Seamus Rocca on why institutions are embracing Bitcoin in 2024

0:00I'm Ashton Addison from the Crypto Coin Show and today on blockchain interviews we have back with us Sheamus Roka CEO of zapo Bank Sheamus welcome to the show and it is great to see you again thanks for having me back Ashton great to see you happy New Year by the way yeah very you're very welcome and the last time we spoke was in the summer end of the

0:19summer of 2023 that was just before Bitcoin just started taking off for what feels like months on end and you know a huge influx into the crypto space and now that ETF has happened I would love to get your perspective on all of that I would love to start off our conversation by first of all just giving a little bit of background to the viewers on your history in Bitcoin

0:42blockchain zapo and then we'll dive into all the latest details yeah no worries well me personally I worked in financial services for the last 30 years pretty much my whole career I joined zapo 6 years ago as the CFO in 2017 and 3 years ago when stepped up to be the chairman and I became the CEO and the reason for that really was

1:10Mostly around the evolution of zapo you know my background is mostly Banking and Zappa was born in 2013 as a as a Bitcoin custodian you know we were one of the first wallets out there for those people who remember in 2016 we were the first Bitcoin debit card that came out before it got shut down you know at one point we were the largest custodian of Bitcoin in the

1:34world we had nearly a billion Bitcoins in our Swiss Vault which we were famous for and we wanted to evolve you know we wanted to evolve from just being a custodian to say look you know zapo is always going to be a really safe place for people to keep their Bitcoin not only in terms of cyber security but in terms of being regulated we segregate all of our customer funds

1:56And what have you we got plenty of capital so that aspect was always something that we did well but to evolve the product we felt that well you know life gets in the way people need to sometimes unfortunately as much as we love to hoddle if you're a bitcoiner and I am myself you need to pay school fees you want to buy a house you need to pay rent and you have to

2:20transact with today's world not some sort of utopian future where we would rather wake up and that's where Bitcoin rules the world right so in the meantime how can we make sure that Bitcoin becomes mainstream well the best way to do that and if we all love Bitcoin that's what we want Bitcoin to do we want everybody to be able to have access to bitcoin and spend it send it receive

2:45it invest with it and we felt that the best way to do that is alongside our custody business on the Bitcoin side is build a bridge and build a bank but it's not just any bank it's the it's the bank of for bitcoiners by excellence and that you know there aren't any other Banks out there that are going to help you custody your Bitcoin keep it safe and at the same

3:11time let you transact buy stocks with it buy the S&P 500 ETF with it have a dollar savings account next to it that's deposit guarantee that applies to anybody in the world that opens up an account with us so all those things to us felt like a Natural Evolution that was going to support Bitcoin in terms of growing and at the same time take take zapo to that next level the only

3:35hiccup we had along the way Ashton is that you know we thought we were going to do it in a couple of years and it took us five but you know 203 in 2023 we've kind of been slowly but surely coming back to the market testing the product and getting some wind in our sales and I think you know 2024 is going to be an interesting

3:56year like you said before you know the ETF is certainly an interesting development and one that we'll talk about in more detail but that's a little bit of my history my role at zapo and what we've been up to for the last few years I love it Sheamus and you know when I got involved in 2013 Zappo was actually one of the first companies that

4:15I had heard of as you know a top tier for custody your Bitcoin you know some of the wealthiest clients that I knew that were getting involved in Bitcoin very early on that was their choice so and I completely agree of the Natural Evolution of it's great to be able to custody your Bitcoin but especially High net worth individuals they want to take that capital and utilize it you

4:40know put debt against it so that they can invest in more things that's what they're that's what they love doing I think I think exactly but one of the interesting things Ashton is you know if you bought your Bitcoin in 2016 2017 which is when I bought my Bitcoin they weren't worth that much money back then you know worth maybe $2 or $3,000 you before the

5:05sort of you know the bull run that took it up to 20,000 or whatever so if you got a 100 Bitcoin back then and you bought it for 500 bucks for example it didn't feel like that much money even though you thought it was going to be worth something one day so doing self- custody in a in a USB drive or your own laptop was fine but if you got 20 you know all it Tex is 20 Bitcoin today and

