Today’s guest is Dhruv Bansal.
Dhruv is the co-founder of Unchained Capital, which lends USD to individuals and businesses who provide Bitcoin as collateral. This is an interesting service because it lets you take out a cash loan on your crypto assets so you can benefit from your bitcoin wealth without having to sell your favorite investment.
In essence, Unchained Capital is a services layer available to users of the bitcoin blockchain and is part of a growing trend towards making traditional financial services available to crypto asset holders.
This is a fascinating offering, and bitcoin holders seem to be really excited about this trend.
- Why someone might take out a crypto asset-backed loan.
- The tax advantages of borrowing against vs. selling your bitcoin.
- The fact that 60% of bitcoins haven’t been spent in the last year, and how this discovery led to the formation of Dhruv’s business.
- What sets Unchained Capital’s product offering apart from other crypto loan products.
- The parameters around Dhruv’s offering, including loan interest rates, loan terms, fees, etc.
- Why Unchained Capital doesn’t do credit checks and how they handle volatility.
- How Unchained stores collateral and how they let you monitor it while it’s in their custody.
- How much money they have lent out thus far.
- Dhruv’s views on the industry and how he sees his product roadmap evolving over time.
Links Relevant To This Episode:
- Dhruv Bansal
- Unchained Capital
- Satoshi Nakamoto
- Bitcoin Whitepaper
- SALT Lending
Clay Collins: My guest today is Dhruv Bansal from Unchained Capital. You might remember Dhruv from Episode 6 where we discussed the top soundbites and talks from Coindesk’s consensus invest conference. Dhruv is the co-founder of Unchained Capital which offers individuals and businesses loans against their Bitcoin collateral. This is an interesting service because it lets you to take out cash loan on your crypto assets so you can benefit from your Bitcoin wealth without having to sell your favorite investment.
In essence Unchained Capital is a service layer available to users of the Bitcoin blockchain and is part of our growing trend towards making traditional financial services available to crypto asset holders. Bitcoin holders seem to be really excited about this trend. On Twitter the other day someone wrote the following about crypto asset-backed cash loans, “I will never have to pay capital gains taxes again ever. This is literally the best thing to happen to crypto, since Satoshi wrote the White Paper in 2008.”
In this episode Dhruv and I discussed one, why someone might take a crypto backed loan. Two, the tax advantages of borrowing against versus selling your Bitcoin. Three, the fact that 60 percent of Bitcoins haven’t been spent in the last year, and how this discovery led to the formation of Unchained Capital. Four, how Unchained Capital’s product offering is similar to and different from other crypto loan products. Five, the fact that most of Dhruv’s customers make interest only payments against their loans.
Six, the parameters around Dhruv’s offering including loan interest rates, loan terms, fees, et cetera. Seven, why Unchained Capital doesn’t do credit checks. Eight, how Unchained stores collateral, and how they let you monitor your collateral while it’s in their custody. Nine, how Unchained Capital treats forks like the recent Bitcoin cash fork of Bitcoin. And ten, what Dhruv envies about providers of traditional loan products, and what he thinks they envy about his company. We also discuss Dhruv’s views on his industry and where he sees his product roadmap evolving over time. Please enjoy my conversation with Dhruv Bansal from Unchained Capital. Dhruv what’s the path that brought you to founding Unchained Capital?
Dhruv Bansal: So I guess Unchained Capital really starts with the discovery that Joe and I made that 60 percent of Bitcoin isn’t being spent, and that’s like I said a tragedy if bitcoin’s going to be useful it’s got to move around. So we decided to build products that could target people who are holding those assets because they want the long term gains, but can we solve problems for them today, so we started meeting these people, what are their problems, amongst those options of what to build, lending really emerged as the leader for us, for a few different reasons.
It’s probably very simple to model, easy to understand, we can accept Bitcoin as a form of collateral, we can extend you a loan backed by that collateral. That’s a pretty simple and hopefully easy to implement idea so we thought. It’s also something that customers demonstrably said that they wanted. We talked to people and they felt that this was a really good way to defer tax payments, to deal with volatility in the market, to free up some of this asset class that they’re sitting on that’s a little frozen for them.
Clay Collins: Hold up this is Clay and I wanted to cut in here. Dhruv just mention three crypto loan benefits, which are deferring tax payments, dealing with volatility in the market and freeing up your assets. I want to break down the first benefit that Dhruv mentioned because I think it’s important. So the first benefit that Dhruv mentioned was the ability to defer tax payments. Let’s say you bought Bitcoin and it goes up eight times in 10 months, and you want to use those gains to buy a car. If you sell those tokens in less than 12 months, you’re subject to short-term capital gains rates, which are high. If you instead take out a loan against your Bitcoin, you can still use your Bitcoin wealth to buy a car, and sell your tokens after 12 months so you can instead pay long-term capital gains rates. Alternatively, if you’ve taken out a loan against your Bitcoin, you can wait a few more years to sell those Bitcoin, because you believe they might go up a lot more over time, and when you sell those Bitcoin, you can use a small fraction of that sell to pay off the principal of your loan. Okay back to Dhruv.
Dhruv Bansal: But it just felt like from a combination of perspectives, the best first financial service to target, to start solving that problem of static unspent bitcoin, and start to give crypto holders some degrees of freedom.
Clay Collins: Do you think you would be participating as a lender, or would you have a business that had roughly the same characteristics minus the blockchain part if it weren’t for the birth of crypto currencies starting with Satoshi Nakamoto’s white paper. Would you be involved in financial services?
Dhruv Bansal: No way, I can’t imagine it would have happened any other way. I’m not saying I don’t think financial services are interesting or valuable, it just wasn’t something I have a lot of experience in. There were alternative lending companies being started, and that industry grew really rapidly and it was really exciting for a while.
Clay Collins: Hey this is Clay again cutting of Dhruv from the editing booth. You might notice that in literally every single interview I’ve done here on Flippening, I’ve asked folks if they’d be involved in financial services if it weren’t for blockchain technology. This is the one question I ask everyone, and in all cases the say no they wouldn’t be involved in financial services if it weren’t for blockchain technology. So far now I’ve interviewed two hedge fund managers, a liquidity provider and Dhruv. I’ve also done some news roundups, and every single guest has said blockchain and distributed ledger technologies drew them into the financial system when they otherwise wouldn’t have been involved. I think this is important, because it shows how disruptive technologies can draw innovators into previously stale sectors that otherwise were uninteresting or simply excluded participants that didn’t come from specific locations, or have a specific pedigree or background. Back to Dhruv.
