Decoding Digital Assets: Risk, Regulation, and the Future of Family Wealth with Jake Claver
Jake Claver
Contact: jake@digitalfamilyoffice.io
Jake Claver is a family office professional and a leading expert in digital assets. He has spent over a decade working with ambitious clients that are focused on growth and stability.
At the helm of Digital Ascension Group, Jake directs a cutting-edge multi-family office, offering tailored solutions to High Net Worth and Ultra High Net Worth individuals. With a forward-thinking approach, he also founded Digital Wealth Partners, a wealth advisory, and leads Syndicately’s Special Purpose Vehicle Investment management platform.
Jake’s unique expertise sets him apart from his peers. He is a Certified Qualified Family Office Professional and an R3 Corda Certified Business Professional in tokenization. As a pioneer in blockchain & Web3 technologies implementation, Jake has created world-class educational programs for family offices and digital asset professionals. With a foundation in Finance from North Texas University, Jake has developed a holistic understanding of effective business practices. His ability to build high-performing teams and mentor leaders has resulted in a track record of unparalleled success across diverse industries.
A trusted voice in the industry, Jake has been featured in prominent media outlets including MarketWatch, Bloomberg, and Yahoo! Finance. His global network and collaborative approach enable him to create long-term value for clients, offering tailored solutions and personalized guidance throughout their journey to success.
Kirby Rosplock
Welcome to the Tamarind Learning podcast. I'm your host, Dr. Kirby Rosplock. And today we're talking about decoding digital currency, risk regulation, and the future of wealth management. I'm very excited because we have a expert of the highest esteem, Jake Claver with us. Jake is really unusual because he got in early and he's been learning from the grassroots. I'm so thrilled to have Jake with us. So welcome, Jake.
Jake Claver
Thank you for having me, Kirby. It's great to be here.
Kirby Rosplock
Well, let me tell you a little bit about Jake, because Jake is so unusual. Jake is the CEO of Digital Ascension Group, and he's also the CEO of Syndicately. It's an innovative investment platform that's reshaping how families and institutions access digital markets. So we're not just talking crypto here. We're talking all about digital assets today, which I'm really excited about. And I'm really excited because Jake is also a certified, qualified family office professional who's pioneered blockchain and Web3 adoption for high net and ultra high net-worth clients. His multifamily office has more than 300 million in crypto portfolios under his watch, and he's not only fluent in technical terrain of digital assets, but also deeply committed to helping families and how they steward that wealth over generation. So today, we're really pulling back that curtain on the future of investing from speculation to strategy and from legacy to leadership. So welcome, Jake.
Jake Claver
Again, super excited to be here and jump into the conversation. I think this is going to be different for your viewers.
Kirby Rosplock
I agree. So I have to admit, I am not a digital asset native nor super senior experienced individual. And so for the beginner and layperson like myself, can you just start with some clarity and maybe pull back the curtain for the difference between Bitcoin, crypto, digital currencies, and that acronym, CBDCs, and how it's tossed around, and what's the difference, and why does it really matter?
Jake Claver
Yeah, so a great question. I think a lot of people maybe are a little bit scared and just don't know what these acronyms mean, or they've probably heard of Bitcoin, maybe Ethereum. We're starting to see some institutions dip their toe here with these ETFs and start to cusky some of these assets. But at their core, these are just protocols and networks. So a lot of people may remember early on, the Internet was segmented and siloed. If you participated and you were an early adopter, you might remember when AOL had email, and you could just email other people that had the AOL email. You weren't able to email people that had Yahoo or Hotmail or some of these other ones that came about until there was an Internet protocol or the email protocol. So these allow for interoperability between siloed ecosystem ecosystems, just like our payment infrastructure is today. And at its base layer, that's what this is. It's a giant accounting mechanism that allows multiple parties to participate in that ecosystem and trust that the other parties are doing what they say they're doing. It's transparent, it's immutable, which means you can't go back and change things after something has happened.
Jake Claver
You can see what's going on. A lot of these are public blockchains, so they are run by people that verify these transactions all over the world. Bitcoin is probably the most prevalent of those with the most liquidity in that asset. And it's basically for just moving value between counter parties in a risk free way. And then you have smart contracts. Ethereum came along. And so once you have that base ability to transfer value across a large distance, as an example, If you wanted to send money from the US to Australia, probably going to be a couple of days before it lands there, there's a time difference. You got the exchange between the currencies for that value to settle. And you've got multiple intermediaries that are going to make pieces or fees on that transaction. With these networks, it reduces those fees and the latency significantly between the counter parties that are transacting. And again, just makes it super simple. So at its core, that's what it was meant for. And then once you have that in place, you might want to add an escrow agent or some time lock constraints or constraints around a transaction between you and that counter party that have to be met before that payment is released.
