083 - Mexico's Bitcoin Frontier: Jose Flores on Arcadia's Bold Treasury Evolution

In this episode, Lynne Bairstow and Israel Muñoz interview Jose Flores, CEO of Arcadia B, discussing his journey into Bitcoin, the challenges of operating in Mexico's crypto landscape, and the evolution of Arcadia from a Bitcoin-only company to a Bitcoin treasury company.

They explore the importance of education, the regulatory environment, and the potential for Bitcoin to transform financial services in Mexico. Jose shares insights on the future of Bitcoin, the significance of public listings, and the role of Bitcoin treasuries for companies.

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⚡  Get personalized onboarding at River for Bitcoin-only financial services: https://partner.river.com/buildwithbitcoin
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Chapters
00:00 Intro
03:55 Jose's Journey into Bitcoin and Challenges Faced
08:24 The Landscape of Bitcoin in Mexico
13:04 Target Audience and Market Adaptation
18:05 Evolution of Financial Services and Lending
24:30 Transition to Bitcoin Treasury Company
30:53 Public Listing Strategy and Market Dynamics
35:55 Regulatory Landscape and Opportunities
42:12 El Salvador's Influence and Future Outlook
50:15 The Importance of Bitcoin Treasuries for Companies
55:25 Future of Bitcoin and Market Predictions

References
https://arcadiab.com/
https://x.com/Arcadiabtc
https://www.youtube.com/ @arcadiabtc 

https://www.buildwithbitcoin.xyz/
https://x.com/BuildwBitcoin

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❗ DISCLAIMER: This show is for entertainment purposes only. Before making any decisions consult a professional.

Transcript

Jose: 0:00

And then as the time went by, we started with the Bitcoin loan book, and that really completely changed everything, because the majority of our clients were people that have been holding for Bitcoin for four or five years already. So we did the work of orange spilling them, and they've been holding Bitcoin for five years. So all of them were ready to use our lending book, right? So it was very natural process to start growing that business, and that's when we kind of, like really took off, because the exchange business is very competitive. You know, you're earning basis points and every time it's compressing and compressing and compressing. So our thesis is really that the business is really around financial services, around Bitcoin, not so much of just buying or selling, right?

Unknown: 0:43

This isn't for everyone. It's for the ones who know the old system is broken and are ready to build something that lasts. Welcome to the build with Bitcoin podcast. You

Israel: 1:04

today, we're thrilled to chat with Jose Flores, CEO of Arcadia B, about his wild ride into Bitcoin, from bootstrapping his startup in Mexico's tricky crypto scene to evolving it into a full on operating and Treasury company. We'll unpack the educational and regulatory hurdles and how Bitcoin could supercharge Mexico's financial future. As a reminder, this podcast is for educational purposes only. If you enjoy the content we're producing, please remember to share and leave us a comment. Thank you. Welcome to build with Bitcoin. I'm co host irrele Munoz, joined with co host Lynne Bairstow today we have the pleasure of welcoming onto the podcast Jose Flores, CEO and founder of Arcadia B, formerly capital X, which is Mexico's longest standing Bitcoin only company, and now making a shift into the public markets through a listing in the Mexican Stock Exchange Jose. We have a lot to get through today. We'll have a very interesting conversation, I'm sure, on Bitcoin, the asset for private and public companies, and a lot more to get into. But first of all, welcome. It's a big pleasure to have you on representing Mexico, and hopefully we can get into the landscape of Mexico and LATAM as well. But happy to have you on. How are you? Jose, hi

Jose: 2:21

guys, thank you for having me. Lynne Israel, it's a pleasure to be here on your program. Thank you also for everything you're doing, educating people out there. So couldn't be happier to

Lynne Bairstow: 2:30

be here. No, we're really excited. And of course, we've known each other. Me being based in Mexico and Israel, being Mexico, we do have a partial partiality. And I've been in in the, you know, in Mexico, and it's just been really difficult to have a Bitcoin only focus in the country, because it does tend to have a lot of kind of broader crypto leanings in terms of people understanding what digital assets are. And so you started capital X, which is now known as Arcadia B, but in 2017 how was that starting a Bitcoin only company and and tell us a little bit about your journey into Bitcoin. What made you so clear on focusing solely on Bitcoin and why you feel that's important and how challenging was it?