Dhruv Bansal: You know I might have thought maybe I can use my skills as a data scientist to do well in that space, but I don’t think I would have made the choice. It’s because I find bitcoin and blockchain so fascinating, and these products were so necessary that I find myself having to think about them and go out and build these things.
Clay Collins: So let’s say someone is considering taking out a loan against their BTC Holdings. When someone assesses whether or not to use Unchained Capital, competitors could be apathy like not doing anything at all, second something like Salt Lending, or three some kind of interest earning custody like maybe just taking their money and putting it into a crypto index fund. Why do you think with those potential competitors in the space of alternative paths, not doing anything using a direct competitor of yours, or maybe investing in a crypto index fund or something like that, why would someone use Unchained Capital?
Dhruv Bansal: Right maybe I’ll answer that in two parts, like why borrow in the first place, and if you’re going to borrow why choose Unchained? So I think you’re right, probably the biggest competitors that we have to our loan product are ignorance and apathy. Not knowing that this is a financial degree of freedom, not caring perhaps for a variety of reasons, or honestly being overwhelmed, why borrow? It’s demonstrably been the smart move, given the price history of Bitcoin, yes there have been down periods, there have been windows in which someone who sold might have been slightly better off. But in general given the rates that we charge, given the appreciation of Bitcoin, given the reality of capital gains taxes. Net net, if you’re thinking of selling, it’s almost always better to borrow.
Clay Collins: I know there can be potentially tax benefits, to taking out a loan on your Bitcoin versus selling that Bitcoin and using those funds to purchase something. You’ve got capital gains, maybe someone wants to defer, they want to translate what will be short-term capital gains, into long-term capital games eventually, or something else. Can you describe what you have heard from your customer base in terms of their tax based motivations for using a loan product?
Dhruv Bansal: I would say when it comes to tax, this could be a seasonal aspect, most of our loans have been in the last month or two, as we have sort of launched publicly and been growing. Certainly tax behavior is important at the end of the year, but tax payments are not due until April or October, so I certainly estimate greater interaction between the need to borrow, and in particular the desire to either pay for tax consequences or avoid them happening around those times. So far the most common use cases for our customers have been investment. Typically wanting to buy a home, or a real estate property, something that is more physical, powered by their very digital Bitcoin, or wanting to take a position in a company, or honestly another asset class, whether that stocks and bonds, or traditional finance, or even additional crypto tokens. But by and large it’s making investments. I think people again that speaks to the desire to get a return from having Bitcoin in the short term, while still being able to hold it for the long term.
Clay Collins: So there are no restrictions to what people can do with the money. Obviously there are things that are legal and illegal, but there is nothing in your documents that say you can’t take these funds and use it to purchase additional Bitcoin for example.
Dhruv Bansal: Let me be careful while I answer this question. So certainly there are obviously things that it would be illegal for us to lend for, we do ask customers the stated purpose of their loan, we do have to run customers through KYCAML procedures.
Clay Collins: Clay again to define KYCAML procedures. KYC stands for Know Your Customer. KYC is essentially the process of the business identifying and verifying the identity of its clients. This is a legal requirement in many jurisdictions, and the term is also used to refer to bank and anti-money-laundering regulations. AML stands for Anti Money Laundering. AML is a set of procedures laws and regulations designed to stop the practice of generating income through illegal actions. Apologies if you already knew this. Back to Dhruv.
Dhruv Bansal: We do have a sense of what our customers income and net worth within and outside of crypto is. So we are in a position to judge where did these customers get the crypto from what are they planning to do with it, is it safe. The chief decision criteria we use are obviously first and foremost legality and appropriateness. Can we lend to this person? Second, is it appropriate for us to do so? Is it safe in the sense that is this person going to be able to meet their interest payment requirements if the Bitcoin price collapses which is something we can talk about how we deal with, price volatility? Do they have other assets they may be able to use to cover their obligations? We are unlikely to lend to someone who was borrowing against the full capacity of all their Bitcoin and has no other sources of income.
That feels unsafe to us, but at the same time we do obviously recognize crypto as a real asset class and that is important. In terms of what they’re doing with it, I don’t think there’s too many forbidden things that they cannot do. I’m not involved in day-to-day loan operations, so someone else will have to speak to that. We do have folks who have borrowed to buy more crypto, but I think we probably take it on a case-by-case basis. If you are from what we have learned about you, if you are someone with assets, if you are a sophisticated investor, if you’re choosing to leverage that’s okay. If you’re someone who doesn’t have a really great income, doesn’t have a lot of assets, and is wanting to leverage your crypto, we may not accept that kind of risk.
Clay Collins: I can give you an example from my personal life. I’m looking at potentially investing in a crypto hedge fund. Unfortunately many crypto hedge funds don’t actually take BTC, so I will have to sell my BTC, get USD, generate a potentially taxable event, and then take that USD, and put it into the hedge fund. I would rather just give you guys my BTC, take out some cash, give that to the hedge fund, not trigger a taxable event. Obviously I’m going to have to pay for gains, and hopefully gains that would come from a hedge fund that I invest in, but I just don’t want to generate that taxable event in the first place. Do you have customers that sound like that?
Dhruv Bansal: I don’t know that I have a customer that specifically has borrowed to invest in a crypto hedge fund, but it is certainly an example of borrowing against bitcoin to make a leveraged investment against another crypto asset, in this case indirectly through a fund. That is certainly a use case, but again it’s more direct forms of investment like buying homes and taking positions in actual companies, and similar that has tended to be the more common use case.
Clay Collins: I can definitely see that if you’re getting paid primarily in a crypto currency, and you still need to operate in the USD world, you have a few options, and this is probably your best one. What are maybe two to three additional use cases you could share with us?
Dhruv Bansal: Yes mostly these use cases that we have discussed so far have been the consumer use cases. 30 percent of our borrowers are businesses and they do include for example miners. Our very first borrower ever was a miner right here in Texas who wants to disconnect their own needs for constantly having to upgrade each cycle their mining equipment from whatever the price happens to be doing. You want to sell when you believe the price is at a local maximum, not necessarily when you’re forced to because of the difficulty adjustment having to roll out more hardware.
Clay Collins: Clay again to explain the use case that Dhruv just mentioned, because I think it’s important. If you are a crypto asset miner, you have to deal with periods where mining suddenly becomes more computationally difficult. During these times you might want to purchase more hardware to stay competitive, but increases in mining difficulty don’t always correlate with increases in crypto asset prices. If you’re paid in Bitcoin for example you might want to purchase more hardware when mining difficulty increases, but only sell your Bitcoin when you believe the price is at a local maximum, or when selling makes sense from a tax planning perspective. That’s why a loan would make sense in these cases. Back to Dhruv.