Jake Claver
And that's really what smart contracts are. They allow for lending. And this is what Ethereum pioneered early on when they were launched back in 2013, 2014. And since then, we've had a proliferation of of 50 to 60,000 of these. And it's a public source protocol. You could launch your own version of Bitcoin today. You could copy it and then just put it out and see if people use it. And a lot of people did that early on with Litecoin and some other things. Doge is probably Elon Musk, if people are familiar with him. He's talked about Doge a lot. Very similar. They all have slightly different things that allow them to verify the transactions happen. But at its core, it's just accounting, streamlined accounting that allows for value to move freely.
Kirby Rosplock
So fascinating. I mean, it is really like the next frontier of our whole marketplace. And I mean, it is... It's exciting, but it is the Wild West, to me, at least. It feels very... It is. Yeah. And I'm so excited to talk to you today because you see it from so many different vantage points, and we'll get to that in a little bit. Tell us about the history of this and what it was originally designed to solve, because obviously, there was some reason why our current financial system wasn't living up to the need. There was an issue of needing a digital currency. What was the problem that wasn't working that we needed a digital currency to solve?
Jake Claver
Well, a few of those, and some of what I've mentioned. So after 2008, Bitcoin, the white paper was launched shortly after that. Satoshi's initial vision was a peer-to-peer payment system between counter parties, where it was transparent. You could see what was going on, and you could trust that the protocol, you didn't have to trust that other party. After 2008, banks don't trust each other. And so you need some intermediary that allows you to trust the other party that they're going to do what they say they're going to do or a transaction is going to clear. And so that's what this does at its core and what the initial The purpose was. We haven't seen it quite come to fruition yet, but I do think that's on the horizon here. Bitcoin has pivoted toward digital gold at this point, and that's because the latency and the cost increased on the network when it forked in 2014. The validators, the people that vote on the changes for that network, if they participate, didn't expand the block size. I know I'm throwing out a lot of terms here that people might not know, but at its core, i just made it clunky and a little bit slower than what it was meant for.
Jake Claver
And so because of that, it is a fixed supply, and people are familiar with fiat currencies, an M2 money supply at this point, the devaluation of our currency. If you had a way to have real money, this is why a lot of families own a portion of their portfolio in gold, because it's a 2% inflation rate per year. That's how much gold is mined. And so as a hedge against governments continuing to print money, you would want something that had a fixed supply that they could not manipulate or change. And if you've been utilizing Bitcoin over the last 15 years or investing in it, you've done really well against the US dollar. It's continued to be debased, and your living situation would have actually got cheaper and cheaper and cheaper if you had held your money in Bitcoin over that period of time. Just really getting back to what is real money and what holds value and how you can leverage this against a degrading fiat system. And a lot of people have figured that out and adopted this over that period and done really well.
Kirby Rosplock
So fascinating. Now, let's shift gears a little bit to how Bitcoin digital currencies are utilized inside of an investment portfolio. When you think about the role they play, where do digital assets belong in a well diversified portfolio? How do you frame them for risk-averse family offices. And again, today we're not giving investment advice. We're just giving education to those who are listening because, again, you have to talk to your investment advisor. You have to look at your own risk tolerance. You have to even think is digital the assets right for you because we're not saying they are. But you're dealing Jake with your clients every single day. And I'm just so curious, how are you helping them think about this?
Jake Claver
We work with a wide variety of people. Some that have made their wealth in digital assets because they invested early on. And then we work with other families that just have an allocation to digital assets, and they want professional services that are curated for that. And the normal professionals that they work just don't have the expertise. And so that's the niche that we've fallen into. So it depends on who I'm talking to, if it's a matriarch or patriarch that is a bit more risk averse and a little bit leery of this asset class, and rightly so. There have been a lot of scams and problems and corruption and loss, 2021 with FTX and Voyager and Celsius. But you also have the banks on the other side of that. We just had pretty significant losses last year for regional banks, Silvergate and Silicon Valley and those. So where do you hold your money? And what is your thesis for your family on how you're going to hedge against inflation? Are you going to continue to invest to make sure that you're outpacing that with the returns in your portfolio? Most of the time, again, a lot of people are...
