Good afternoon. My name is Mike Belshe. I am CEO and founder of BitGo. We are the world's largest, I guess we call it, infrastructure provider. Sometimes people think of us as a custodian, but we do all things financial services.
Originally it was Bitcoin entering the capital markets era. I actually changed this up last night because I thought that was a little bit boring. So one of the things about BitGo, we had the unique experience of going through the IPO process. It's an interesting process. I think for those of us in digital assets, you know, not just in Bitcoin but beyond, we see so much opportunity to change things around. So I have a few lessons from that I thought I would share. It's a bit of a personal experience. Hopefully it's a little bit fun, a little bit off the beat from kind of the rest of the stuff that's been talked about at this fine conference today.
All right. So, let's see. First lesson. What is a private key? This is where you've seen that internet meme where Michael Saylor goes... I saw that over and over again on the IPO road show process. So, road show, right? We go through this test in the waters process. Probably met with 125 largest funds in the world. Goldman led this thing. They are of course the experts at bringing in the trillion dollar funds, the hundred billion dollar funds, etc. Remember all of these guys have been on the sidelines for the last four years basically due to regulatory issues and it's not digital asset specific, it's not Bitcoin specific, it's the entire asset class. So as such they haven't studied it. And by the way, these guys will invest in anything, computer chips and potato chips are all chips, right? What's the difference? So there was a lot of education. Interestingly they did ask me, what is a private key? They dug deeper, what's it look like? Fascinating question.
But one of the things that's interesting is that when you really think about it, we are still just in early days and all of those educational questions that get asked, there's still so many people at the pinnacle of finance that don't yet know what it is that we're doing with Bitcoin.
All right. So, lesson number two, the mental model that investors have about how this stuff works is completely broken. Not broken like they've got a bad model, but they don't understand what's happening in our world. They expect and they always try to bring things back to something that they do know about. So, they think that our markets work similarly to traditional markets. And they've kind of heard, I guess, market structure. I'll talk about market structure bill in a second, but they assume that there must be a network, a fabric of brokers and exchanges and custodians and banks that all come together and they think that they know how this stuff is going to work.
So, you know, we come in, we're often labeled as a custodian. We're not a custodian. We do custody. We have seven custodial licenses around the planet. So, I guess that's why people want to put you into that box. But when we started building, starting out with Bitcoin, that's where we got 'Bit' in our name from the 2013 era. You know, we were trying to build technology then, we wanted to make it so that everybody can use it at the institutional level. We needed those regulatory licenses. We did build custody. There was no market structure. So we found ourselves as an island. You know, you wanted to have liquidity, you had to take it out of the deep cold storage that we provided. You had to go put on some rickety exchange somewhere. None of that existed.
All right, back to the investors we met with on this road show. You know, they still actually think all of this stuff exists. So, they expect that there's brokers out there. They expect there's duties of best execution. Of course, this doesn't exist.
All right, let's see. All right, Bitcoin price is down. All right. This might be a little uncomfortable. Why is the Bitcoin price down? Obviously, it's very complicated. There's people at this conference that can probably talk about it much more intelligently than I. From the road show we did actually miss a little bit and it's not incorrectable, we can. But back to the basics of what did we promise? We promised with Bitcoin that we were going to make democratized access, we promised that we were going to take out middlemen, we promised that the rates would be lower, promised that Bitcoin would deliver on all these things. But as an industry, you know, we've done okay. I think probably most people here, I can't see you guys, so I can't see you raise hands, but on the user interface for Bitcoin digital assets, I think most of us agree there's still a lot of room to go. It's sort of usable. Techies can use it, the younger generation can use it, but it's not as good as it could be.
But also on the financial side, we've actually replicated too much of what we had with traditional finance already. You know, one of the things that you hear if you go up and down Wall Street is that they need to trade against retail. Sometimes it gets called, you know, ripping the face off of retail. When I was on this road show, we talked a lot about trading. And interesting, I had Goldman on the side over here. We're talking about what's going on with how we provide access to Bitcoin in the digital world. And turns out you go to the US leading exchange, you can ask ChatGPT to do this right now. I say what was the take rate on retail trading in the last quarter that they publicly announced is 131 basis points. By the way, that's actually down from 143 basis points the quarter before. In other words, in our industry, we are ripping the face off retail even worse than Goldman Sachs rips the face off of retail. Makes them jealous. So, look, all of these things, we've got to do better. We've got to continue to build out these markets. This was very much on their minds.