Jose: 3:17

I mean, you can imagine how challenging it was, not only under the regulatory side, but also, you know, family, friends, everyone, overall, thought I was crazy. And the reason I had so much clarity, I went to undergrad in the United States right at 2008 nine, you know, right after the financial crisis. So, of course, you know, I wanted to understand what happened. So I went to economics and, you know, I think it was on year three, you know, once we start getting into, like, the nitty gritties. And I understood how the Fed worked. I was, you know, blown away. I never understood how things really worked. I thought we were still, you know, backing money with gold and all of that, you know, old story. But when I realized how everything really worked, I just couldn't believe it, and I got kind of depressed, you know, being like, I mean, this is such an unfair system. Like, why do I even bother going to school and, you know, all this effort and whatever so and I there was nothing I could really do. So I just continued with life, and I finished school, came back to Mexico, worked for the government, for not for the government, but like contracting for government for a while. And, you know, I got an experience into that, and saw all the corruption and, you know, all the waste and mismanagement, I just was, you know, for some reason life took me through that route, and I was just tired of the system. I went to New York to do a master's, and while I was there, you know, I already heard about Bitcoin, but, you know, just as funny money you used to buy things on the dark web, like I really didn't understand. Understand, like the the impact and the technology behind it, until I was in my doing my master's, and in there, you know, I was taking a math class, and for some reason it was mentioned there. And I was like, what is bitcoin doing here? And then I started digging deeper. And I was very fortunate to meet my current partner, co founder. He's, like, very deep into, like, he's an engineer. I'm not so I couldn't really get into the code and all that. And he started explaining to me, and, you know, when I I kind of saw the solution that I was looking for, you know, since my undergrad, and I was like, Oh, my God. Like, this is really, really big. So, you know, I was working in construction, doing a master's in construction, and I just dropped everything. I completely, I was finishing, like, I finished my master's for project management on construction, and I just was like, I don't care, I'm going to drop everything, and I want to work on Bitcoin, like, full time. And at the time, Yuri, which is my partner, he was doing trading, like, high frequency trading, doing arbitrage. But he was like, you know, we do good balance. Because he was like, all, you know, very unprofessional, if you would say, using personal accounts and using like, not, you know, like, very not well managed. So I was like, Okay, you do the coding. I'll do everything else. And we found the company around that time, which was, like, 2016 and then, you know, we had the big bull run, and we did really well that year. But then the spreads were gone and we were okay. Now we're sitting a ton of money, and what are we going to do now? Like, there's no like what we were doing was done. So from that point on, we were like, Okay, now, you know, we got lucky, if you want to call that way, we're sitting and we know the cycles in four years, we're like, Okay, let's start building something from there. You know, things started gradually, you know, we started doing the exchange, and then it just grew from there. But yeah, I guess I was looking for Bitcoin before it was even invented. It's like, or around that time, at the same time, when I saw how the system really worked, it just, I really got depressed, like it was hard for me to see people, you know, competing and going to school and working long hours. And if you understand the system, is like, I mean, there's no point. I mean, it's very hard to break out of that system without having assets,

Israel: 7:35

right? Yeah, well, I mean, you hit on a point that's super important, which is first seeing how the actual monetary system in the Fiat world functions and and if you understand that, then you realize, of course, that there's a big problem in Mexico. I mean, I want to get your thoughts and also maybe set the stage, as far as you know, Mexico. And why? Maybe you know a little bit different than other more developed countries with more stable currencies, but Mexico, Jose, I mean, there's a long story of various crises with, you know, inflation, all because of mismanaged debts, fiscal deficits, devalued currencies. So I actually my personal story I came from, from Mexico City to the US out of the 9495 peso crisis, I think, as a country and as a population, Mexico should see very clearly that when you leave money managed and printed by the government there, it doesn't lead to good outcomes. Right? What? What do you see in Mexico that makes you optimistic?

Jose: 8:44

I mean, I just think Mexicans, we're very resourceful. You know, it's like, we adapt on the spot. We're just like that. We've endured so many hardships that there's even a story where, you know, these German guys, they needed to find a solution for a line of production. And sometimes there were boxes that were coming out empty. And, you know, people, engineers, you know, they came up with this, like, a million dollar solution. And sometimes would work, sometimes they it wouldn't work. And there's just a Mexican guy in the line. He's like, dude, he just turns a fan to a line of production, and the box that was empty will just blow away. So we Mexicans have that kind of, you know, Spark, where we're very creative. We adapt on the spot. I think it's just a matter of people having the right information. And I think that's what has been lacking in Mexico, where, you know, the narrative has always been crypto, you know, trading. Give me your money, and I'll trade it for you, and I'll give you, you know, like 20% per month, you know, those kind of crazy stories and people just, I think sometimes also when people are desperate, they take very desperate or bad mistakes, but then they learn, right? So I think we already went to. That process last halving, where Mexicans got all into crypto, and they lost big time, and they got scammed, and they got like, everything. And now this, this cycle, I've seen a lot more Bitcoin Maxis, or they didn't. They don't even know what Bitcoin Maxis is. They just, they're like, I only invest in Bitcoin. I know what self custody is. I will never do it any other way. And it's because they learn, right? And these, you know, this cycle, I've seen a lot more of that, where people now are understanding that Bitcoin is different, and the narrative of Bitcoin only is gaining traction. And we see a lot of more, you know, corporate family offices looking into only Bitcoin, not crypto.