Jake Claver
They understand this asset class, and they're probably more involved than maybe even they should be. But again, I'm not here to give any financial advice. People make their own decisions. But when talking to a family and looking at their total portfolio, we've seen somewhere between half a % and five % if somebody's just making an allocation. And the reason for that is these are asymmetric bets, and they're a hedge against the banking system. So if that's how you're looking at it, even if you put in, let's say, 1 % of your portfolio into digital assets, and it was diversified across some of the winners that you thought might do well based on their established presence or some of the innovations or use cases that they may end up taking here in the short term in the near future, then you may see a lot of people think Bitcoin is going to a million dollars over the next few years. We'll see if that transpires or not, but that's a 10X. If you put 1% of your portfolio there and it did 10X over the next couple of years, you're 10% richer. Than you were just a few years before.
Jake Claver
There's not a whole lot of places you can just park your money and see those types of returns. Now, if you get into some more innovative things, a lot of the stuff that we're allocated to that we think we're going to see utility of these networks, then you could see somewhere between 20, 50, 100, 1,000 X return on a very small investment, very similar to venture capital. And So again, speculating, but high risk, high reward here. And so with that, that's why we see the smaller allocation, because the upside is so significant. But if you pick wrong for whatever reason, it doesn't cause a huge problem with your overall networth or the rest of your portfolio.
Kirby Rosplock
Makes sense. So we're not talking about people aren't going in, typically. And again, we're not giving advice, but it's not like you're looking at betting buying the farm here or going long. But these are very strategic and very specific and very targeted. So this is a very different investment thesis basis, per se, in the overall structuring of your portfolio. So this is really interesting. It's a very different way of thinking. Now, let's talk a little bit about custody. I think that's been a huge concern in the past, but how have How do you see how solutions like cold wallets and Multisig evolved to meet institutional standards? Can you talk a little bit about that?
Jake Claver
They really haven't, unfortunately, but institutions are starting to dip their toe in the ring here. So you've got Fidelity. They're willing to custody your Bitcoin. You can see it there with your manager at Fidelity. It shows up on your balance sheet. We just had the housing committee state that if you're holding crypto on an exchange, they will show that on your balance sheet moving forward. I think that's a big step forward for your ability to leverage these assets, very similar to how you would your stock portfolio or some of the other investments that you've made. And so what we do is we work with Anchorage. They are a federally chartered bank. They're the only federally chartered bank here in the US that provides custody for digital assets. We have FBO accounts for our clients. So these are segregated bankruptcy remote insured accounts that are held there in institutional custody with much greater security than you would have just with Multisig or a cold wallet. They do have Multisig, which provides some additional benefits that we can talk about a little bit later for taxes. But that's where I see the industry going. For most high net-worth individuals and family offices, it's likely that they would partner with an institution to hold their assets there.
Jake Claver
B&Y Mellon, they've built out an infrastructure using fireblocks as their back-end to be able to custody digital assets. I don't know when they're going to roll that out to retail or their high net-worth clients. But I do think once we see regulations become a bit more solid, especially here in the US, over the next 12 to 18 months. We will see a lot of these institutions throw their hat in the ring and start providing services very similar to what we do today. We're just front running the market a little bit.
Kirby Rosplock
Understood. That's so cool. So let's talk a little bit about tax, because I think there's a lot of questions there around tax strategy. What's one move you've seen that saved clients real dollars, whether it's jurisdictional, structural, or charitable?
Jake Claver
One that's super simple that we've seen people take advantage of... Well, I'll give you two. In the past, and actually this isn't available any longer because they actually regulated it at the end of last year, but people were using HIFO or FIFO for their accounting instead of LIFO. So So if you went back and looked at your highest purchase, that would be what you would sell first, so that you would have the least amount of tax implications. The other piece that hasn't been formalized that people have taken advantage of is, you cannot do this for stocks, but you can for crypto, which is the wash rule. So if you had unrealized losses at the end of the year, you could sell out of those positions and then reallocate if you wanted to or buy right back. You don't have to wait the 30 days like you normally with stocks. And so you're able to lock in those capital losses against capital gains to be able to offset some of the tax if you did have capital gains early in the year. And these are taxed as capital assets, so short term, long term capital gains, maybe your regular income, if you've held less than a year for trading these assets, if you're holding them longer than that, it's going to be 15, 20 % for long term capital gains.