5:26Bitcoin hits $50,000 and you got a million dollars right and all of a sudden you know when you look at your wallet and you see a million dollars you go am I am I okay trusting the security of that billion dollars to myself or do I want to trust a company that has invested hundreds of millions of dollars in being able to do it for you has never had any hacks or any issues and has had

5:51up to a million Bitcoin in its faults to keep them safe right and so at the end of the day it kind of comes down to trust and I think they plenty of people out there as that I will never convince that they need a product like zapo you know not your keys not your coins I can do self- custody it's not that difficult but I think that is going to stop

6:13Bitcoin from going mainstream because not everybody is comfortable with that you know I've been in the industry for six years I'm not comfortable doing my own self- custody right because all it takes is one mistake and you lose your Bitcoin and if you lose your Bitcoin you know back in 2015 when it was worth a couple of hundred bucks maybe it's not that big

6:32of an issue but if you lose your Bitcoin now we've seen some people crying on Twitter when they've lost their Bitcoin it's heartbreaking right so I think that you know there's an element of if you want to do your own self custody that's fine if you want to thrust an exchange with your custody that's fine but there's an element of well most people trust other institutions with

6:56their money now you're going to be picky about those institutions you know because obviously some institutions fall over but I think if you understand the institution how it works and what they do in our case for example you know doing Bitcoin custody segregating your funds we do the same on the dollar side you know we basically just invest your dollar deposits into earning yield so we

7:15can pay you interest so we're a very narrow basic bank right but what we do is we give your Bitcoin superpowers because you can do so many things with your Bitcoin right you could you could add a click of a button turn it into dollars and buy stocks so it's another way of think about it is you're investing some of your Bitcoin if you want to into some stocks if you want

7:36to buy apple or whatever savings accounts those are products that most people otherwise wouldn't have access to if you just keep it under self custody right so I think that level of well I've got a trusted institution that I can keep my Bitcoin safe and allows me to do all these things and give my Bitcoin superpowers I think you know part of our journey is to help Bitcoin

7:56go mainstream so you know that's that's our goal you know we've been doing this for a long time now and if Bitcoin does well we do well and vice versa so even though you know we're a bank we're not any Bank we're a Bitcoin back MH I love it and you mentioned you know it all of these functions it only made sense to implement them but it's something that can't be done

8:18overnight especially when you have a bank and you want to follow the proper regulations and then Bitcoin is a new asset class and it's like doesn't really fit into the documentation that's out there now and we saw the same thing with the ETF as well you I think the first filing ever for the ETF the wink of us twins was like a decade ago you know they wanted to they knew we need to

8:39get this into the stock market get this to traditional investors and finally now we've seen 10 years later it only makes sense and you know we started knew in 2023 okay for sure this is coming very soon and it was almost right after our last conversation in the summer you know Bitcoin was around 27,000 just under 30,000 and it was that first

9:00sort of initial news in August like hey it's going to be listed for sure they almost slipped up like oh we're announcing early but that sort of sent it on a Skyrocket of fomo people like oh we need to get some now before the ETF in quarter three and quarter 4 of 2023 I'm curious on you know did how do you think Bitcoin did did you expect it to be when an ETF was

9:25launching around was it's just almost around 50,000 it's almost double since we spoke in the summer which is pretty incredible for half a year but I feel like that's sort of bitcoin's nature that it's unpredictably stronger than you think it will be yeah well I think I'm going to give you a slightly longer winded answer but you know it goes back to what you said at the

9:46beginning which was you know it's taken us much longer to get to where we are now than we thought and the reason for that is you know there's still this apprehension with tradition the traditional space around all things crypto but if anything the for me most rewarding thing about the ETF is that Bitcoin stood out you know for us it's it's obvious to say

10:11that because you know zapo has been you know focused on bitcoin from day one but I think there's a sort of vindication there for Bitcoin but look if we' set out to set up a digital Bank Ashton that does you know basic Financial Services we would have done that years ago could have done it you know with a bit of investment me 180 months maximum two years right for us

10:36it's been a much longer journey and the reason for that is anything that you want to do the moment you speaking to the traditional Financial world all of a sudden it's like oh yeah but you touched Bitcoin what about this what about that so we've you know we've really been at The Cutting Edge of convincing people that look you know you

