October 23, 2024 • 50min
BTC205: Bitcoin Interest on FDIC Insured Cash Accounts w/ Alex Leishman (Bitcoin Podcast)
We Study Billionaires - The Investor’s Podcast Network
Key Takeaways
- Business adoption of Bitcoin grew by 30% in just one year, driven by individual business owners and entrepreneurs adding Bitcoin to their company treasuries after adopting it personally
- Private companies currently hold more Bitcoin than public companies, as they can more easily make unilateral decisions to allocate to Bitcoin
- River projects business Bitcoin holdings to grow significantly through 2026, potentially outpacing daily Bitcoin issuance
- River is launching a new high-yield cash account that pays interest in Bitcoin while keeping USD deposits FDIC insured
- Proof of reserves and transparency around exchange holdings/liabilities are becoming increasingly important
- The first major public company not run by a Bitcoin advocate adding Bitcoin to their treasury would be a watershed moment
- Advice for newcomers: Only invest what you can afford to lose, hold for the long-term, and expect volatility
Introduction
In this episode, Preston Pysh interviews Alex Leishman, CEO and founder of River Financial. They discuss River's recent report on the 30% growth in business Bitcoin adoption over the past year, detailing trends in cross-border payments, treasury management, and the unique ways businesses are integrating Bitcoin. Alex also touches on River's major new service offering interest on FDIC-insured cash deposits paid in Bitcoin, the importance of proof of reserves, and shares insights on how companies and individuals can navigate volatility in the crypto space.
Topics Discussed
Business Bitcoin Adoption Growth (01:46)
Alex explains that River's recent report was inspired by the rapid uptick they were seeing in business clients, particularly small and medium-sized businesses, opening accounts and buying Bitcoin for the first time. He notes that business adoption tends to follow individual adoption, as business owners who invest in Bitcoin personally often decide to allocate some of their company treasury to Bitcoin as well.
- 30% growth in business Bitcoin holdings over the past year
- Trend driven by individual business owners and entrepreneurs
- Follows pattern of personal adoption leading to business treasury allocation
Private vs Public Company Bitcoin Holdings (12:37)
Alex highlights an interesting finding from their research - private companies actually hold more Bitcoin than public companies currently. He attributes this to private companies being able to more easily make unilateral decisions about Bitcoin allocation.
- Private companies outpacing public firms in Bitcoin holdings
- Easier for founders/owners to make unilateral decisions in private companies
- Public companies limited by board approval, shareholder concerns, etc.
Projected Growth of Business Bitcoin Holdings (14:53)
River's report includes projections for continued growth in business Bitcoin holdings through 2026. Alex notes these projections don't even include potential ETF inflows, just organic business adoption.
- Significant growth projected through 2026
- Could potentially outpace daily Bitcoin issuance
- Does not factor in additional ETF adoption
Key Areas Where Bitcoin Adds Value for Businesses (15:54)
Alex discusses three main areas where businesses are finding value in Bitcoin beyond just treasury management:
- Cross-border payments and remittances - Faster, cheaper international transfers
- Inflation hedge - Protecting purchasing power of cash reserves
- New product/service offerings - Integrating Bitcoin into existing business models
River's New High-Yield Cash Account (27:34)
Alex announces River's new product offering - a high-yield cash account that pays interest in Bitcoin while keeping USD deposits FDIC insured. This allows users to earn Bitcoin yield on their cash savings without taking on additional risk.
- FDIC-insured USD deposits up to $250,000
- Interest paid out daily in Bitcoin
- Initial interest rate of 3.8% APY
- No stablecoins or rehypothecation involved
Potential Misunderstandings by Big Banks (30:05)
Alex discusses how traditional banks may misunderstand the technical competencies required for proper Bitcoin custody as they enter the space. He suggests partnerships between banks and specialized crypto firms may be the best path forward.
- Bitcoin custody requires cryptography and computer security expertise
- Financial expertise alone is not sufficient
- Bank/crypto firm partnerships could combine strengths
Alex Leishman's Personal Interests (32:12)
Alex shares some personal details, including his recent efforts to improve his Spanish language skills and his interest in Argentina's political and economic situation.
- Taking Spanish lessons
- Fascinated by Argentina's new president and economic reforms
- Enjoys Latin music
Advice for Cryptocurrency Newcomers (34:26)
Alex offers advice for people new to Bitcoin and cryptocurrency investing:
- "Never sell your Bitcoin" - Buy and hold for the long-term
- Only invest what you can afford to lose
- Expect volatility and don't overextend yourself
- Learn lessons with a small "gambling" allocation if needed, but protect core Bitcoin holdings
Managing Bitcoin Volatility (35:55)
Alex discusses strategies for dealing with Bitcoin's price volatility:
- View Bitcoin as a long-term investment
- Don't invest more than you're comfortable losing in the short-term
- Expect wild price swings in both directions
- Focus on fundamentals rather than short-term price action
Lightning Network Development (43:17)
Alex shares his current thoughts on Lightning Network adoption and development:
- Increasing adoption for custodial/institutional transfers
- Challenges remain for self-custody Lightning wallets
- Potential for stablecoins on Lightning via Taproot Assets
- Overall bullish on Lightning's future, especially for hub-to-hub transfers
Conclusion
Alex Leishman provides valuable insights into the rapidly growing business adoption of Bitcoin, highlighting how individual entrepreneurs are driving this trend by allocating company treasuries after personal adoption. River's new high-yield cash account offering Bitcoin interest on FDIC-insured deposits represents an innovative new product in the space. His advice for newcomers to stay grounded, invest responsibly, and focus on long-term fundamentals is particularly relevant as excitement builds around a potential bull market in 2024-2025. Overall, the conversation paints a picture of increasing mainstream Bitcoin adoption by businesses and individuals alike, with specialized firms like River continuing to build infrastructure to support this growth.