Jake Claver
We work with people to structure this inside of their trusts or their corporations. And so then you're able to use that income that you've created off these assets or the capital gains in ways to be able to mitigate taxes on the other side of that. So people think that this is just the Wild West and there are no rules. There are some rules, and you can leverage those. I'm hopeful that Trump is going to do what he said, or his family has said, and remove capital gains on specific assets that are US-based. I don't know if Bitcoin is going to fall in that bucket or not. There's a lot of speculation on that. You even have a few states, including Missouri and Texas, and Florida, that have advocated that there should be no federal income tax or capital gains on these assets. We'll see if they adopt that or not. It's still up in the air to your point, but we work with people to navigate that space. We have multiple CPAs that we work with that are crypto tax certified and stay up on all of these rules all the time and even help write them.
Jake Claver
Wow. Yeah, there's just a couple of little tidbits there to be able to help people. And I'll mention the Multisig also. So we're working on a way right now to verify this with the IRS, but It's my opinion that if you had a Multisig wallet or a time lock on your rewards that you receive from staking, that those should not be taxes, taxable income until you remove it from that wallet. These taxes would be deferred, and The reason for that is currently the way that the rules are written by the IRS is that you need to have domain and control of those assets at the time that you receive them in order for them to be taxable or for that to be a taxable event. If you're working with us and it's inside institutional custody, and there's a multisig on the wallet, you don't really have dominion or full control of that wallet. And so we're advocating in the position that the taxes would be deferred on that income. We don't have a final ruling on that yet. But again, to your point, a little bit of a Wild West, but there are rules here and things that you can take advantage of.
Kirby Rosplock
Well, it's fluid. And so depending on when you're listening to this podcast, definitely check.
Jake Claver
That can be completely different a year from now.
Kirby Rosplock
Yeah, definitely check with your advisor to see what's current at the very moment, because, again, the space is moving so fast, and I'm sure there's going to be updates regularly. Luckily, you really got your finger on the pulse. Let's talk a little bit about this Puerto Rico Act 60. It's frequently cited for crypto investors. Is the hype real? Can you tell us what this is? Are there other favorable structures family should know about? Tell us more.
Jake Claver
Puerto Rico is an interesting jurisdiction. We've seen a lot of crypto investors flock there that have done really well. The reason for that is it's just a flat tax of 4% if you live there, and there's no capital gains on your digital assets. But it comes with some qualifications. You do need to reside there for at least six months and a day. That needs to be proof-able if you're audited. You forego your voting rights here in the US because it's a US territory. You can still be a US citizen and live there. You're just not going to be able to vote. And some of those things matter to some people, and some things don't. The infrastructure there in Puerto Rico is not fantastic because they don't charge a whole lot of taxes to be able to support that. So you do need to be pretty affluent in order to purchase property and generators and all of the things that would be required if there's a storm that comes through and knocks all that stuff out, which frequently happens. So be give and take, right? Just like many other jurisdictions, it's not always sunshine the rainbows, but there are effective ways to mitigate taxes that we work with here.
Jake Claver
If you just stay onshore, there's a lot of solutions. Insurance is another very interesting way to be able to structure things that we've started to work with. We work with a group called Meanwhile. So if you do have some Bitcoin that you want to get into a whole life policy and you got a low basis on that, then moving it into the policy There's qualifications around insurance like there always is so that it doesn't become a modified endowment contract or your ability to leverage it. You want to maintain that. So it's going to be a couple of years before you have the opportunity to borrow against it. But if you borrow that Bitcoin back out of that policy, your basis is now whatever you borrowed it at. And so if you were liquidated at that point, it's not taxable because it's a loan and you get cash that you can deploy however you want to. It's not owed back because you have that policy that will cover it upon your death. So a lot of innovative solutions have come to pass here in the last few years, and we're continuing to build ours out right now with private placement life insurance and some other products that we're bringing to market.
Jake Claver
But a lot of restrictions that we see people set things up in as well outside of the United States just because the regulation here hasn't been super favorable during the last administration. So we've seen a lot of people move to Singapore or Dubai as locations where they have much more favorable taxes when it comes to digital assets.
Kirby Rosplock
Well, that's actually a great segue for my next question, because I heard through the great find that you sit on this digital chamber, which is a working group to drafting policy. Is that correct? So what core regulatory shifts should families be watching for? If I understand that you might be understanding the regulatory side of what's coming down the pike for the digital currency world.