10:56can do it in a regulated way you can do it you know using anti- money laundering techniques you can do all the traditional things that institutions do you know you can do that with Bitcoin as well but it's a long journey so that leads to the moment of the ETF which is look the ETF in my view is very much an Institutional product right what it does is it provides access

11:24to fund managers and institutions that don't need to have the headache of tring and holding their Bitcoin they can just buy the share or the nav of whatever ETF they choose make it part of their portfolio or even trade it you know because the underlying is Bitcoin you can short the share you can do what institutions normally do in financial

11:47services if they want to be able to trade or have exposure to an asset class in this case Bitcoin but it's very difficult for them to do it without the ETF so very much the ETF is like look if you're retail person like you or me you can just buy the Bitcoin you know you don't need the ETF unless you don't want the sort of the risk of the custody side and you rather just you

12:10know have your share issued by black rock or whatever through their fund which is also an incentive but you know it's quite easy these days compared to 10 years ago to go and just buy Bitcoin right but that's not the same for institutions but I think that legitimacy that the ETF brings to the industry and to bitcoin itself is a game changer I completely agree and I'm

12:35hoping that some of the institutions you know there's so much volume and you know I read over 10 billion dollar in volume which is like blowing all other ETFs in history out of the water and you mentioned there you can't short it so it's not like the price has gone catastrophic since the listing in fact it's gone down a little bit but the volume has shown that there's

12:57huge interest hoping some of those institutions as well maybe diversify and actually hold some Bitcoin whether it's through a custody provider like zapo or you know themselves or something because when you buy Bitcoin and you put it on zapo versus buying the ETF you're when you're with Zappo you actually you actually own the Bitcoin itself you own

13:19the Bitcoin exactly you have a legal right to your own Bitcoin because we're the custodian right so it's the same as if you bought an Apple stock and you're holding it at a custodian legally that stock is yours the custodian has that stock off balance sheet well it's it's the same with us right so it's your Bitcoin we're just keeping it safe for

13:36you but the difference between us and the ETF is that you can send and receive Bitcoin right so all of a sudden it has it has that store of value component which we all love about Bitcoin but it also has that crossborder transmission mechanism that you can send and receive it so that means that for us in particular you know being an offshore bank that can send and receive

13:56Bitcoin that means that we can you accept customers from all over the world it makes it a very International product which is what Bitcoin by nature is designed to be so the bank that we build is not like a local bank it's very much an International Bank which is akin to what Bitcoin does but then if you think about the ETF like you rightly point out

14:17you know you're not really holding the Bitcoin but you do have exposure to it so of course black rock and all these big companies grayscale they're all going to have to hold Bitcoin in a custodia right some of them hold it at coinbase some of that hold it other custodians but they have to hold that Bitcoin and I think to some degree I think there was this perception well

14:37they're going to have to buy a lot of Bitcoin so of course the price is going to shoot up well yes or no because if you think about it you know there is such a thing as overthe counter transactions you know so rather than just go to a liquidity provider and or an exchange which is what you and I would do to buy a couple of Bitcoin if you have to buy massive amounts of

14:57Bitcoin you're probably going to look front over the counter provider where you can agree a price up front to exchange it so that you don't affect the price massively right CU you don't want to do you know I'm trying to put myself in the shoes of black rock or grayscale I don't work there right but I'm just I know enough about financial markets to be dangerous Ash

15:15but you know you if you're running that fund to some degree you definitely need to hold the underlying right because that's what dictates the share price but there's this Dynamic where if the price shoot Ups Too Quickly you're going to price at investors MH so you almost want to make sure that investors go well I definitely want the exposure

15:36to bitcoin I want to buy a share in this ETF but if the price had gone to $100,000 within a week then all of a sudden a lot of investors would have gone oops it's too late for me at that price I can't buy the share so actually it's not the worst thing in the world the price has gone down a little bit and it's just hovering around that you know over 40,000 Mark in terms

15:58of where Bitcoin goes from here look I having been involved with Bitcoin for six years I've stopped trying to even bother predicting price right but in my view you just need to think about as any investment right if you asked the master of investing Warren buffer himself what's the number one thing you need to do with Investments is just you need to have a three to five year period

16:22right if you're worried about what the price of Bitcoin are going to do in the next three months because you want to trade it good luck but I think you know where is the price of Bitcoin going to go after something like an ETF announcement after the Haring or whatever else over the next five years at least double at least but beyond that it's like what more do you

