,

stretch as twice as good as most everything else.

And if you're a taxpayer and Miami Beach,

you're going to pay four times better than your money market.

And of course, your bank's going to pay 40 basis points,

but I'm going to assume you're smarter enough to move your capital

into a money market and get paid 400 basis points.

But ultimately, the best thing going is private credit,

which is going to be that illiquid opaque idea.

And this is going to be much better than that.

And this is, again, trading plus or minus a few cents right now.

So I'm going to give you a little bit more personal.

I've actually calculated the tax equivalent yield in New York City

for you, the living New York City.

It's 21.8%.

So stretches of bank account to pay you nearly 22%.

Tax equivalent yield of your New Yorker.

It's about 21% in LA or San Francisco.

If you live in Miami, it's 16%.

But if you're saying, are you asking,

do you want digital credit?

I think the chart is illustrating why you're going to want digital credit.

This is that story in Europe, right?

Stream is a 12.2% effective yield.

The money markets are 1.5%.

A 10-year Euro-credited instrument is 2.6%.

So you're talking about 1,000 basis points more than the 10-year index in Europe.

So it's within your euros by stream and capture a 10% carry trade.

Who's going to do that?

Well, I think a lot of people are going to do that.

Once here, you have to come to two conclusions.

You have to decide Bitcoin's not going to zero tomorrow forever.

Do you trust Bitcoin?

And then you have to trust the company strategy.

So if you trust the issuer and you trust Bitcoin, then this is like free money.

It is staring at you. If you want the carry trade of carry trades,

this is the tax equivalent yield in the major cities in Europe.

23% in Vienna.

And I put the money market fund over there for reference.

Just so you see, the status quo is the little green dot on the right side.

And this is what the digital economy is going to bring to Europe over time.

The summary of all this, right?

I mean, the message is digital credit is just superior.

It's superior to corporate credit, conventional credit, mortgage back credit.

The credits are $300 trillion dollar market.

As people start to think, well, maybe I'd like to get double triple or quadruple.

You're going to see 1, 2, 3, 4% of that market change.

This is a snapshot of the risk-free rate in every currency in the world.

And what you can see is the US dollar is the highest risk-free rate.

But you know, you float over here to Europe.

You're 1.9, 1.8% and Singapore, it's 1.4% and Japan, you're 50 basis points.

And Switzerland, you're minus 40 basis points or something like that.

So what is the idea of digital credit? It's very simple.

You saw a Treasury credit instrument. You converted into currency of choice.

You stripped the wall off of it and you hand someone 600 basis points or 800 basis points more than the risk-free rate.

What is the ideal product? The product that is felt to be useful by the people of the world.

Okay, well, what do people find to have value?

Well, there's a word in the English language for somebody that everybody finds valuable.

It's called money. That's the word, right?

If you actually generate 600 or 800 basis points of additional yield in the currency of choice, you have created the perfect product.

What is the perfect product? It's the product that someone is deaf, dumb, blind, and a coma.

Yet unborn would still find valuable.

I thought the iPhone was the perfect product at a point, but I'm on the iPhone 17 Pro Max.

There's 35 versions. We're going to be the iPhone 137 by the time your grandchildren are born.

But you put something like this in a portfolio. It's going to work for them whether they know it or not.

So I'll just end with this.

What have we done? Well, we've created an equity.

And if you want enhanced exposure to digital capital and digital credit, you buy the equity.

That's how you get the amplified roller coaster.

And if you're the equity investor and you want that kind of amplification, you buy it.

If you don't trust anybody, if you want no counterparty risk to a company or to our no currency risk, buy Bitcoin.

Bitcoin is the index on the crypto economy. What does that mean?

It's the index on the free market economy.

If you want to buy the free market capital index, you just buy Bitcoin.

It is the risk-free rate for a person that believes in digital assets and the digital economy.

If you want to have your cake and eat it too, you buy something like strike a convertible preferred.

It gives you a guaranteed dividend, some portion of upside consistent income and principal protection.

If you want to maximize cash flow, you buy one of the high yield instruments like STRD.

You know, 13% tax deferred.

If you don't quite trust the company and you want to make sure that you've got some investor protection and some penalty if they try to skip a dividend, you buy the senior instrument like Strife or Stream.

If you simply want to strip all the volatility away and just get something much better than your bank or your money market, you would buy the Treasury credit instrument.

Now, if you're not sure what you want right now, I will tell you what you want.

What you want is you want this Treasury instrument that is basically a high yield bank account.

You want to be paid 10.5% with the tax deferred for the next 10 years.

When you change your mind, you sell it for the same price you bought it and you go do something that gets you something better.

But at the end of the day, I know a lot of Bitcoin maxis, a lot of Bitcoin believers.

There aren't very many of them that would say, I'm going to actually put all the money I need to pay my kids tuition in the fall into Bitcoin.

They all have Treasuries, they all have near term obligations.

If your choice is to get 30% ARR with more than 30 vol, or to get 10% tax deferred with no volatility, there's a lot of people that would put some portion of their money into that no vol.

It's pretty compelling, especially if you can borrow the money at four and you can get into the carry trade.

With that, I would thank you for your time.

I think if you're a finance here and you're an investor and you think really hard right now, what I've shared has implications for every company that has digital assets on its balance sheet.

It has investors for all implications for equity investors. It has implications for credit investors.

The only thing I would say is it's worth thinking hard about.

We say Bitcoin takes 100 hours to understand. That's a 15 second ad.

It doesn't take even 100 seconds to understand, oh a bank account that pays me 10% and I don't get taxed on it.

That's like, oh two good to be true, what's the catch?

Just like a lot of people don't want to play with fire or explosives, they all would like a car with an automatic transmission that's got fire and an ignition inside it that will take them here.

We are now on the verge of being able to create some wonderful financial instruments that will appeal not to the crypto, maxis or the innovators or the tech investors.

The mission is give a billion people 10% tax deferred everywhere in the world.

It's kind of cool in the US, but if you live in Switzerland or Japan and you're getting 50 basis points or laugh, there's a difference between nothing and 10% return on your capital.

It's a revolution in finance.

I think in the last 12 months my eyes have been opened and I realize that our mission is to go and digitally transform the entire credit marketplace, which means the banking industry and all of finance and we can do it everywhere in the world on a strong Bitcoin based foundation.

Thank you.

Thank you everybody.

So that now concludes day one apart from the Bitcoin and crypto digital asset treasure reception.

So I'm very proud to announce before we do that the date for the conference next year will be.

It's going to come up hopefully.

A little bit of a delay.

10th to the 12th of November back in Miami.

We will also be having a private crypto conference which will be announcing one day in New York for February 2026.

Right now if you head to the next door the bar is open.

You will see management teams from the world of Bitcoin, Salana, Ethereum, Sweet, Ripple and so forth.

Thank you very much. We look forward to seeing you tomorrow morning.