Jake Claver
We have a pretty vested interest in the success of this asset class, and we also want to be at the table when this is being drafted. Otherwise, we just get stuck with whatever the lawyers and the people in DC say. So we ponied up the money and are participating in that working group, helped write and draft the letter to the SEC on how RIAs should be regulated if they're managing digital assets, which pretty proud of that. They took all of our suggestions. And as far as I'm aware, we're really the the only SEC-registered RIA working with people that have less than 50 to 100 million in these digital assets. There is one other family office, The Spoke. If you've got a larger amount of Bitcoin, they do cater their services to those individuals. However, I think they are full. I think they have the 15 clients that they wanted to work with. So we're continuing to add clients if people are interested, but Yeah, it's a working group and just drafting policy, trying to stay on the forefront of that, make sure that investors' interests are upheld when working with this asset class and that the regulations aren't too constricting when it comes to the adoption of this asset class, and then also our ability to work with clients and people to leverage these assets and get the full benefit of them.
Kirby Rosplock
And how do you future proof governance? I mean, especially when adding digital assets into an investment committee. I know we're shifting gears here again, but when we're thinking about a family office framework, how do we start to think about the process process of where a digital asset might fit in the discussion around investments? Because I could imagine investment committee not even knowing how to relate a discussion on digital assets into that whole wider guidance.
Jake Claver
Well, you'd probably have to go to the board if you're going to make an allocation here. Most families have a defined thesis on where they're going to make investments with the committee. And if they chose to go a different route than what was stipulated, then you're probably going to have to have a discussion with the board and say why you're doing this. So there's two sides of the coin here. One is the investment itself, these digital assets, these tokens that move value within these protocols. Then you've also got the technology itself that could be leveraged for governance. You have decentralized autonomous organizations that have been created. The first legislation for that was out of Wyoming. There's been some issues with that, like who do you hold accountable for a decentralized organization? But the beautiful part about these is you can actually code the governance in. And you can stipulate how many board members need to vote in order to make changes within that ecosystem. There's a lot of things that family offices could leverage with the technology in the future. And that's something that we're looking at is building in governance frameworks with this technology over time to support the families that we work with.
Jake Claver
But back to the original question, it would have to be a shared interest between the board and the financial committee. There'd have to be a vote that would go along with that. And then you probably would want to limit exposure again to whatever the risk tolerance was for the family and make sure that it aligned with the long term values and principles that they had put together.
Kirby Rosplock
That's great. That's really helpful. So just a little bit around when we're thinking about families and the challenges when we're thinking about legacy, family, generational planning, private keys don't show up in a traditional way, right? So what best practices do you recommend for multi-generational inheritance of digital assets?
Jake Claver
Definitely institutional custody.
Kirby Rosplock
Okay.
Jake Claver
So in the past, the way that this was done, let's say you had an asset protection trust in Nevada or Wyoming or South Dakota, or maybe even it's offshore in the Cook Islands. You would write down your keys for your wallet, and you would cut them in half or three ways, depending on how many parties need to initiate on a transaction for it to happen. And You would just give them that portion of the keys and delete the wallet, like a paper wallet.
Kirby Rosplock
Yeah.
Jake Claver
Not great, especially for your visibility of the assets. And God forbid, somebody loses a portion of those keys, what do They do. They're lost. So institutional custody provides a way that you can add a multi-sig. The assets are held by an institutional custodian, again, insured, segregated, bankruptcy remote. The one thing that I think, well, there's a lot of things that traditional finance got right. The one thing that is glaringly obvious when it comes to digital assets is the separation of custody versus trading. We've seen, again, alluding back to FTX and everything that happened there and some of the other exposures that have taken place. When assets are commingled or rehypothecated or you're not sure who owns them or how you're going to get them back if a bankruptcy happens, not great, especially for long long term legacy planning. So you want to make sure you're working with somebody that has all of those factors. Again, maybe a little background is helpful for people. I made a lot of money in crypto in '20 and '21. And at the time, I'd gone to school for finance, was working in May, and I started seeking out these professionals for my personal portfolio.
