Welcome.
Let's do this.
All right.
Yes, this is actually, I think, maybe a coincidence.
But it's an interesting amalgamation,
I think, of people who have different experience
with different types of custody.
So quick history and background.
I've spent the past eight years building
different types of self-custody products
really focused on individuals and helping
people be their own bank.
Obi is interesting because he has exchange experience.
He is very familiar with having to do
the traditional centralized custody in the way
that a lot of the big companies that have probably
helped onboard many of you into this space.
And now Caitlin is working on a new type of custody
in the sense of the legal framework around it.
And then coming back around full circle,
making things even more complicated,
Obi is working on--
the best way I could describe it is a federated custodial model
that will be an interesting blend of what we've all
been doing for the past few years.
So getting into that, I guess, Caitlin,
when you're looking at the type of custodial models
and the quote unquote "Bitcoin banks"
that people are onboarding with these days,
what have you found to be wrong there?
And what is your approach?
How is it different?
Why is it important to be trying out new things when
it comes to trusted third party custody?
Well, I think all of us would agree, not your keys,
not your coins.
I say that all the time.
And yet, I'm building a third party custodian.
How is that not a contradiction?
It has to do with both the legal structure, as you said,
which is different.
I'll get to that quickly in a second.
But also, the fact that there are certain parties, namely
fiduciaries, who have to segregate the asset management
from the custody of the assets.
That's been true in the United States since 1940.
And that includes any registered investment advisor,
any investment company, like a mutual fund
manager, corporate treasurers, pension funds, et cetera,
follow the same rules as best practice.
So that's really the target customer base.
And I'll be like Jesse Powell, who
says, even though he built a custodian,
don't custody your assets with us.
But the difference for custodia is the Wyoming legal structure,
which tries to reflect Satoshi's vision.
And I think a lot of you know who Trace Mayer is.
He helped set it up in the first place.
His vision was the legal system could end up being an attack
vector on your Bitcoin.
And Bitcoin doesn't care what the legal system is.
But for you to close off that attack vector on your Bitcoin
where a judge might someday make you give up your private key,
whether it's in a divorce settlement
or whether it's in a political terrible situation,
like Eric was just talking about potentially happening someday,
you'd rather have it set up such that you own legal title.
And so here's the punchline.
In Wyoming, the special purpose depository institutions
don't take legal title to your Bitcoin.
It's the law of bailment, where if you choose a bailment
structure, what it means is just like in a valet parking
garage or a coat check, you're not
turning over legal title to your Bitcoin to the custodian.
And so if your garage goes bankrupt
while your car is parked there, you
can just go get your key, turn it on, and drive away.
That's the concept.
Gotcha.
Yeah, so Obi, you've got that exchange experience.
I assume you probably saw a lot of things
that might be nightmare fuel for the rest of us
if we got to peek under the hood there.
And so you're not doing that again.
You're actually doing something very different.
Is it fair to call this a community banking model?
You're trying to make it easier for there
to be many more custodians, so hopefully
at a much more distributed and decentralized level.
I guess the point being that while I've always
been a self-custody advocate, I think
we're all self-custody advocates.
We also realize that there is complexity,
there is responsibility.
And for any number of different reasons,
be they legal, personal, people just
don't have the time to devote to it,
there is a convenience factor and efficiency, of course,
to be gained from having a trusted third party,
or maybe in your case, a semi-trusted party
to help with that.
How would you best describe what the goals
and architectures of FETI are?
Yeah, so it would be good to talk about this previous world
I was in as context.
So I ran a Bitcoin exchange.
It was the UK's longest running Bitcoin exchange.
And we had hundreds of thousands of clients.
And we were Bitcoin-only.
And unlike many other exchanges in this space,
we really wanted people to self-custody.
And we weren't just paying lip service to it.
So for many years, we would talk, almost beg our customers
to self-custody.
And I would take time to talk to key customers
from different demographics, different backgrounds,
and get to know them.
And they are now friends, lifelong friends, many of these.
And I remember very clearly one day,
after many years of trying, one of our key--
she was in her--
really streetwise woman in her mid-60s, Jewish background.
She remembered from her parents from the war
why it was important to self-custody, hold assets.
And she said, look, I really understand Bitcoin.
I understand why it's needed.
I understand why I should self-custody.
But Obi, I know you've been trying for a year or two.
But the reality is I trust you more than I trust myself.
Sure.