Dhruv Bansal: So that’s kind of a nice operational degree of freedom for his business. Miners are definitely one category of customer for us, but also funds. There are several funds which own crypto currency, not just crypto investment funds, but more like private companies shall we say. One of the interesting use cases is funds, amongst our business borrowers who are capitalized perhaps by some original founders or individuals, purchasing Bitcoin early but now are sitting on several million dollars in crypto currency and are thinking about what to do with it. So often times making investments for equity in companies they believe in, is an interesting option and so we allow them to do that while still maintaining their crypto assets. Essentially this is another form of leverage, just leveraging outside of crypto currency into other forms of assets like private company stock.
We’ve also got someone, this is a use case I really like, we’ve got someone who was just flipping houses, they’re sitting on a lot of Bitcoin, and are using Unchained to take out money to buy houses, invest in repairs and then sell them at a profit. Again I think a lot of these use cases ultimately their end goal is income. Some kind of investment that makes money powered by this asset class that I believe in long-term but isn’t really giving me any short-term returns. I addressed a little bit about why one should borrow as compared to selling, it’s demonstrably the best decision, the next question I suppose is why borrow with Unchained?
For a while we were the only option in market, for probably the last half of 2017 when we were lending, but now there are actually other options. Salt Lending in particular is the most famous and well-known. I think of them as it’s really nice to have a real competitor operating. For a while when we were working on this company in 2016 there wasn’t too much around, crypto lending out there and we felt like we are being pretty contrary, and it turned out to be great, because now that there’s Salt and a few other firms out there.
We feel really validated that this is a real market that a lot of people are recognizing. Salt has a lot of talented entrepreneurs. They’ve got a great team. I will say this, I tend to think of them as a marketing first company, whereas we are more a product first company. That is just two different ways to think about building good products, and good services for customers. Salt of course famously did an ICO. They have a utility token, I think it’s done very well. They raised a lot of money on that basis, and they’re going to go use that I presume to fund loans and to power their business. Whereas we kind of started by first building our product, getting into market earlier, getting real feedback from real customers, and trying to grow in that direction, so a little bit of a distinction there. I also would say as a borrower, divorcing myself from working at the company, when I just think about being a customer of a lending product, the things I’m looking for simplicity and security and safety.
My personal bias the attitude that I hold around technology, I don’t like the implementation that Salt offers in terms of managing funds with smart contracts. It sounds very sexy but to me it’s a little frightening. As a person who writes smart contracts, I know what bugs are capable of doing. Their code is not open source, it’s difficult for me to trust that what they say is happening is really happening. Their marketing while very omnipresent, is not clear in regards to certain key facts, like do they originate the loans or not, will my funds be automatically liquidated or not? Part of what I find frustrating is the community around Salt is often at a loss for actually knowing the answers to these questions. There are some funny blog posts where people have gleaned out information about how Salt may actually be working right now, that strikes me is just not transparent enough. Whereas we are very much an opposite kind of company. We are transparent almost all the way.
We tell you exactly what our terms are, our contracts are absolutely open source and simple, and we show you the assets that we hold on your behalf. The value proposition our companies offer is very identical, getting US dollars in return for holding Bitcoin or crypto currency as collateral, we’ve just chosen very different approaches and implementations. I prefer ours because it’s simple, there’s less code there’s more transparency, but I can appreciate what Salt is trying to do. I think they’re trying to be more of a platform than we are. They’re trying to have a little bit more scope in that regard.
I think that’s really cool. I think that’s important long term. It’s important to be able to service the long tail of the market, but that’s not really where we are oriented. We cannot offer somebody a $500 loan. We can only work with customers who have enough crypto assets to sort of make working with them cost-effective for us, but also those are the customers that have the biggest pain points, and truthfully there aren’t that many of them in the country. We have gone therefore with more of a direct, we originate loans, we are building a platform where you can find lenders and then you can get loans. That’s a big distinction between our two approaches.
Clay Collins: If you think about a lot of potential solutions in this space, you could have probably some companies that take a more services business approach to it, and I think other folks might go out and build infrastructure. Maybe they’ll build a protocol, maybe they’ll issue a token like Salt. When you think about a services business versus an infrastructure business, it sounds a little bit more let you guys have gone the services route. Do you think this will ever turn into a protocol, or that you will issue a token, is that for engineering reasons, or other reasons? Let’s say six months from now or a year from now, or say even tomorrow you wake up and you have an insight that indicates to you that the problem you want to solved is best solved at scale with a protocol, would you build that or not?
Dhruv Bansal: Yeah that’s a really good question. It’s something we deeply think about as well. I mean honestly when we were contemplating this company last year, and starting to build it late last year and early this year, we didn’t feel that there was enough of an ecosystem for us to just build a product, and just throw it out there, and just hope that people would lend and borrow and everything would be copasetic. It struck us as money is a very trust oriented product, you need people you need real people behind it.
You need to feel like your money is safe. You need to be able to call people. There needs to be a human level of interaction, if your going to earn that trust, and so there’s a sort of necessary services component. If this were a more mature industry, there might be layers in which there are companies making products and they are being resold by in tech we often call them VARs, Value Added Resellers. People who are closer to the customer in the value chain. Because of how nascent the ecosystem is none of that is around.
We can’t just rely on a group of seasoned loan officers, who know how to do crypto loans and then sell them our product. Over time though that may start to change, and I think our company DNA is very tech and big data and infrastructure heavy, that’s really where we shine. It’s been interesting for us to limit that scope, and really, really focus down on a simple direct laser focused product, and then support it with really, really good customer service. I can envision over time as maybe other folks get involved and this could be anybody from regional banks to global megabanks decide they want to be part of crypto lending, that it’s okay. It’s a great way to make a return. It’s a real product and they can do it safely and cheaply, and wanting to use our software that we have developed to do that, that’s an interesting possibility for us.
We are certainly exploring it with a few channel partners like banks and exchanges right now, and I can very much see us moving in that direction, but we wouldn’t want to compromise the service that we have. It’s one of the things our customers genuinely really appreciate right now, is that in the world of crypto which is often fly by night, and chat me over Telegram, we are talking to you on the phone or meeting you in person are making sure you feel taken care of, because we are trying to win your trust. So I think if there were ways where I felt the customer experience for products that we’re building could remain as good as it is now, yet we could not have to absorb some of the scaling costs associated with having a large services business, we would very much be excited by that. Part of it just depends on how the ecosystem develops I guess, you also asked about a token.