Israel: 10:44

Lynne and I are partners at bays layer advisors, where we use our network of Venture Capital Partners and startup founders to connect investors with unique opportunities within the Bitcoin innovation space. Alongside this, we help startup founders with their growth and fundraising. Visit our website's advisory section to learn more.

Jose: 11:02

So I think it's, it's getting there, and I'm hopeful because Mexicans will understand it very fast. It's just, we need to give them, put them the information out there, and they'll, you know, they'll adapt on a dime. So that's, that's kind of my hope for Mexico. I don't even, and I even talk for the government. You know, sometimes government can be very inefficient, but also sometimes, once they get it, so they can change everything in two weeks. So, you know, they can be very efficient when they want. So I'm hopeful that, you know, the whole society, including the government, will become very pro Bitcoin, because everyone benefits from this technology. It's just we need to see, like, show people that

Lynne Bairstow: 11:41

when you first started capital X, did you have a particular client type in mind? I know that I've heard you talk all the time about the importance of education and educating on how Bitcoin is different, and there are so many. I mean, there are different sectors inside of the Mexico community and economy. But did you have a particular client focus in mind that you thought will start here, and that way it'll gain traction. And how has that changed over time? If it has,

Jose: 12:07

yeah, I mean, it's like all startups, you know, you start with a plan, and you're just pivot along the way all the time. You know, it's like, you keep iterating, iterating, more data, and redirect everything you're doing. So at first we were like, Okay, let's build this for retail. You know, it's like, retail, yeah, that's where we need to go. But retail was not ready for Bitcoin. Only, you know, for them, you know, they saw a price of 20, $30,000 and was like, no, no, no, I'm gonna buy a penny stock, hoping it will go to that amount and whatever. It didn't work. But thankfully, like I told you guys, we kind of always had our Bitcoin Treasury before then, because we were, like, everything we hold on Bitcoin, there's no cash flows. Like cash was only for day, day to day transactions, liquidity or whatever. So that really helped us on not being in a rush to generate revenue. And we were more thinking, okay, like, what is really going to work in four or five years from now? So we understood that we needed to just reach anyone out there that was ready for Bitcoin. And what we experienced is that retail wasn't that ready. But what we did see is like high net worth individuals, some family offices and just companies, you know, companies that needed ways to move money between borders, and we kind of started attacking those markets. We kind of, you know, started growing slowly word of mouth because, you know, we didn't got big funding or anything, so we never spent big on marketing. But the only time we spent on marketing was going to events physically, and weren't spilling people there, like boots on the ground. But we never spend money on like social media or whatever. We never did any of that. And slowly, you know, we started getting more clients and more clients, and then as the time went by, we started with the Bitcoin loan book, and that really completely changed everything, because the majority of our clients were people that have been holding for Bitcoin for four or five years already. So we did the work of orange spilling them, and they've been holding Bitcoin for five years. So all of them were ready to use our lending book, right? So it was very natural process to start growing that business, and that's when we kind of, like, really took off, because the the exchange business is very competitive. You know, you're earning basis points and every time it's compressing and compressing and compressing. So we our thesis, thesis is really that the business is really around financial services, around Bitcoin, not so much of just buying or selling, right? So that's when we realize, okay, we need to think big on this side. And we start lending our growing our lending book. And you know, it's, it's been evolving. Even some of my clients now they're lending us money so we can lend that. Out, and just the market is maturing a lot. So to give you an example, when I went to investors, and I was like, okay, lend me money at interest rate, and I'm gonna add a spread on that and lend it to people with, you know, Bitcoin as collateral and and everything. And they were like, Okay, but what are you gonna give me collateral? I was like, nothing. You know, I have the Bitcoin, I can give you keys, and we can share some of the custody with the Bitcoin. But if the price crashes, I'm not going to be able, if you're sleeping and you don't sign, I won't be able to to, like, margin call or sell the Bitcoin to cover your your part. And they were like, no, no, that doesn't work for me. Like, I need you to guarantee the Fiat return to me. I was like, the only way is if I hold the custody of the Bitcoin. So there was a lot of friction there. But now I have an investor that he's like, no, no, no. I mean, if there's a margin called don't sell the Bitcoins, please. I'll keep them, you know. So you know the market is maturing, and now you see these guys with access to capital that really understand Bitcoin, and they're like, No problem, I'll have one key. The guy who's pulling down the Bitcoin has another key, and you are escrow, and you do the third key. And if you know, for some reason there's a margin call, I just keep the Bitcoin. And you know that changed the game, because now people who are giving us their Bitcoin, or they're more confident on the whole multi SIG structure and all of that, and we're all about that, you know, we're Bitcoin maxis, and we don't like clustering other people's Bitcoin. But you know, sometimes it's not because we want to, it's because our investors want to, and you know, we need to comply with that. But this solution, for me, was beautiful, and it's just one sign of how the market is maturing. And you know, that was four years ago, and growth is exponential in Bitcoin. So imagine where we're going to be in four years from now.