All right, so let's see. One other thing, and there's been a lot of talk, I mean, obviously, of Bitcoin on your balance sheet, whether you're a digital asset treasury company or corporate. Little known fact, people don't know about Bitcoin on our balance sheets. You can see it in our S1, but we've had it all the way back to 2013. We raised our series A and we said, 'Hey, hey investors, we want to put half of this into Bitcoin.' They said no, but they did let us put a quarter in, which is not too bad. So we've carried this for a long time.
But interestingly, when you go to the public markets right now, the analysts and the bankers alike struggle to understand what this means. Now, part of that was due to the fact they just seen some strange looking companies. A, there was digital asset treasuries were kind of the wave in the summer last year. Remember, we got delayed on our IPO process because the government decided to take a little vacation in October. But you know, so the digital asset treasuries, they were just getting their heads around that. You had one of the public companies that went through that had a massive Bitcoin balance sheet which rivaled their operational business. And then we just had a little bit of Bitcoin and this became actually a confusing point. Like some of the analysts said, well we can't give you credit for the Bitcoin at its value towards your equity value in your company. I was like wait what why what you're going to value it as something less than market value? But believe it or not this is still happening. There just haven't been that many public companies. So, I was very surprised that this happened. But it was a real issue that we saw during the road show.
All right, quantum resistance. Look, I'm not really worried about quantum computing right now, but I cannot tell you how many times I was asked what do you think about quantum computing? So, whether you think it's an immediate threat, it's going to happen in three years. There's some startups super well-funded, they think they're going to crack it in three years and crack the elliptic curve. I don't think so. But it's all over all of these institutional investors. They don't really understand technology and they're hearing the latest FUD. Now, by the way, Bitcoin has seen and endured FUD over and over again. Whether you're talking about the energy consumption or the fact it's backed by nothing or, you know, the China exit, you know, there's been many of these, but QR is definitely on their mind. My opinion, I don't think quantum resistance is actually something we need super fast except for one thing. I do think we should just solve it to take it off the table. All of these guys sooner or later are going to be paused as long as this issue is out there and we've got a whole bunch of folks that are saying they're going to solve quantum computing and that FUD is just going to continue. So anyway, I was surprised by how much this was there but it was very much front and center kind of in their minds.
All right, clarity. So the Clarity Act, it's pending market structure. If you're not familiar with it, by the way, if you ask anybody like what is market structure, it's like two words, but people have massively different interpretations of it. I know there's talks about stablecoin and interest. Really, that should be about Genius, not Clarity. But nonetheless, clarity comes up a lot. I do believe we need market structure, but what I was surprised to learn on the IPO road show is how much those generic investors think that clarity is the thing which gives us basically that stamp of approval, that legislative approval that this asset class is allowed to move forward. So they kept asking like, well, this is really going to enable your business. If you look at the Clarity Act itself, it's got a little bit of clarification, which is good, but mostly it enables the CFTC to have the charter to go and solve this. It's going to take them 18 to 24 months. It's quite a ways away. Nonetheless, all of these institutional investors very much it's on their mind.
All right. OCC charter kind of on similar point. We did just get an OCC national bank charter. Thank you to the new Trump administration that unlocked all of these agencies from the SEC to the OCC to the CFTC. It's definitely gotten a lot better. They all believe this is like required. Those of us in the Bitcoin space, you know, we're big on self-custody. All of these guys, they didn't quite get it. My surprise as we talked to them about having a full complement of self-custody Bitcoin options, they didn't care about any of that stuff. They didn't even understand it. They didn't think it was even necessary for the future. I hope everybody here sees that like if we don't preserve self-custody even though businesses will generally choose custody, ultimately we'll end up with the same banking system that we have today that is it'll be a small closed loop system, individuals won't be able to participate.
All right, so anyway, OCC charter. Lastly, stablecoins, I think it's my last one. Stablecoins, definitely a lot easier for all of traditional finance to get their heads around. They can understand stablecoins a bit. I do believe this is going to be like the gateway into digital assets at a much larger scale. All of a sudden we'll have digital both sides, both the dollar side and the Bitcoin side. So definitely saw a lot on that front.
Finally I just wanted to conclude with what I really learned. The Bitcoin principles that hopefully everybody here has been adhering to or looking forward to for so long. Look, the scarce supply, it does matter. The transparency, it does matter. We can improve the system. A lot of what I talked about here is all on the Bitcoin side. In terms of that IPO process that we did, it's terrible. It's the worst price discovery system you'll ever see. I think any of us could probably pick a better system than what they do there. But the principles of Bitcoin is what we need actually in all of the digital asset space. So anyway, that's what I learned from the IPO road show. All right. Thank you.