Clay Collins: If you woke up tomorrow, six months, a year from now you’re like the best way to do this is with an Unchained solution, we’re are going to turn into an infrastructure company would you do that?
Dhruv Bansal: I mean I kind of denied the premise there, if you’re dealing with dollars some part of your organization has to live off chain, it’s just the way the dollar’s work. That doesn’t mean that we haven’t thought about tokens. There’s no need for a token to power the product that we have in the market today, which is you give us Bitcoin as collateral, we extend you a loan in dollars, we use the blockchain to escrow the collateral. It’s very safe it’s a multi-sig cold storage wallet et cetera, but we’re not putting any of the logic into the blockchain or anything like that. We’re keeping it very separate, and so we don’t really need a token to implement the product that we have got right now. It’s very simple and direct.
The token is just the collateral, that’s the reason why we didn’t do an ICO. In the future I think we will be interested in a certain class of token. Often times lending companies like ours as they scale their loan book they’re able to securitize it, so they’re able to resell it in bundles to various investors who can evaluate not just any individual loan, but more the characteristics across the entire loan bundle of what they’re buying. We think a token is a great way to extend an offering like that, that if you bought the Unchained Capital token you would have access to a income stream based on the interest payments from our loan book, and essentially it would be away to very cheaply securitize the loans that we are making, and of course raise lending capital for us to make those loans in the first place.
Investors in that potential future token can look at our existing track record, it can be a really financially informed decision, and not perhaps like I gut hey I just love this ICO I’m going to buy it. That’s always been our goal, to make a justifiable reason to invest in this token. One of the challenges though in bringing a token like that to market today, is that it would almost certainly be viewed as a security, and we think that’s fine we’re not afraid of securities, but it means that there is a certain infrastructure for handling securities as tokens that needs to be built, and people are building it.
There’s a team coming out Overstock, T0 I believe, and there’s another team out of Toronto with Polymath, these are both networks as far as I understand them to allow for exchange of security tokens which are actually security, so dealing with investor accreditation, dealing with the various disclosure rules that have to be present, so somehow there are going to help solve those problems, so that they can bring the liquidity that people like about utility tokens into the classes of investment that the government’s going to class as securities. I think if those things were to become real, we would be pretty excited about releasing a token, which was a security which functioned kind of like a bond in that it bared a rate of return based on the performance of the loans we are making in the market.
Clay Collins: Do most borrowers make payments against the principal, or are they primarily making interest only payments?
Dhruv Bansal: Our loans are structured right now that when you borrow you only have to make interest only payments that the entire principal payment is done as a balloon payment at the end of the loan. Customers can of course prepay if they elect to do so, if they want to close out their loan or pay down part of their principal they are welcome to do so. That’s also a great way we deal with volatility, so if we have to do a call for additional collateral maintenance, one option is you give us more collateral, but another option is you can pay down some of the principal. Those are both ways to handle decrease in the price that we offer to our borrowers.
But in general I’d say that we haven’t had sufficient time to see the long-term behavior, so some of our borrowers have taken loans up to three or four years now, so there just hasn’t been enough time to see how that is going to play out. What I have seen is amongst the borrowers that have taken short-term loans, three months or so is our shortest loan, we have now been in market long enough where folks have taken out those loans and closed out those positions. Often times what we find is that they’re really just a prelude, that if you’re taking out a loan for 90 days for $50,000 you’re using the product to see how it works, what was the experience like, did I feel good about it, was Unchained easy to work with, and then it often rolls into a much larger loan for a longer time period.
Clay Collins: So are most of your customers taking the standard term and not paying additional amounts against the principal?
Dhruv Bansal: Correct.
Clay Collins: Interesting.
Dhruv Bansal: Except for in the cases where they want to close out their loan because they like to take out more capital, or they found the service was too stressful. I think some people were very sensitive to this. Some people shouldn’t play with leverage, it’s not something they’re comfortable with. We had one customer that borrowed at a recent high, we had to do a call for additional maintenance, collateral maintenance, when the price diminished, and this customer, God bless her she found it stressful. She was in a great position to do it, but we have to understand what you’re doing, you have to understand the risk you’re taking on. We are very careful to ensure borrowers never borrow against the full amount of Bitcoin that they have.
We want to make sure that, we are not a loan to own company, we’re not trying to make loans so that we can profit from default. I think some people just aren’t comfortable having a lot of risk like this, so when those cases they have just paid out the principal and then got out of the loan. That’s totally fine, but in general the folks who are comfortable with holding debt, understand that as a tool for financial management, who are taking out these loans they are doing it with a very specific purpose. They’re looking at the numbers and saying this makes all the sense in the world and are taking advantage of the fact therefore the payments are interest only.
Clay Collins: Can you just walk us through your product, what are the terms what are the parameters that you are offering?
Dhruv Bansal: So we have a loan product that we extent to consumers and businesses, in some 30 or 35 US states, exact details depend on loan amounts and rates and eligibility, but we are active throughout most of the country now. The terms we offer are first of all a 50% loan to value ratio. If you would like to borrow let’s say a $100,000, you need to give us $200,000 at the then price, the origination price in collateral, so $200,000 dollars in Bitcoin. You apply for a loan online, we do our KYCAML process online, typically you will be approved within 24 hours. You apply for the loan, we generate legal documents like they are very familiar to you if you’ve ever had a mortgage or any other kind of debt vehicle, or loan that you have taken.
You sign it, we use Docusign right now, hopefully a very familiar experience for folks, and then when it’s all said and done, you go ahead and you deposit your collateral, we provision a single address for you to use during the duration of your loan, that way you can be fairly confident that your collateral is remaining where it is. As soon as we receive the collateral, we send you a wire transfer with your loan amount in the back account that you choose. Then you make monthly interest payments, just on the interest amount that you’re due. Loans can be between $10,000 and $1,000,000. We’ll go past a million dollars in certain cases. We borrow from 90 days to I think three years.
I mentioned a couple of times casually, the way we handle volatility, is that we have a right to do collateral maintenance calls, since we lend at a 50 percent loan to value ratio, you got $100,000 of cash for putting $200,000 of Bitcoin with us. If the Bitcoin price were to collapse, by 25 percent and it was to reach say, $150,000, we would issue that maintenance requests, we’d ask you either repay some of the principal, or provide more collateral, your choice, nothing happens automatically.
Clay Collins: Which one of those do you find people doing more often, giving more collateral?