16:46want if you want to double the value of an asset in five years which I think that's I super super conservative for Bitcoin what other asset class is going to give you that return yeah it's it's crazy but it's almost I don't know people that have been in here for multiple Cycles they feel like it's almost like sky the limit is a is a proper answer because

17:08you just can't put a cap on what it could be you know although there have been some crazy million dollar crazy predictions it there I wouldn't I wouldn't go past them to say that might not happen it might not be in three years but you know the some of the smart smartest investors like Michael S all of these institutional investors especially ones that are just getting

17:32involved at the ETF they've been waiting for this moment they're definitely having long-term investment Horizons 3 to five years or longer I've heard many 10year plus investment Horizons and Bitcoin is still a baby and I think it just hit its 15-year birthday but even the supply before the supply stops coming into circulation that's like 140 years and hopefully it's it

17:57lasts many centuries well look I agree it's it's super early and I get asked that question a lot by friends relatives oh you know it's at 44,000 it's too late and you'd be surprised Ashton how many people don't actually realize you can buy a fraction of a Bitcoin you don't have to buy the whole thing but yeah there's it's never too late right but you just have

18:24to have a three five 10 year view it's almost like here's an investment that not going to touch for three to five years and it's it's very difficult for me to see how you would lose money out of that investment that's just my personal view that's not sort of financial advice but I think to your point look if you ask me you know I work at Bitcoin and the interest because

18:45I'm passionate about it right and if you ask Michael sailor even more so he probably has the largest dash of Bitcoin in the world at least his company does but those you know people like me or I'm not bring myself to Michael saor but you know people who are in the industry are always going to tell you yeah bitcoin's going to go to you know a

19:03big price this at the other for me what's super interesting is that you're now started to see you know large respected institutions that haven't really been known for being involved in the space you know big International Banks saying yeah this asset is going to go to 200,000 in the next three to five years for example and I think that all

19:25of a sudden I think that's also a GameChanger you because you've got analysts out there who are looking at this asset class and they haven't really been involved with before and looking at what's happening in the market and thinking oh wow this could really be you know something big and part of that for me is you know this institutional side that's we're now seeing with the

19:47ETF as well which cements it is if you think about investment and trading in particular if you asked any professional Trader how and when they make the most money it's through volatility you know for Traders volatility is a good thing right when there's no volatility is very difficult to make money so I mean that's one of the downsides people would argue

20:13at this early stage of Bitcoin which is that it's very volatile but if you're a Trader that's awesome you want volatility so now all of a sudden through the ETFs there are mechanisms out there for Traders to be able to make money and if Traders are making money I can guarantee you that all the financial ins itions want in and if all the financial institutions want in the price

20:33is going to go up now we could sit here and be purists and say you know the suits are coming and Bitcoin is ours and how dare they touch our Bitcoin right but hey you know if the institutions help create legitimacy for Bitcoin and the price grows and there are still companies out there like zapo that care about making sure that Bitcoin is in the hands of retail customers that have got

20:56the same access then I think we're in a good place I completely agree and I love what you guys are doing and that you're still sticking to those principles and you know what I feel like most people that almost everybody that has a Bitcoin prediction they're already holding Bitcoin they want you know they have a personal interest a personal interest in

21:16like it having a high prediction they hope it comes true so that they so that they'll be wealthy personally but it's still has been you know it was the top returning asset of 2023 and the last 10 years and all time and I would you know they one of the things they say in the stock market is like let your winners run and cut your losers to fill them

21:36in your winners and Bitcoin seems to be that winner since it's in time yeah and that's the thing you know we all we all know about the you know Bitcoin is Dead news articles the moment the price goes down it's almost a bit of a running joke but look we all those of us that have that vested interest like you say want it to go up now that's that's why

21:59you know if you really want to get a sense of what's happening and what might happen to bitcoin listen to somebody that doesn't have invested interest so that's something that I do regularly because otherwise you want to make sure that you're not in an echo chamber you know if you follow Bitcoin groups on Twitter or LinkedIn or you're constantly going to Industry events all you're