Israel: 16:47

Yeah, and it is, I think, a massive shift what you just mentioned Jose. Because what essentially happened there is now you have pretty sophisticated and mature institutional players understanding, okay, now when this triggers. You know what? I actually want to I want to keep that Bitcoin. I understand that it's a hard asset and pristine collateral that that I'd be better off holding and managing risk around that. That being said, I think there's still signs that we have a long ways to go. I don't know if you probably saw the recent Standard and Poor rating of strategy, the largest, of course, Treasury company, and they're still discounting, from what I could gather, they're still basically assigning negative points right to Bitcoin on strategies balance sheet. I think it's inevitable that that will change, and it'll completely flip flop eventually, but it goes to show, right, there's, there's still a ways to go. We're still taking the baby steps in this journey of educating on bitcoins power as collateral. But you know, I'd like to get into the transformation of Arcadia from a Bitcoin operating company, let's say, offering these financial services, to tapping the public markets in Mexico Jose, but before that. So just to do a quick highlight, we you mentioned a couple of them, but capital X and now Arcadia be the financial services around Bitcoin that you guys have been offering has been so essentially, the exchange business, or the buying, selling, holding, the lending books, as I understand, there's also a debit card offering from you guys. Can you tell us maybe what, what those core services are?

Jose: 18:23

Yeah, it's, it's more like a credit card, where, basically you can use your line of credit instead of having to withdraw it to bank account. You can just use your Visa card anywhere in the world. And that's kind of a way to access your line of credit. And then we also have a way for anyone to accept Bitcoin payment. And then we have a toggle where, you know, it shows a percentage, and people can select what percentage they want sold into Fiat and what percentage they want to keep in Bitcoin, right? Because the first thing we heard from businesses is like, I cannot keep the Bitcoin because I need to pay rent and electricity or whatever. So it's like, okay, you decide how much you convert to Pesos. So it's all done automatically. If you put 9090 10, would you receive Bitcoin? 90% will go into pesos, and you keep 10% in Bitcoin. So that's kind of a for me. That's the best way to stack Bitcoin for people that don't really are into it and not ready to spend money into Bitcoin. It's just a way for them to accumulate Bitcoin without having to spend money. And it's just good for for the ecosystem. To be honest, it hasn't really gained a lot of traction, but it's something we want to offer all the time, because it's very important for the Bitcoin ecosystem. And then the third, the third services we also offer. It's the new fiduciary model, where we have as a phone and there's a trust inside. Basically, we're upgrading our lending book. So before you know, you just had a contract that, okay, you're giving me Bitcoin and I'm going to give you Fiat, and there's a contract. But, you know, contracts. You know, we're in Mexico. They're fine, but there's nothing that. So with a trust, basically now we are under Mexican law. We are very responsible for the assets. We are on a whole different level of responsibility. And you know, you need to document everything, and you need to go to like notaries, and so it's a more robust process, so people are safer when they're giving us their collateral to get a loan. And we're gonna do all kinds, all kinds of business on top of that, like helping people do collaborate, collaborative custody, full custody, and everything in between. So because I'll just give you an example, I have a client who, in the early days, he bought Bitcoin, and now it's like, a lot of money, because it was, like, six years ago, and he's like, I don't I don't want to have this, this responsibility, because it's his family is Bitcoin, and it's like, this is too much for me. Like, I'm not ready. I'm not technical enough. Like, this is dangerous for me. Like, I don't want to have this responsibility. So he's looking for this kind of solutions where it's like, okay, yeah, I want you to cost it a Bitcoin, but I want to leave everything in writing. Who can access the Bitcoin, who can't, when? Why? You know, and kind of like, leave, like a trust, basically on the Bitcoin. So that's kind of our new business model, which we're really excited about. But those are the main things. You know, it's custody. It's buying and selling Bitcoin, and the Bitcoin book or line of credit, which includes a credit