Dhruv Bansal: Usually putting in more collateral. We’re very careful again to ensure the customers aren’t borrowing against the full amount of Bitcoin that they hold, and usually for us that’s a risk flag. It’s also just so much easier to deposit more collateral right. I mean our average time it’s an interesting statistic, there have been two major priced drops since we have been lending that we’ve had to do this for, and our average time to get more collateral is about an hour, just pretty incredible.
Dhruv Bansal: In one case a customer provided more collateral in seven minutes, that’s an amazing speed to re-collateralize.
Clay Collins: They’re like, “Don’t sell my Bitcoin.”
Dhruv Bansal: Yeah exactly. I mean it’s funny customers are so on top of the price motion that they’ll call us the night before. Hey man I think it’s going to happen tomorrow, well alright dude chill out, it’s cool, if it happens it happens, we’ll call you it’s going to be easy. It’s actually very nice how informed our borrowers are about the price and their obligations, which makes sense they don’t want to lose their Bitcoin.
Clay Collins: So if it depreciates more than 25 percent then do they have to get back to–
Dhruv Bansal: I think contractually they have 48 hours, and then if the price descends further I believe a 45 percent price drop, so if that 200,000 dollars in Bitcoin becomes 110,000 dollars if I did the math right, at that point the loan is technically in default, so we are allowed to repossess collateral. To pay for our principal obligations, liquidate it, and if there is any remainder it goes back to the borrower. We’re not allowed to keep any of it, and we don’t intend to.
Clay Collins: When they refresh their collateral, they need to get back to having two times what they’re borrowing is that correct?
Dhruv Bansal: That’s usually the way we set it up, though they are of course free to just repay some of the principal if they would prefer to do that.
Clay Collins: What’s the interest rate?
Dhruv Bansal: Typically we’re charging between 10 and 14 percent. Depends on the state, and depends on the loan size and various other parameters. Often times we’re constrained by the lending capital sources we have, and the particular laws around lending in the states that we are active in, so we tend to just quote a broad range because it’s a little bit too complicated to get more specific, unless we really get into the particulars of each case. We encourage borrowers if that’s a rate that you can tolerate, if you feel that that’s fair for the liquidity we are offering, get in touch let’s find out if we can work together.
Clay Collins: Is there a service fee, or what other fees exist in addition to interest?
Dhruv Bansal: We charge a one percent origination fee which is part of that 10 to 14 percent figure I quoted previously. Most of the interest that we’re charging is usually going back to our lending capital providers. I’ll make a comment that if you think 10 to 14 percent is too high, you’re a borrower and you’re like that’s a really high figure I don’t know of that makes sense. Trust me, I’m talking to the lending capital providers, and they’re telling me 10 to 14 percent is way too low, this is Bitcoin it’s risky it should be way up here.
It feels to me like we are not in control of the rates, that’s just what the money markets so to speak are willing to lend Bitcoin at, and demonstrably borrowers are borrowing at those rates, so I feel like market dynamics have calculated the effect of interest rate band. One thing I really like about having other competitors in the market like Salt and a few others, is that it’s only going to act to decrease the rates to borrowers which I’m a big fan of. I’m a Bitcoin holder and I want this to be cheaper for Bitcoin holders.
As a company I also think that being able to access lower cost capital, for crypto as collateral is a great way for us to start being able to engineer new classes of financial instruments beyond just loans, which would require those low costs of capital, so 10 to 14 percent is where were out right now, inclusive of all our fees.
Clay Collins: Let’s talk about future roadmap. When you think about what’s coming down the pike, it seems like there’s different routes you can go down. A whole bunch of them and you’ve thought about this a lot I’m sure, do you ever see yourself ever lending crypto assets in exchange for other critical assets? In other words if I want to sell my Bitcoin to get Ether, that can generate a taxable event, but if I take out a loan it doesn’t have to be taxable event, is that something you think you would do? If you could just share with us your thoughts on future roadmap that would be awesome.
Dhruv Bansal: Yeah absolutely, lending against Bitcoin as a form of collateral is zeroth and very first and laser focused place that we started, but you’re right. Our ambition is to go quite a bit more broadly than that. Absolutely we want to accept other forms of crypto currency as collateral, so we already have Etherium working internally, we have a gold as quarter to do kind of a bug bounty around our very multi-sig contracts which we’re going to open source so folks feel comfortable putting their Etherium with us when they borrow.
We anticipate having done Etherium we’ll expand to ERC20 tokens and other kinds of assets as customers demand them, so there’s sort of that direction in which we’d like to expand. I think what you’re asking about is also really interesting. Instead of just doing crypto for cash loans, we could do crypto to crypto loans, and that’s also really compelling and interesting for a certain class of customers. It’s a very natural extension past the product we’re already delivering, but I would say our ambitions are even more broad than that.
We’re not Unchained lending because we don’t view ourselves as truly just a lender, even in becoming a lender what we realized is that we had to develop a lot of expertise in software around custody, that multi-sig cold storage, hardware wallet backed super safe storage of crypto assets at scale is not a solved or easy problem. We had to do too much work frankly to get to where we are, and it helped us realize that in building a lending company with actually built a custodial company almost that we’ve had to solve those problems.
That creates an interesting other set of possible products for us. We’re already in conversations now with various crypto funds and various other people that would like to store assets securely, is can we build a really nice practice around multi organization multi sig cold storage, which I view as the safest possible way to hold Bitcoin or any other crypto asset. Especially in the case of lending is very compelling, we have three parties lender borrower and originator namely Unchained, makes all the sense in the world.
Instead of having Unchained hold all the keys to that multi-sig form which is our current model, to federate those keys so that borrower, lender and ourselves have a key which creates a very nice two of three structure, if we are out of the picture the borrower and the lender can get together, to free their collateral. If the borrower disappears the lender and ourselves as the originator, can still repossess the collateral to pay off principal obligations. If the lender disappears it’s okay, the borrower and ourselves can still act right, and pairwise all the parties in this quorum are incentivized to behave correctly, it’s a perfect use case for multi sig.
Clay Collins: You know it strikes me that the bank in a lot of ways is a value added custodian, you’re a custodian that happens to take advantage of these custodial services to offer a loan product, but there could be a lot of other products that you can offer in addition to loans once you have custody of someone’s funds. What other potential services would you offer once you have custody or is that information confidential right now?
Dhruv Bansal: Yeah custodianship you’re right, it’s a very central problem. If you can do custodianship well, you can do many, many things around it well. If you don’t do custodianship well I think it’s very difficult to offer any of these kinds of services without just partnering, and I think that are perfectly okay solution too is to say well we just use Coinbase for everything. Well that’s fine, but in our opinion Coinbase is designed for scale and massive transactions, and in theory speed of response.