22:19going to hear is bitcoin's amazing bitcoin's amazing the price is going up and it's like we all Pat each other on back and go aren't we the Smart Ones you know that's great there's nothing wrong with that right but sometimes you kind of got to do a bit of a double take and go well have I you know have I taking the blue pill here or do I need to

22:39cross check and that's what I'm seeing that I think is super interesting when you're seeing financial institutions that don't have exposure to bitcoin saying this asset could be worth x1,000 in the next few years I think that's fascinating that's when that's when you know that it's we're in a completely different space and Bitcoin today than what we were two or three

23:00years ago mhm it's funny though because if you look at an unbiased opinion and then they come to the conclusion that yeah Bitcoin is going to do really well well then all of a sudden they probably will gain a personal interest in it and then you know they'll buy some and then all of a sudden it's like well it's hard to I know there are some Davos

23:20guys for sure that are against still against they think that it will be worth less than it is now or that won't succeed but once you have an interest in it's it's hard to find reasoning in the other conclusion well I think that what I think is also interesting is that even those that have been the most vocal in terms of being anti- Bitcoin I guess probably the

23:46most famous is Jamie Diamond I'm sure there are others you know I'm not picking on Jamie at all but JP Morgan is still going to be interested in getting a piece of the pie and figuring out if there's money to be made they're they're going to make sure that they're at the table so even those and we all know that JP Morgan is involved in trying to distribute the ETF and

24:09through Brokers and whatever so that's another example of you know even though you might have your doubts about Bitcoin it's now got to that point where it's impossible to ignore because even the doubters are saying well actually I'm not sure about this s class but you know what just in case I want to see at the table so from that perspective You' got

24:29to think well even the naysayers want a seat at the table those that don't have a vested interest are saying I in this asset class it could go to 200 250,000 and then of course there's all of us who love Bitcoin in the industry going is going to the Moon right but it's when you have that balance that it's not just the echo chamber and there's people outside of it that are

24:50even the ones that are that are the doomsayers are are trying to get a piece of the pie you got to think that we're we're on the right track and I think that you know if you think about every other Bull Run there was never one thing that triggered the Bull Run not that I can remember from the three that I've already seen you know there was always a I always have this analogy it's

25:13almost like a catapult you know when you sort of you're constantly pulling on the ratchet to build a tension and eventually when there's so much tension the thing just goes you know with Bitcoin it's a little bit like that so people thought it might be the ETF it has yet others might think it's the harving and it might not be but there will be a

25:33point in time and I can't tell you whether it's in the next 12 months 18 months or 24 months but not more than that at some point over the next couple of years that catapult the tum will just release and it'll shoot and what's super interesting about bull runs isn't it is that when the price starts to go up that's when people start knocking your door saying hey this thing's going up

25:57how do do I buy it's said nobody buys it when it's at the low everybody wants in when it's already doubled in value it's crazy but it happens every time I know and that's why you have to have that 3 to five years and understand that in this next Bowl run you know it's almost inevitable that at some point it will be above the all the all-time high

26:16will go past and it'll be a new all-time high and if you're looking at it now it's a fire sale at at 40,000 so I'm excited to see what's to come I know the having event and what is to play out with the ETF are the two things that are sort of on the top of my head right now looking forward to seeing how that plays out in 2024 what are you and the

26:37team Ino s plan the other thing well the other thing Ashton just there's one more thing that I think is not trivial that I would add to that which is the US election yeah you know because I think it's been pretty clear over 2023 even though you know I we don't run a US operation but it's been pretty clear that the US took a massive anti-

26:59crypto stance silvergate and other Banks got shut down and suffered as a result and obviously the SEC took a very hard stance it's been a sort of a very negative 2023 from a regulatory perspective and one would argue that the SEC approved the ETF through through baited and choking breath because they had to for legal reasons right but you know a republican

27:25Administration might have a very different view on crypto and that might be another interesting development where the us all of a sudden turns around and goes from being anti- crypto to being you know to favoring crypto again and I personally well I don't have a view on which political party comes in I'm not American no but I would love it to see an Administration that is

27:46Pro crypto because I just think you know the us being the largest economy in the world if the US supports crypto then I think that's another game Cher that you know that would be that wouldn't be the thing that creates the B run but again to my sort of Ratchet of the Catapult analogy that would be another big tension creator that would help create the next B run