Jake Claver
And I could not find a wealth manager that would do it the way that I wanted get it done. Again, that archaic system of like, we'll just cut the keys in half, and I'll keep a half, and you keep a half. And I was like, I don't really feel comfortable with this. And so, sought out institutional custodians for myself. We originally partnered with Standard Custody, which was acquired by Ripple last year. And since then, it migrated our solution and clients over to Anchorage, which is where BlackRock currently holds their digital assets for their ETFs. So if that tells you anything about the security that they provide, it's pretty robust. And that's why we're partnering with them. But again, I think a lot of these institutional custodians may end up buying these exchanges or integrating Ripple Custody or Fireblocks or Copper is another infrastructure provider. And as long as they have the licenses to operate, and that's another piece that's still up in the air is, does a regular broker-dealer allow you to transact tokenized securities? Are these assets tokenized securities? What are they? The full designation for these assets, aside from Bitcoin, is really an XRP.
Jake Claver
XRP, we know, is not a security. It was regulated a currency by FinCEN back in 2014. But really, Besides those two, there's not really clear guidelines on what these things are. And so until we get that, I think institutions are still going to be a bit hesitant to custody them. But that would be my recommendation is look for an institutional custodian that has three legs to the stool. There's a custodian that's holding those assets. You have somebody else that's counterparty that oversees them, whether that's your trustee or an RIA. And then you have your piece where you would sign as well. And God forbid, something happens to you, you have your spouse or beneficiaries that those assets flow to.
Kirby Rosplock
Such great insight. I mean, this is definitely a more nuanced type of asset that we can't just throw it in trust and forget about it and then wake up one day and be like, Here you go, beneficiary. Have fun.
Jake Claver
Well, maybe it's on a thumb drive in your desk. You're just going to have to be very specific about maintaining those keys. I see a lot of people, if you are going to do it that way and you do want to hold it in a Corporation without a trustee or counterparty, a multi-sig wallet could be an effective tool for that. But in addition, I see a lot of people get metal plates that they will stamp their keys on, and they will have those in multiple locations. So if a house burns down or you lost a box at the bank or something else happens, you have redundancy in place to make sure that those assets aren't lost.
Kirby Rosplock
That's really great advice. I mean, great thinking to be safe and have a contingency plan. Sort of along the lines of multi-generational wealth, how do you bridge generational divides? And I'm thinking about, how do you help a skeptical matriarch or patriarch and say a millennial or Gen-Z digital native, air, find common ground where maybe the rising-gen says, I am a digital asset native, and I really am gung ho and want to go in this direction. And I have elder Gen who are like, Absolutely not. I just don't think this is the way we're going to be investing investing, how do you help family as where there's maybe two different perspectives?
Jake Claver
Two pieces. Education. Most families are going to continue to invest in the area where they made their money because that's where their competency is. And that makes the most sense. It's where you have an edge or an advantage over other people participating. Investments tend to be zero sum games. So if you have a core expertise that allows you to discern which opportunities in a specific are better and are going to have a larger return or are safer, then that's where you're going to continue to place capital. When having conversations between multiple generations, what I've seen happen most often is that the older generation will allow the younger generation to take a small portion of their portfolio for the family and manage that. And if it's successful, they'll continue to allocate. So from prove that this is going to be the thing that is going to be successful. We're hesitant. We're willing to give you a million dollars, $2 million to take this over here. And it's still inside the trust and whatever other structures we have put in place to mitigate risk of loss and exposure. But you can manage that. And if it's fruitful, then maybe we'll make a larger allocation in the future.
Jake Claver
And that way, the younger generation is involved. They're excited. They got a piece. They're able to start working on their competencies and investing the family's money. But it's not such a large exposure that it's going to cause the rest of what has been built by the matriarch or patriarch or Gen 2 or whoever the older generation is to be lost because of some mismanagement of capital by the younger generation.
Kirby Rosplock
Yeah, that's great advice. And when you think about that rising-Gen or just families in general, education is obviously a huge part of what's happening broadly. And obviously, it's a passion of Tamarind Learnings. What are you seeing as maybe three pillars that 101, you have to start educating your clients, your prospects, just the industry? And I obviously know you're all over social media. You are like the guru. You have so many followers out there. But what are you thinking about as the most important things to educate consumers out there about blockchain, about digital assets, crypto? What are you sharing?
Jake Claver
Again, it's just core understanding of what this asset class is, like we talked about at the beginning. Most people don't even understand what it's meant to be used for, why it exists. Most people see it as meme coins or gambling. It's complete speculation. And they would not be wrong at the current time either. It's still a very nascent asset class, close to three trillion in total value. Gold is 12 trillion, right? So about a gold is the current total market cap for all of digital assets. It's a net in comparison to the larger equity market or some of these other asset classes. What I would hope people would discern or understand is that, again, these are protocols. If they are adopted at scale, this asset class will actually end up swallowing all of the others. All All of these assets will be moved on-chain, and that value would then move over these networks. And whichever networks end up garnering the lion's share of that, the token would have to be able to provide liquidity in those markets and for those transactions between counter parties. And that is where the alpha is. If you can figure out which three to five of these networks are going to be used at scale globally to transact, that's where the upside is.