We are designed for safety and multiple people having to be signing off on every single cash outflow. It’s a little bit of a different philosophical architecture for a company as well as the technology, so I think it’s more natural for certain use cases than others. You’re right custodianship is pretty central, if you do custodianship well as we’re already doing, we can offer loans as we’re already doing, but we can start to offer many, many more interesting products beyond that.
Clay Collins: That’s a really interesting path to go down. It kind of strikes me that in some ways Bitcoin hedge fund that takes in-kind investments, and other words a hedge fund that takes BTC and then invests it for you, they have to do a lot of custodial work as well. That’s kind of value added custodian, instead of providing you a loan they’re investing on your behalf.
Dhruv Bansal: Absolutely and I think you’re right. Thinking of banks as value added custodian’s is really appropriate. That’s what banks in theory should be, they should be competing to create the most value for folks whose funds they have in custody. In practice that may not always be what happens, but I think what’s cool about crypto is because of how forkable and changeable and fast moving everything is, there is a focus on delivering value to end customers.
Clay Collins: Have you considered being a prime broker?
Dhruv Bansal: Am I interested in being a prime broker? I’m not sure.
Clay Collins: Me again to explain what prime brokerage is. Prime brokerage is a set of services that investment banks usually offer to institutional hedge funds. These services can include things like securities lending so a fund can for example short a stock, global custody and also financing. I asked Dhruv if he was interested in being a prime broker because I think that a lot of what he does could be packaged as a set of prime brokerage services to crypto hedge funds but that’s a topic for another conversation. Back to the program.
Dhruv Bansal: I think one of the challenges we have as you get larger in the financial industry, your regulation and compliance loads becomes ever larger. This touches on the idea of service versus technology versus infrastructure. Do we really want to as a small start-up sign on for the costs of becoming a broker-dealer, or dealing with large financial institutions at that scale? We may went to partner for those kinds of services, and be more of a technology and infrastructure kind of thought leader that’s allowing these massively capitalized big players to do the stuff safely and well.
One thing we have that other larger players don’t have is a lot of knowledge built from being in the dirt with crypto technology for several years and building stuff ourselves. But today where we’re starting out, we have had to do everything ourselves, and I think that’s also appropriate. We’ve got to show that we understand how the financial industry works by participating in it from the ground up, and that it does include all the regulation and compliance workloads that we have today.
Clay Collins: How long from the time someone applies for a loan to receiving cash in hand, how long is that process?
Dhruv Bansal: It can be as short as a day or two. The longest part is honestly waiting for the wire transfer to clear. It really just depends on how familiar the customer is with our own process, have they borrowed from us before, or do they have access to all the funds they’re going to use for collateral. Is the Bitcoin network congested that day, it can take up to a week if the customer wants to review documentation, they want to consult with their lawyers, it’s the first time they’ve ever taken out a loan on a crypto asset, and that’s fine. We totally understand that we’re never trying to rush customers through the process, but it can go very, very quickly, if you know what to expect in the documentation and you’ve got your funds ready we can move very fast.
Clay Collins: Are your docs pretty squeaky clean? If people are familiar with loan docs are yours pretty simple, pretty short to the point or is there a lot of extra language that’s been added because you’re dealing with this new and somewhat unfamiliar asset class at least in the traditional banking system?
Dhruv Bansal: That’s a great question. I don’t know that much about what traditional loan documents look like anyway, but I do know there’s a set of what’s required, and then there’s what you do to make this make more sense for crypto assets, there’s a lot of disclaimers and stuff that will be in the contract that we are just required to have there. In that sense it it’s very similar to any existing loan that you might have in which you can have similar kinds of documents, but I would say the heart of our loan documents is really what we call a kind of a cover letter.
Really just in very clear language that even I as an engineer can understand describes what is about to happen. You are this person you are agreeing essentially to grant us a lean, it’s not our property but to grant us a lean on the collateral that you’re going to place in this address that the provision for you, it’s going to be between this time and this time, you’re going to pay exactly this much, here’s your exact APR, here’s the cost of this credit to you, and various other things we’re required to say.
We describe our collateral maintenance process, we describe prepayments, our loan documents I think are only two pages. There are I think some interesting aspects to this, when I think about how we have to adapt some of the language in their for crypto currencies in particular, I think the concept of forking is also really interesting. That’s not a thing that traditionally happens with assets that are collateral, you don’t suddenly fork, there are stock splits, but if you have a home equity line of credit your house doesn’t suddenly become two houses with different paint colors. I think that’s an interesting aspect that obviously customers always own the funds that they put in, if there’s a fork you get your tokens back, it’s difficult for us of course to guarantee any kind of timescale around that.
Clay Collins: Hey it’s me, I should probably explain what this fork thing is, essentially Dhruv is saying that if a crypto asset that they’ve been holding for you as collateral experiences a fork, like when Bitcoin Cash forked off from the Bitcoin blockchain they send you your tokens from the forked chain. For example during the Bitcoin Cash fork they would send you your Bitcoin Cash, of course they can’t always do this until it technologically safe and possible, but when those tokens are available they’ll give them back to you, that’s it.
Dhruv Bansal: A lot of times that’s just a practicality issue around what software is available, so there are some interesting angles like that, but on the whole man our documents are pretty easy.
Clay Collins: How many pages total and length are there and what percentage do you think you will be able to cut if you weren’t doing crypto loans?
Dhruv Bansal: If we weren’t doing crypto loans and were doing traditional lending almost everything that’s in there would still have to be in there. There’s only a few places that we’ve really changed the process to specialize it for crypto currency. For example the concept of address the concept of forks, these are things that are crypto unique. We have a few lines or paragraphs around them, but by and large from the legal and compliance perspective we are an asset based lender, and our documents look like any other asset based lenders, and they’re about as short and sweet as you can get if you were doing asset-based lending. They aren’t tremendously more complex because of crypto currency.
Clay Collins: So the vast majority of the wording would be exactly the same if you were issuing a loan against someone’s house or something like that.
Dhruv Bansal: Yeah I don’t think it’s a stretch to say that we modeled most of those documents on those kinds of asset-based loans, because that really is the category of product that we sell.
Clay Collins: What do you think providers of traditional loans, for example loans against your house, what do you think they envy about your business, and what do you envy about their business?
Dhruv Bansal: What do I envy about them? Certainly I envy about how they can take for granted people’s attitude towards the kind of collateral that they’re working with.