Lynne Bairstow: 21:36

card. You know, I always find that some of the most successful founders are the ones who are solving problems for themselves. And it sounds like it's kind of the way when you and Yuri started and you wanted to, you know, figure out a better way of handling everything that you you've kind of created a company to solve your own problem and then found a fit with many others. And to your point, I think that bitcoins appreciation has also made, I mean, it's the only asset that I think that you know people, once they really understand it, realize the benefits of not selling it, but continuing to hold it. But how do you access the appreciation in it? So I think the tools that you're, that I'm hearing, that you're, you're releasing with Arcadia, allow people to kind of utilize the gains on their Bitcoin without having to exercise a sale. But I'd like to get into a little bit about the whole concept of the Bitcoin treasury, which was part of your announcement. And this happened in late August of this year, when you switched from capital X to Arcadia. And as part of that, you also announced this the more formal strategy of being both a Bitcoin operating company and a Bitcoin Treasury company, much like the success of strategy, formerly MicroStrategy in the US and metaplanet and Japan and some of these other companies that have really used financial engineering in order to accumulate a greater amount of bitcoin. Can you explain your thought process and how you came to you know, this is a significant move inside of Mexico and really globally, I think, in the financial markets, of understanding the power and the potential of holding Bitcoin as a treasury asset. And as we mentioned earlier, Israel, I have never really featured any one of the Treasury companies on the podcast yet, because we really focus on company builders more than financial engineers, but you're both, so we'd love to hear how you came to adopt this strategy inside of Arcadia.

Jose: 23:34

You know, it's funny. I think it's just, it was just meant to be, really because there were so many strange things happen. And, you know, everything was just like a lot of flow, and people aligning and finding the right people and all of that. And it all started with a bluff from someone I met in Vegas. So the stories I met Boyd here in Monterey, and he comes like, hey, what do you think about Bitcoin Treasury company in Mexico. I was like, There's no way. I mean, the market's not ready. They're not sophisticated enough. And and, you know, I know some people that have public companies in Mexico, and I talked to them, and, you know, the first thing was like, Get out of here. Like, you're crazy. So I didn't see it happening, you know, really, I told boy, like, I don't think this is going to happen. And then I also hated the idea of concentrating Bitcoin in custodians, so both my partner and me, we didn't like that idea. Like you say it's just hoarding Bitcoin using financial engineering, but they're not really costing the Bitcoin. So that leads to paper Bitcoin and naked shorting. And so we were like, no, but then we were in Vegas, and a guy, just for some reason, he was like, Oh, you're from Mexico, yeah, we started talking, and he's like, I have $250 million to deploy to a treasury company in a new market like Mexico. And I was like, Oh, my God, really

Israel: 24:56

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Jose: 25:16

with Bitcoin. So I called boy, and I was like, apparently there's demand. What do you think? And he was like, All right, let me test the waters. And he tells edu, Lynne, hey, we're thinking of doing this. And then he's like, I'm in. I was like, what? I was just calling you to see what you thought. And now he's in. So we're like, Okay, this is happening, and the only condition we set out at the beginning is like, we're going to do self custody, like, there's no way, like, we'll rather don't do it. If investors are like, no, no, it's too dangerous. You need to put it in Coinbase. It's like, No, we're never doing that. That was our only condition, and it's still our only condition. So, you know, we started talking to people, and we saw there was some kind of interest. And what really convinced me was void speech was was like, you are too Maxi, and that's why you've been so slow, and you haven't scaled. You need to meet people where they are, and people are not ready for custody. People are not ready. And I kind of been realizing that over the years where people were just, you know, even seeing, like, for example, some of my friends, you know, I've been talking to them about Bitcoin for 10 years, and they still haven't invested in Bitcoin, I was like, if I'm not successful there, there's something wrong that I'm doing. Because I've been, you know, able to earn spiel, maybe four friends, not, not that many. So I was like, Okay, we need a new approach. And that convinced me, because I think a lot of my friends will definitely buy an instrument, if they can call their bank and be like, okay, buy this sticker. Everyone will be in Bitcoin, or a lot more of my friends will be in Bitcoin, so, and it's all part of the custody people are afraid of taking responsibility. And I really never thought people would be like that. And then the other day, I read this Dostoevsky quote, which basically says this, people are not sometimes they're not ready or they don't even want it. So I was like, Okay, let's adapt. If my mission is to orange peel people in Mexico and giving them exposure to Bitcoin. I mean, this is pretty efficient, so that's where we decided to go ahead with it. And also, you know, having Boyd and Ed in the team, both of them joining and helping, that definitely helped us take that decision.