And when I heard that, my heart sort of sank.
But then I asked a really, really important follow-up
question, which is, OK, who do you trust more than you trust
me, than me?
And she thought about it for a moment.
And she goes, well, I asked my son.
And he's the one who suggested that I use the exchange.
So if he said that I should go to Wibble Wobble Exchange,
I would have gone to there.
So essentially, I trust my friends and family,
my community, more than I trust you.
And that was the seed that, if I'm
going to take a Sherlock Holmesism,
I put in my mind palace and just left it there.
Sometime later, I was lucky to meet my co-founders.
And one of them was the inventor of the Feddy Mintz Protocol.
And this is a mechanism to take community custody of your money
and also of your data or any other information that
is of value that you want to be able to take custody of.
And it allows communities to take custody of that,
but be able to access it, use it, and add functionality to it
to rival the functionality and usage experience
of a third-party exchange.
So in the gamut, you have first-party custody,
which another way of putting it is do-it-yourself custody.
It's great if you have your own car
and you can fix it and build it yourself.
That's always the best.
But not many people can do first-party custody,
although self-custody on Bitcoin is much less difficult
than self-custody and building your own car, just to be clear.
And on the other extreme, you have third-party custody.
And this is stranger custody.
You're giving your money to someone who's incentivized
to take your money.
And maybe, if they're a curly-haired guy in the Bahamas,
that may not end well.
Right.
And then in the middle now, you have this new concept,
which is federated community custody.
And it's naturally decentralized,
because instead of having--
third-party custody naturally centralizes.
You always see it.
You see it with Mt.
Gox.
Over time, it became the dominant exchange
worldwide, doing the vast majority of volume.
Then it left.
Then you had Poloniex that started to grow.
And now, more recently, you have things like Binance.
It always centralizes.
And so a world at scale with billions of people
using Bitcoin, where there's three or four
third-party exchanges custodying everybody's money,
is a nightmare that will make George Orwell turn
in his grave.
Yeah.
I mean, that's really why I've focused
on trying to make self-custody easier for so long,
is it is this battle against the systemic risk.
You get too much concentration, too much money, too much power.
And then inevitably, either through malfeasance
or simple negligence, catastrophe hits.
And thousands, if not millions, of people
are adversely affected, and in many cases,
may get turned off from the whole space.
And then we have to go through another cycle.
And this is, I think, a perennial question is,
is this an indefinite thing, or can we break the cycle?
And this sort of hybrid solution may, in fact,
be able to give people the convenience without creating
that systemic risk.
And kind of looking at it from a different perspective,
though, Caitlin, you're still very
focused on the traditional finance side of things.
I think bridging these two worlds.
It sounds like FEDI is more agnostic in that it could--
your community bank could have bridges to traditional finance,
or it could be a pure Bitcoin-only play.
But I guess, why do we even still
need to talk to these traditional finance folks?
I sometimes wonder that same question myself.
But the answer is that the companies in this sector
still need to pay their vendors in dollars.
It's really that simple.
You could probably get away with paying your employees.
Most employees would probably prefer
to be paid in Bitcoin companies, in particular,
would prefer to be paid in Bitcoin.
We just heard Mayor Suarez of Miami
talk about how he's taking his salary in Bitcoin.
So you can pay your people in Bitcoin, but not your rent,
certainly not your payroll taxes,
certainly not your tax taxes to the government.
So there still does have to be connectivity.
And unfortunately, one of the sad realities
of the way the United States is set up
is that in order to be a business,
you have to have a bank account.
Why?
Because under tax laws, you have to remit your payroll taxes
to the IRS through your bank.
And so this is why, unfortunately,
the authoritarian-oriented politicians
started to realize about a decade ago
that the banking system could be used for social engineering.
And it's fricking scary.
And there was a big pushback against it.
Operation Choke Point 1.0 ended up expanding.
It started with the payday lenders
and ended up expanding to 30 different industries.
And it's back.
Well, Obi, when you're envisioning
the future of federated mints and community banks,
do you expect that these quote, unquote "bankers"
will be interfacing with the traditional system?
Do you expect that we'll see more people become
sovereign quote, unquote "banks,"
but not in the sense that they're regulated companies?
Or do you think it's still going to be more of a corporate
for-profit, impossibly regulated thing?
It's just an open question.
And you're providing a solution, and people can implement it
however they want.
So it's the latter.
We're providing a solution, and people can implement it
in any way they want.