Clay Collins: They don’t even read the docs I get it, they sign it.
Dhruv Bansal: These are homes and buying a bundle of 10,000 homes I get it. It’s almost casual the way people regard other kinds of assets, and the scrutiny that they put upon new kinds of assets like crypto currency. It’s fair, it’s absolutely deserved and it’s fair, but it can make life more difficult. I’m certainly envious of that. I’m also envious of the scale of the market that they’re entering. Crypto is a tremendously large market now, it’s hundreds of billions of dollars in size, and the addressable market for loans, is many tens of billions I’m sure within that space, but the addressable market size for student loans in dollars is I think a trillion dollars or more.
It’s just everyone is in the regular loan industry, and still relatively few people are in the crypto loan industry, but that’s also exciting. That means we’re in early days. In theory the ecosystem is poised to expand and it’s all going to be gravy, so that’s what I’m envious about, what would they be envious about me? On some level I want to say the rates, because I believe we offer a very safe form of lending. It’s akin to a margin loan in which we’re literally holding the collateral or access to the collateral that we’re using to guarantee the loan security. It’s very safe, our collateral as I described, we can obtain more within minutes when we need to, it’s automatic and digital there’s no downtime there there’s no closed markets. In that sense it’s a very safe form of collateral, yet our interest rates are 10 and 14 percent, so there is a premium that I believe lenders are getting for choosing to accept the risk stigma around crypto currencies.
I believe the actual risk is lower. I’m not saying crypto currencies aren’t volatile, or that there aren’t some existential risks associated with them. There absolutely are and that I think what drives the premium. But I know a lot of lenders who love the idea of 10 to 14 percent rates, and love the idea of quick collateralization, and digitally recording the rights to everything and all the cash flows and all the accounting, that’s pretty compelling.
Clay Collins: So in other words if a bank needs to possess a house, that’s a very costly thing to do, but they’re getting a much lower interest rate, you can’t just walk in and possess a house or possess a boat, these are very complicated things to do. Whereas if someone defaults on their loan actually selling their Bitcoin is pretty easy.
Dhruv Bansal: Yeah it’s done within minutes.
Clay Collins: And you make more. One thing you said which really stood out, is you give people access to the address where their Bitcoin is stored so they can monitor it at all times to make sure their Bitcoin which they in fact own is still there. Is that correct, they can monitor it they can watch it that kind of thing?
Dhruv Bansal: That’s exactly how it works, I’m a Bitcoin holder I’m nervous about storing my funds on exchanges, I don’t trust third parties, I trust myself I trust my hardware wallet, and I recognize that a lot of Bitcoin holders are like that. What we have today is about as good as we can do as a single organization, you have to trust us we hold all the keys, but there are multiple keys, it’s a hardware wallet is cold storage et cetera.
The reason we display addresses is because since we know that you don’t really have any rights to this crypto currency when you give it to us, at least from a controller’s perspective, you have legal rights. In theory there is nothing preventing our entire company from turning tail and stealing all your coins at some colluding event. I mean we would never do it it’s absurd, but you don’t know that, so as a concession what we like to do is that we like to provision a single address that the customer can use when they deposit their collateral, and the collateral will remain at that address the entire duration of the loan.
We don’t recycle collateral we don’t reuse it to fund other projects, we don’t lend out the Bitcoin that you give us to other people in order to make more money. It literally just sits there and it serves as collateral. You can watch it through our website, you can watch it through any third party block explorer you want. As our concession to you, because we understand that you’re giving up control, this coming quarter as part of our custody solution, we want to release that multi organization multi sig custody model in which we can do better, instead of just showing you the address but we have got all the keys, we’ll show you the address and will give you one of the keys, and we’ll give our lending provider another key and then we’ll be left with the third. That creates a really interesting situation where no one organization really has unilateral control over the funds in that address, but as I mentioned pairwise lender and borrower and Unchained as the originator are pairwise all incentivized to do the right thing.
Clay Collins: Do you find that your lending provider takes comfort also in having the addresses so they can monitor that the Bitcoin is there to back up the amount they have given you, are they looking at that also?
Dhruv Bansal: Yeah I mean there’s a certain amount of trust. There is legal paperwork obviously between our lending capital providers and ourselves, that describes the class of loans we have agreed to buy as we originate them. It’s pretty cut and dry, but I know part of the reason they feel comfortable signing such agreements in the first place is because they can see the collateral, they know that we are not some fly by night operation, they can verify that those funds exist on the blockchain.
Clay Collins: Who is your lending provider? Is it a high net worth individual that just believes in the space, or how does that work?
Dhruv Bansal: Yeah our lending capital providers right now are high net worth individuals and small institutions. Typically those that understand Bitcoin rather deeply got into it somewhat early have Bitcoin themselves but also have a lot of traditional cash. Because of that I think they recognize the enormity of the problem we’re solving, and how attractive a loan product can be for Bitcoin holders, and I think as we grow we’ll turn to actual capital markets to raise larger sums of lending capital to go out there and operate with, but so far this is where we have been.
Clay Collins: Are you open to sharing with us the amount that you have lent thus far?
Dhruv Bansal: Yeah sure I can absolutely say we got a few dozen customers and our loan book is now multi million dollar loan book, we have about 10 million dollars of lending capital remaining to lend out before we go out and raise more, and we’re actually doing that because we are originating loans at a pretty exciting pace right now.
Clay Collins: So if you look at the run rate here you’re going to need to raise more here soon, that’s awesome, congrats.
Dhruv Bansal: That’s a good problem to have though right, that’s what we keep telling ourselves. It’s kind of fun as a startup we do equity fundraising for obviously our own company. Since we don’t have a token or anything like that that’s how we pay for things, but then we also have to do fundraising for lending capital, and the investors that fund equity are very different from investors that fund loans.
They want totally different things they care about totally different things, so as an entrepreneur it becomes a whole other workload to bear, but it’s actually really interesting to talk to investors that are trying to access a rate of return, as compared to investors that are trying to access some crazy multiple at some point, very different attitudes. I sometimes think how ironic it is that we’re bringing crypto currency which is a very multiples oriented industry, into the world of traditional capital which is very give me a fixed dependable rate of return industry, but I think it kind of makes sense, because I think the two kind of need each other right now.
Clay Collins: Yeah crypto investors are interested in X’s, and traditional investors are interested in percentage points which is insane. Can you tell us a little bit about your operations, how many people are on your team, where do you spend most of your time?