Israel: 27:30

And Jose, I mean, well, first of all, I think you're spot in in your comments of kind of meeting people where they are. Because, yeah, I mean, when you when you really think about it, it is a big leap, right? You have to basically undo all your thinking that you maybe learned in your, you know, your economics university classes and, I mean, that's just the reality, right? We've, we've been taught how money and economics works for decades, in in a fashion that that you have to kind of unlearn and just strip it down to the bones when you get into Bitcoin, and then go from there, right? So, yeah, to your point, not everyone's ready to take the leap to just go Bitcoin Maxi and believe on, you know, believe fully in what this vision that you hear people on the internet telling you should be so I think, I think we're making progress, slowly but surely, and as far as the public listing on the Mexican Stock Exchange, so being a public security you've, of course, done a lot of work in researching this, and specifically within Mexico. I mean, first, for someone listening, what are some of the benefits that having having a public exposure to a publicly listed security might give you, and specifically, what pools of capital do you think will be most interested in, in a company like Arcadia B,

Jose: 28:52

yeah, so I think it's like a multi step process, and it's going to take us many years. It's not something, you know, we're not opposed to it, but we don't think it's, it's something like, you know, meta planet, where in six months, we're going to be worth billions of dollars. I think that's even kind of dangerous, you know, when you grow too fast, too soon, you know, you get the wrong kind of investors. I mean, see what's happening with NACA. You know, you need to be very careful, and we'd rather grow small with the right investors and with the right, you know, engineering and all of that. So it's a multi step process, right? So right now we are, you know, we have preferred shares on the private market where we're placing them right now, and then, from there, we have the same instrument with a little less favorable terms as the first round. It's called a certificate. So in Mexico, you can issue public instruments while being private. So it's more debt, kind of like debt instruments. You're not listing the equity, the common stock. But you can list prefer shares or convertible notes, that kind of stuff. So on the first round, which is the certificate simplificado is not for retail, so that's going to be one step. But then we have the full certificate that one's for retail, and then the IPO. And the reason we because, you know, we thought about this. We could just do the certificados burst activists without going public, staying private. And you know, we've considered this approach. But the thing is that, you know people, at the end of the day, they want to be able to have liquidity right, being able to sell the shares, pledge them as collateral, like do something, not being stuck there for 510, years. So if you're private, it's very hard to put value on the shares. If someone wants to exit, how you're going to value the company under what? What metrics? So it's just everything gets more complicated. And as you grow and you have more investors, I think the best way is just have a public pricing of everything, so there's no arguments on what's the price of what? And also you allow exit, which, you know, I've been talking to Lynne, and that's one of the biggest reasons why there's not a lot of funding for Mexican startups, because the exits are very hard. So in here where we want to give people an exit and being able to either cash out or use their shares as collateral, because you can do the same with shares, by the way, not only with Bitcoin. I mean, that's my idea came from that, you know, dealing with banks and shares, they offer the same, you know, collateral loans. So that's why we decided to go that approach. And it also give us the size for the afortis, which, you know, they won't get into a deal if you're too small. So it's just kind of like, you know, when you put things on the balance, yes, it's going to be a lot more compliance. Yes, it's going to be a lot more work, but we think it's worth it to really get to the afforest, which is our main objective, you know, being able to really help millions of people, give them exposure to Bitcoin and help them fight inflation.

Lynne Bairstow: 32:11

And I just want to step back and clarify that authorities in Mexico are the pension funds. And so that might be a term that our audience is a little bit more familiar with and and I think I've heard you mention, the figure, $350 billion that right now is in Mexican pension funds that has very limited investment parameters that they can invest in. And so one of the objectives that you might have is to open up the ability for these pension funds to invest in a Bitcoin based asset, and therefore help the millions of people that you just mentioned. And maybe you can just talk about two things. One, just to give a perspective of because I think this makes you know, this is like, why would you do this for you know, the Mexican stock exchange is not as liquid. It doesn't have the number of investors as the US stock exchange or European but it does have the the ability for the pension funds to invest in certain instruments. And then also, if you So, if you can talk a little bit about how you view that market as potential buyers of Arcadia financial instruments. And then the second is the tax investment, the tax benefits of stock, versus buying Bitcoin. And I think those are two unique aspects to what you're doing that I think make, make what Arcady is doing a super attractive investment. Yeah.