Jake Claver
There'll be nuances. There'll be specific use cases where certain things get some adoption. I mean, look at Google. Google has 80% of all the search engine market. There's still 20% of that that's fought over by other competitors in the space, whether it be DuckDuckGo or I don't think AskJeeves is around anymore. But there's braveBrowser and a few others that garner a small market share there. And that's how I look at these networks as well. There There will be absolute winners that take the majority of certain markets. And then there may be a nascent piece of that that's interoperable in some way, but they fight over the last 20 % there. That's what I'm hopeful people. Maybe if you only took one thing from this, you understand that this asset class will literally eat the rest of all of the other asset classes, and all of that, that market cap will eventually move inside side of this one, which is wild to think about. But that's what I think people miss most often, why they may not understand what it's meant for or view it as just speculative.
Kirby Rosplock
Interesting. And then really, I feel like one of your interesting things that differentiates where you said is that you're really diligencing all the nuances of all these different permutations of the digital assets. So that's almost like a whole different way of... We think of stock pickers, we think of picking fund managers, but now you're really looking at and picking NFTs and digital currency.
Jake Claver
Whatever you're picking.
Kirby Rosplock
I'm just saying all the different types of digital currencies you're exploring and looking at those different opportunities.
Jake Claver
You You mentioned USDC early on. I don't think I went over that. No, you didn't. So maybe circle back to that for a second. So that's a Stablecoin. And we do have Stablecoin regulation in the house right now through the genius act that will hopefully be passed soon. You've seen PayPal launch a Stablecoin. Bank of America said that they'll launch a Stablecoin as soon as that regulation passes. I think other large enterprises may do the same thing. If you've got a Google wallet on your phone, you've got an Apple wallet on your phone, these social media platforms have been buying up or getting certified in different states as payment processors or transmitters. And so I think that there'll be ways to move value inside those ecosystems also. But they will be backed by US dollars or some other sovereign currency where they buy the bonds or the treasuries associated with that, they get the returns. Whatever institution is issuing that Stablecoin, that's the way the bill currently sits, is that it's not passed on to the retail individuals that are leveraging that as cash or digital cash. So there's a high incentive for them to purchase a bunch of treasuries and issue these Stablecoins.
Jake Claver
Tether, which is currently the largest by market cap Stablecoin, is the most profitable company per capita in the world. They only have about 100 employees, and I think they grossed somewhere around $13 billion in Q1 this year. They currently have somewhere around $180 billion market cap. And again, they're backing that with the majority of it being treasuries. There's some other issues with Tether that we won't talk about here, but they are currently very profitable. And because of that, you're seeing institutions take notice. And I think once we get the Stablecoin bill launched, USDC and ROUSD, which is Ripple Stablecoin, along with many others, will be used a lot more prevalently and accepted by our merchants in a lot of applications.
Kirby Rosplock
Super interesting. Well, I know I've learned so much today, and I think we've just hit the time for our lightning round, which is one of my favorite times of the podcast, where, Jake, I'm going to ask you just a couple of short questions. Just give me whatever comes to mind, and I'm going to hit you up. Here we go. Cold Wallet or Multisig, what's your first line of defense?
Jake Claver
If you're managing less than $100,000, a cold wallet is probably fine. Decent is what most of our clients use. It's got a biometric. It has the largest variety of assets that can be held on that. It has a nice interface and it has a little bit more security. You can add a 25th word as a part of your seed phrase. But ideally, if it's more than that, you're looking at some multi-sig solution to make sure that you're mitigating risk of loss and that there's at least some way to keep somebody from hacking you or fishing you, somebody giving out the keys and them stealing all of your assets, which is still, unfortunately, very prevalent.
Kirby Rosplock
Good to know. All right. Second question. Most underrated jurisdiction for digital asset innovation?
Jake Claver
Innovation? I'm going to go a different direction than most people would think here. I'm I'm going to say US. In the past, I would have said Dubai or Singapore. But with the current regulatory environment, I think you're going to see a lot of innovation come back here on shore. And I think that they're going to provide a lot of incentive for people to do that as well.