Dhruv Bansal: Yeah sure our team is still really, really small. We are a lean company, and we like to focus as much as we can on taking the funds we’ve raised and plowing them into our products and our marketing, and not necessarily our own staff salaries. Unfortunately or fortunately our customer base is growing, the rate at which we’re having to write code and support our product, is growing so we are hiring now, we’re up to I think six people full-time, and we’ve got some interns and a few contractors, so the team is still small, less than 10 people. We’re headquartered in Austin but we spend a lot of time on the coast as you can imagine. That’s where a lot of fundraising comes from for both lending and equity capital as well, is where a lot of Bitcoin and crypto owners live, and so often in San Francisco and New York.
Clay Collins: When it comes to applying for loans there might be some folks listening to this that might want to take out a loan, are there less credit requirements because it’s a collateralized loan, if you have the Bitcoin and you seem like you’re pretty good on paper, is it very likely that you’ll get approved if you’re going to put the funds to pretty good use?
Dhruv Bansal: Right so we don’t actually perform a credit check. We are a loan originator, and therefore it means we’re essentially underwriting the loans that we offer, but our underwriting model if you want is very simplistic, and it really is essentially weighted by the collateral, and if you have sufficient collateral we’re likely to lend to you. We don’t necessarily need to know your credit score, or too much else about you, because we feel like the collateral is a pretty safe asset for us.
In some sense that’s the core idea we’re bringing to market, is the idea that Bitcoin is safe collateral, despite its faults and volatility everything else about it. With that said we want lent to anybody at all who shows up with Bitcoin, because obviously we don’t want to lend to terrorists or criminals, people who obtain their Bitcoin in illicit ways, we want to make sure that borrowers have some kind of income, or asset ownership outside of Bitcoin just so they can afford the interest payments, because our questions are how are you going to pay for this loan that you are about to take from us? We want to make sure those basic complications are present, and then there’s also just a kind of look and feel check, like Bitcoin is a shady industry let’s just say it out loud.
Clay Collins: Parts of it are.
Dhruv Bansal: Parts of it are, sure, because there are definitely people that are out there who would love to take a loan because it will help them clean dirty money that they’ve stolen or obtained in horrific ways. I’m not blind to the darker side of the crypto world, so there’s a certain sense in which we are the originators it’s on us. We are really asking ourselves does this make sense, this person acquired Bitcoin in this year, they do this for work, here they are on Facebook, here is what we know about them, here’s what the databases of the government gives us access to say about these people, everything looks copasetic I believe this story I can make this loan.
We definitely have rejected loans that clearly look like they’re coming from people who are in the black market who obtained Bitcoin in some way there are unwilling to describe, and are not really willing to give us details about themselves. No, we won’t lend to people like that. We are interested in growing our loan book, but there’s a safe way to lend and there’s an overly eager and desperate way to do it. We are more excited about being a long lasting successful company, and I think whatever scrutinies are on the crypto world today there’s going to be more. I want to be able to proudly say we followed every possible regulation and we went above and beyond in making sure that the customers we’re interacting with are legit people that bought Bitcoin or mined it or earned it in a real way, they are real participating members of the economy, and that’s why we are actually growing things.
I think the macro picture for us is look if these people are borrowing, they’re borrowing why? To build homes to buy stuff to fix things to make more stuff, and that helps the economy. If Bitcoin is this thing that sits on the side here being speculative, but is a bubble it’s going to collapse is going to explode one day, but if Bitcoin starts getting all these inroads and bridges into parts of the economy it’s helping to support, it’s interacting with, it’s helping to grow and economics is not a zero-sum game, things can grow together. If Bitcoin is well networked into the traditional economy, then I think it has even more staying power, and it’s an even more powerful asset class to be exposed to. That’s kind of our macro pictures, we want this to grow but we’re unwilling to sacrifice by working with shady people in the short term just to see that happen.
Clay Collins: Do you do any kind of analysis of where the funds have come, do you use a service like Chainanalysis to make sure it hasn’t floated through dark pools, or it’s not from a hack, or tied to silk road funds, do you do any kind of check to make sure it’s not dirty money, or hasn’t been dirty money in the past?
Dhruv Bansal: We do not do any kind of hard checks, we don’t do independent research to follow backwards your Bitcoin trail through the blockchain. We ask you, we ask you to self-report we know your name and address and a lot of other information about you that you’re also reporting. As I said it’s partly looking and checking in databases that real law enforcement is tasked with, maintaining and keeping current, and partly it is a look and feel.
If we feel that there is no way a person who describes this as their history has this much Bitcoin without something else happening, we’ll ask for more information. We’ll say we don’t believe this, how did you come to own this stuff? If we can’t get a good story out of it, we are unlikely to lend. People are very forthcoming, if you’ve got Bitcoin legitimately and you know you want to now use it to do all these great things, none of our customers have pushed back on that idea, no one has said well I’d love to tell you but it’s none of your business.
Presumably those customers who do feel that way, and it’s fine to feel that way, are just not coming to us. If you’re coming to us is because you do want to work with us and you know we are a real company and you’re expecting to be asked questions about your financial history and your personal identity, and are more than eager to make us feel good by telling us everything you can to de-risk the loan for us, but short-term we do not do any kind of chain analysis or any kind of official credit score analysis, or anything like that. In that sense our underwriting model is somewhat simple. Do you have the collateral? Can you tell us a good story about how you got the collateral? Do we believe you? Does the government say you check out in various ways that we need to run by them?
Clay Collins: Do you have any last words for our audience?
Dhruv Bansal: Maybe I’ll go with our motto. Friends don’t let friends sell Bitcoin. If you’re thinking of doing something special in your life, you want to make an investment you want to buy something you want to realize some gains, maybe think about borrowing. Could be a tool that you’ve used elsewhere in your life. Maybe you’re seeing it for the first time in this context. Reach out, learn, you will find one of us on the phone talking to you and telling you about our product. We want to hear from you if you’re not interested if you don’t like our service tell us why. We are building it for you, so the more we understand about what you want, the better it will be, so do reach out.
Clay Collins: Yeah it strikes me that if you opt to take a loan against your Bitcoin instead of selling it, it’s quite possible that you could find yourself in a situation where you actually never have to pay capital gains against your Bitcoin. If you take out a loan for a long enough term and if you’re getting a paycheck every month and can actually pay off not only the interest but the principle over a period of time, then you’ll never have to take this capital gains which is a potentially cool place to find yourself in. That said none of this should be taken as tax advice. I’m not a financial planner adviser. Thank you for all your insights thank you for sharing your business model with us, and appreciate having you on.
Dhruv Bansal: Thanks for the opportunity Clay this was really fun.