Jose: 33:34

So here in Mexico, for example, if you buy bitcoin spot, Bitcoin you need to pay depending on your bracket, but you could pay up to 35% whatever profit you made. If you buy a share of a company, you only pay 10% there's no bracket. Everyone pays a flat 10% so that's huge. Not to mention the new approach Saylor has been talking to, which is genius, where you're returning the capital first. So there's a lot of things you can work around, but definitely in Mexico, that's one big thing. And then the affordance or the pension funds. I mean, like you said, their pockets are very restricted. And in Mexico the majority of the market is fixed income. That's like, where the big volume and everything's happening. I mean, even the carry trade moved from Japan to Mexico, some of it because the government is paying very high fees, very high interest rates. Mexico is paying right now, close to 8% I think, seven point something. So, I mean, it's almost twice what the US are paying. So it's a very interesting market. It's big, like the fixed income in Mexico is really big is, you know, not so much. I think that can change. And the reason why we started doing it in Mexico and not going to, like, you know, doing dual listing, or going to list outside of Mexico, and then coming here, is because you. Know, we know the Mexican culture, the Mexican politics, and what what we're doing is very new. And we know it's not going to be easy. It's going to be, you know, a lot of work, a lot of talking to people, teaching people what we're really doing. And, you know, it's, and I think doing as a native Mexican company with native founders that know the culture, know the people, is going to be key. Because if you're just like a multi billion company that just comes from outside, and you're trying to dump your instruments here with this new thing, I mean, regulators, I think it's going to be really hard to do that. So our approach is like, let's, let's orange spill the government. I mean, we can do it. They know we've been here for a while, and we're trying to do those connections. And with all the investment bankers we've talked that is our main hurdle. It's like talking to regulators and really explaining them with apples what we're doing. And you know, like they say, if you cannot explain it to a five year old, you really don't know what you're doing. So we're confident we can do that. And, you know, it's not rocket science. It's very simple. And I think they're going to like it, because in Mexico, you know, there's been more de listings than listings on the stock exchange in the last 10 years. So, you know, regulators are kind of like, okay, there's something we can improve. So we think it's the right timing, the right everything, you know, the US is moving very fast on that front of regulation. So, you know, we just trust on, on the timing of God, and we think everything will just come together. Because definitely that's the biggest challenge in Mexico. And, you know, listing the stock, anyone can do that. But, like, I told you, the big part is peso denominated instruments, right? Like, you need to have kind of, like, fixed income denominated instruments in pesos. That's kind of like, where the big pools of capital are, and that's the ones we're going after. And what's the

Israel: 37:00

timeline you're looking at Jose from certificado bursa del to IPO. I mean, what are we looking at as far as when the stock might actually be listed?

Jose: 37:08

Yeah, I mean, like, like, you know, we cannot give specific dates because we really don't know. I mean, but like, on the work that we need to do, what's our responsibility? So we're probably going to be issuing the first instrument, late q1 early q2 next year, and then the next instrument probably gonna be q3 and from that point on, we're basically fully listed. We can issue a lot of stuff, the IPO 18 months from now, maybe two years tops. That's kind of like our expectations, but you never know. You know it's not granted, it's not a given. Anything can happen. We cannot, like for certain, tell people that we're going to be able to do this, but we're very confident that we will, because we've seen the demand is there, and the more instruments you you issue, I mean, and like I told you before, like a new listing is a rare thing in Mexico. So we do things properly. And you know, once they see our audit, because right now we're being audited by Baker Tilly. So once we publish that, and we show the government how we're doing everything by the book, I think we'll be listening in two years or so,

Lynne Bairstow: 38:19

I'd love to dive a little bit deeper into the regulatory opportunities challenges. I mean, several years ago, Mexico published a FinTech law that everybody was championing as kind of a model, and then it ended up not really being helpful for digital assets and even for fintech. So I think we've had waves as as presidents have changed and policies have changed, much like we see in the US. It's like you have an administration that's very friendly to innovation or to to new models, and then you have another administration that's less friendly. How are you how do you view it from the long term perspective that you have of what you can do or what the government really should be doing in order to to advance this, this economy and and I guess the second part of that question would be, how much of a role model do you feel El Salvador is, or could be, in terms of what they've been able to accomplish as a small nation, but in the region that has faced some of the similar problems that other nations and the other countries in the region have faced. I mean, do you, do you feel that they're viewed as an example at all?