Kirby Rosplock
Fantastic. All right. Three, biggest regulatory wild card in the next twelve months.
Jake Claver
The Clarity Act is currently still being looked at and reviewed. I think that they may kick the can on that into '26. And it basically stipulates what is a tokenized security? How's that governed? How's it regulated? An ICO, if you issue a token, what's the right way to do that. There's still a lot of things up in the air with that. And so I think established networks are going to have a pretty significant advantage for a little while longer and maybe become entrenched in certain areas until we get the regulation around things. And again, some of the ones I mentioned are really the only things that have clarity here in the US and have a moat at this point. So that's what I think. The Clarity Act is probably what I have my eye on over the next 12 months here.
Kirby Rosplock
Okay. Quantum computing, is it an existential threat or an exciting catalyst?
Jake Claver
Both. There's a lot that goes into that, right? And especially for protection. And some of these protocols only have a certain amount of encryption. So I'm going to go a little high level for a second, but people may know that Bitcoin is a 256 bit encryption. There are supercomputers that could hack that today. With a quantum computer, I think it's likely that if we had a quantum computer mine the rest of the Bitcoin, it could do it in about a week. Whereas as the protocol sits today, it would take until, I think it's 2142, something like that, until the last piece of a Bitcoin is mined by the underlying network if it persisted as it exists. But again, it's a finite amount of collateral. And so if that Bitcoin ends up getting wrapped on other networks, then I think it still will have some pretty significant value and may actually end up being better used as a digital cash if you didn't have to use the underlying network. We've seen other derivatives like Lightning Network and a few other things that people have tried to use to realize Bitcoin's initial vision. But the other piece of that is, again, all of this is a giant accounting mechanism and data aggregation.
Jake Claver
And with the advent of AI and quantum computing, I think that you're going to see the implementation of this technology and these protocols in a lot of different areas across the economy. It's going to create some really significant disruption when quantum computing comes about and is at scale. And if you're on the right side of that and you're leveraging it, I think that there's a lot of opportunity there as well.
Kirby Rosplock
Fantastic. All right, my last question. One book, podcast resource that every new digital asset crypto investor should check out.
Jake Claver
This is going to be self-serving.
Kirby Rosplock
Yeah, do it.
Jake Claver
But I would say mine, like you mentioned, we do have a pretty significant social media following. I'm Jake Claver on YouTube and most other social media forums. That is my moniker. I am beyond broke on Twitter. But outside of that, it's just Jake Claver across everything else. So I don't always have all the answers. I'm learning just like everybody else is, but I have conversations with the people that are actually leveraging this technology and building it. And I think I bring a pretty unique perspective to this that other people don't have because of the companies that we're building and working with and the areas that we're working in. And so, again, it sounds a little self-serving, but I think we have the best education of anybody else out there.
Kirby Rosplock
Yeah, well, I can attest to it because I've been watching several of your podcasts and several of your shorts and watching you and following you. And you have an amazing following, and it's super fun, very entertaining, and I'm blown away about the intellectual and intelligent following. And it's really fascinating. I can't believe the listeners and viewers that you have, they are sharp. You get some really good questions.
Jake Claver
That's really good questions.
Kirby Rosplock
Yeah, really, really good questions.
Jake Claver
I really enjoy it. People stay pretty engaged and on top of it. And again, to your point, if you're first getting in, it's going to be like drinking from a fire hose. There's a lot of vernacular and acronyms that you might not be up on. But if you do get the bug, and I would say you have to have that passion for it just like anything else, then it is fun and it can be consuming, but well worth it if you take the time to figure it out.
Kirby Rosplock
Well, Jake, thank you so much for this electrifying deep dive into the digital asset compliance in the future of the family wealth space. I mean, you've brought this all together with such clarity and candor. And I'm so appreciative because honestly, it's hard to believe how you've wrapped it all in with the family office universe and now bringing this to the multifamily office space. So I'm so grateful that you've been here on the Tamarind learning podcast, bringing your intelligence, your illumination, and all your insights. So if you've enjoyed this, what you've heard, please like, please subscribe, please find us, Apple Spotify, Amazon, YouTube. And also please go find Jake Claver because he's amazing. He's out there on Mondays and Wednesdays, like AMAs and his mastermind community. And again, thank you so much for listening, and we'll see you next time. Thanks again, Jake.
Jake Claver
Yes, ma'am. Thank you for having me.