28:08yeah no I completely agree and usually running up to an election is always good for the stock market and with Bitcoin more now ingrained in traditional Finance through the ETF I feel like that will definitely trickle into Bitcoin and correlate them a little bit more so it's just a Melting Pot of different things getting ready for the next

28:29years to come so that's amazing and we don't have a lot of time left Sheamus but I was I was asking you on you know what are you and the team going to do to prepare for this Melting Pot in terms of helping more people getting more people involved in zapo and providing the services that they need and forecasting what other services they might want in the future sure absolutely

28:51well look 2024 is going to hopefully be a great year for us because the product that we'd envisaged is pretty much almost there so in 2024 we want to have a couple ofes that we feel would complete the product one of them would be the ability to draw down dollars on your Bitcoin in your Vault so you know like I said before if you hold

29:17Bitcoin I hate the idea of having to sell my Bitcoin so but sometimes I need to borrow cash maybe drawing down some cash against Bitcoin as collateral might solve that problem it's short term so that's an interesting product that we think customers might be interested in that we want to bring out this year and the other one is you know we pay interest on a savings account for

29:39Bitcoin at the moment and we do that by using our own zapo coins and we go out to other institutions we landar we earn yield and we pass on to the customers without touching the customer coins we're just doing it to test that product and we've seen that there's demand for it so the next step for us there is you know how can we create a product like that scales and for me

29:59the best way to do that is defi you know how defi until now has been very much a sort of a very much ethereum smart contract based technology protocol but you've got rap BTC you've got other things that are out there that are trying to bring Bitcoin into the fry and you know if people come to a bank to earn interest well if we're a Bitcoin Bank what can we do to help our

30:25customers earn interest in a way that is safe transparent and that we can be open common about how we do it rather than promising thousands and thousands of percents of return and taking undue risk right so that's so with those two product features I think it's almost complete you know to the wealth part of the product we're going to add the ability to buy ETFs not a Bitcoin ETF of

30:46course you don't need to if you're a Zappa you can buy the Bitcoin itself but you know if you want to diversify maybe you want to buy the S&P 500 instead of having to buy individual stocks you can buy an S&P 500 ETF or you can buy a fund that gives you exposure to certain asset classes so we want to make it easy for our customers to invest medium to long term that's what zapo is

31:07all about so of course Bitcoin is the core but you can divest into into other products so we that we got the product sort of complete so the next thing to do is you know how do we get the message out there that look zapo back this is what we do and we here to serve people who've got Bitcoin so you'll probably us a bit more visible in media in events you know the

31:32events that we know are very much focused on you the crypto industry and the Bitcoin in particular Bitcoin industry in particular so I think you'll be seeing a lot more of zapo in 2024 very exciting and I love those product lines and I think Defi and other utility for Bitcoin will be huge and I think the institutions will want to get involved in that eventually as

31:56well absolutely and I think look we really want to make Bitcoin easy for our customers right so in the same way as we do the custom you don't have to we invest millions of dollars on keeping your Bitcoin safe from hacking from everything else it's a little bit like that with defi you know our treasury can get your Bitcoin wrap them deploy them

32:16to a and then just give you the return you don't have to go into metamask and worry about security it's like so what that means is that it makes Bitcoin mainstream why because my mom could use the product you don't need to be a technical expert to be able to do self- custody and that's what I mean by going mainstream right not everybody's willing to take the risk or knows how to deploy

32:38their Bitcoin to wrap BTC and into a to generate yield you don't have to zapple will do that for you right so I think that you know we want to be that trusted partner to people who have Bitcoin and say look not only can you trust us with your Bitcoin to do all these services for you and make your life easier but it's going to give your Bitcoin all these powers that

32:59wouldn't otherwise have if you were just holding your your private Keys safely under your bed M very cool I'm looking forward to it all I would love for my mom to use a and if she's on zapo and it makes it easier then the power to it so awesome thank you so much Sheamus for coming on than your insights into to bitcoin are phenomenal I appreciate what you and the team at

33:22Sappo are doing to bring these kinds of products into the world for Bitcoin more utility so people can not just hold their Bitcoin but actually utilize it and use other Financial products with it without having to sell yeah absolutely thank you very much ashon always a pleasure to be on the show