And it's far more than your quote, unquote "bank."
It's this custody solution for both your money and your data
and your digital lives.
What we're seeing, though, is there's--
from the feedback that we're getting--
is there are different parts of the world.
There are parts of the world where
they want access to the services that we take for granted here,
but it's just not economically viable for people
to provide it to them.
So they have no access, or at swingingly high fees,
they have access.
So it's economically very, very negative for them to have.
Now, those parts of the world, they often
are in, we say, in the global south,
because often they are in the global south.
That represents more than half the world.
So we are in the minority in that context.
The next context-- and they just need options,
and they cannot use the options that we're discussing.
So community banking is a way for them
to use the technology, the most fundamental technology
of community, and use that to empower themselves
when combined with the new freedom technologies
like Bitcoin, like Lightning, and like FedEmit.
And so they can be their own community
custodian of their money, their data, and their digital lives.
The second group are people who have
live in parts of the world which have actually
quite sophisticated financial systems,
but they're under the yoke of authoritarian regimes
or dictatorships.
So they have banking, but if they were to use it,
they may be arrested, and they may be imprisoned, and so on.
So they cannot trust their banking options.
Again, that section of the world is
a different carving of the world.
It's also more than half the world.
So again, we are in the edge case of the edge case of a place
where we can generally trust our banking options,
and we produce enough revenue to be economically viable
to provide competition and reasonable services.
So in this edge case of the edge case of the world,
here it makes sense to interface with banking providers
and so on, and that is possible.
People can extend FedEmit with any functionality
they want, connected existing tax systems,
existing compliance systems, if they wish to do that.
And for example, communities can be not just villages,
and towns, and religious institutions, and families,
but they can also be corporations and organizations.
They are groupings of people, and they
have the benefit to take control of their money.
Yeah, really any group of people who
has some sort of incentive to coordinate with each other,
and maybe in a semi-trusted way.
Caitlin, I'm sure you have an interesting perspective based
upon your ongoing battles on the traditional side of things.
Would it be fair to say that if you win your war,
you will actually make it easier for some people
to follow in your footsteps, and make
that particular type of Bitcoin banking more open?
You're lowering the bar.
Yes.
Here's the history of the US banking system in a nutshell.
States always chartered banks until 1863,
when Lincoln era, Civil War era legislation created
a federal banking charter.
The chartering authorities were equal.
So states and federally chartered banks
were on a par.
Then the Fed got created in 1913, and then the FDIC in 1933.
And the quick and dirty is the Fed and the FDIC
were created as utilities.
The Fed runs the payment system.
The FDIC runs the insurance company for the banking system.
Those were available to all banks,
regardless of whether they were federally or state chartered,
until about 10 years ago, when suddenly Washington DC
decided it had the political power to start saying,
well, we like this industry.
It's Operation Chokepoint.
But we don't like that one.
And then the Fed started saying, well, OK,
we don't have to give accounts--
we don't want to give accounts to all state
chartered banks anymore.
The law says the Federal Reserve shall provide services
to all eligible depository institutions.
And that's the fight.
So the question that you're asking is spot on.
If it is determined that the law means what it says,
then there will be more opportunity for Bitcoin
companies, and really financial technology companies
as a whole, to get access to the Fed itself.
That is what the legislation, the Monetary Control
Act of 1980 says.
And there's extensive legislative history
for those who are interested.
Law professor Julie Hill has just
released a law review article about the legislative history
and why Congress made it clear that every eligible depository
institution shall get services from the Federal Reserve.
Well, I dare say that this may play
into what Eric was closing the last discussion with,
where you may be that virus that's
getting inside of the traditional system
and able to open it up for the rest of us, right?
Best of luck.
Any other closing thoughts before we
get kicked off the stage?
You're both optimistic, obviously,
on the paths that you're working on.
They're different, but I think they
will be usable as platforms for millions,
if not billions of people.
Yeah, I will.
I would remind people--
and we said it at the beginning, Caitlin said it--
that if you can do it, you should try to self-custody,
if you can do it.
But if you can't, we need to find solutions.
And we've discussed some solutions here,
to take people away from third-party custody, where
you don't have guarantees, to areas
where you have more control of your money and power.
And so doing that, we can level up this society here
and level up humanity.
And thank you to all the engineers
who are working on this project.
The engineers are the most important people
in this ecosystem.
Kudos to you for working on trying to solve it.
All right.
Thank you.