Jose: 39:30

Yes, I think it's in the back of everyone you know. And you can like people cannot lie about the results. I mean, they're there. Anyone can go and see them from their from themselves. You know, I invite anyone to go to El Salvador and walk at night. You know, before that was unthinkable. So the results are there, and I think it's definitely on the minds of every citizen and probably a lot of politicians as well. So here in Mexico. You know, we've always kind of followed the US. You know, the US is a big daddy. So whatever is happening there, whatever regulation is there, will follow, I think, you know, the current Mexican government, one of the of the benefits is, like they control, they have a lot of control in the country right now. So if they want to change, they can change things very fast. And I think they will, because once they understand Bitcoin, and they see the US is moving that direction. And like you mentioned, okay, what happened in El Salvador, and you see all this movement, I think they're gonna like it, because, you know, they're more on the left side, so they're not very friendly with the US. And you know, Bitcoin is a way of being more independent, if they really understand that in a big macro way. I mean, I think we will be able to convince them that it's not helpful, only for for Mexicans, but also for the Mexican government to start, you know, accumulating some bitcoin and getting some independence from from central banking infrastructure. So I mean, yeah, I think I'm very positive. Really, I'm very positive because I think inflation is going to run hot everywhere in the world, not just in Mexico, and desperate times call for desperate measures.

Israel: 41:15

Just listening to what you were mentioning, Jose reminded me of when I was first, when I was first studying Bitcoin, and I was precisely trying to think through these scenarios, right? Of, well, well, what? How are governments going to react? And, you know, how does this play out? And when you get into that game theory aspect, and of course, you have to really study, you know, the incentive structure behind bitcoin and understand it as a network, and it's, you know, decentralization and all that. But I remember for me when I realized, like, holy crap, no matter who you are, you know, an individual, a business or a government, you really are better off by plugging into this network than you are trying to fight it. And you know, to your point, I think regardless of political inclination. Many countries will start to just see the economic, societal benefits and just the sovereignty aspect of not depending on your adversaries. You know, it will be fascinating to see how this all develops, and we are starting to see some movements in Latin America. Orange in Brazil recently became the first publicly listed company you're, of course, you know, paving the way in Mexico. So, I mean, I'm very excited to see this, you know, evolve and mature. And I wanted to ask you, Jose, because I do agree with something you mentioned earlier that you you would rather start maybe thoughtfully and slowly, not, not get ahead of yourself, and, you know, maybe raise money and deploy money too fast and do it in a prudent manner. Let's say so that being said, I mean, 2025, has been a pretty interesting year. I've I think we may be approaching close to 200 or so publicly listed Bitcoin Treasury companies globally at this stage. But of course, not all of them will succeed,

Jose: 43:08

even selling Bitcoin. Some of them have been selling Bitcoin. Yeah, I saw a

Israel: 43:12

word early November, and I saw news this morning, precisely on on one of the these Treasury companies basically being forced sellers right of the of the Bitcoin, which you supposedly acquire to not sell. So what you know, what I want to ask you is, what are some of the lessons, you know, is it maybe on debt levels or just general strategy? How are you thinking through this? And what are some of the lessons that you're you you're taking away from, you know, strategy and and all the others that have followed.

Jose: 43:44

So I think it's like you need to do a lot of lobbying with investors, because if you go after the cheap money, I mean, you give them shares, like, if they give you the money fast, that means it's good for them, not for the company. So you want to do something that's good for the company and also good for them or or good for both. It takes a lot more convincing to do, right? So we are low time preference. We we see this playing out over the next 10 years. We're not thinking, you know, one year or two years. So it's a it's a long game, and whoever has the patience and the time is going to win because, you know, nobody can buy time, and if you have the patience and the time, and just even if you don't stack as much Bitcoin, but then we're not forced to sell or whatever, you know, we could end up with more Bitcoin. So we're not competing against anyone. So people are, you know, seeing these metrics, oh, this company has this much Bitcoin, I need to, you know what is my ranking? And it's like each country has their own needs, their own market for us is more as a long, long term play, orange spill in Mexico, basically, that's, that's our whole No, our goal is not stacking as much Bitcoin as possible. Our goal is to orange spill. Mexico. So on that front, you know, we're not in a rush. We'll take things slow. And definitely the biggest part, for me is just getting the right kind of investors that think the same way as we do, that they're not looking for an exit in one year, like it's IPO, let's dump the shares like I have an exit. We want people that, you know, they're going to hold the shares, and they really believe this in the long term. If you don't, that's fine, we'll give you preferred shares, but if you want to get into the cap table, you need to be aligned with the same vision that we have, you know, and because, you know, we could very easily right now raise money and dilute ourselves and put people on the cap table, but we won't do it. It's like we'd rather grow slow and don't dilute ourselves and lose control of the company, and bring people who are just playing Fiat games, right?

Lynne Bairstow: 45:50

I love this perspective, and I want to, I want to extend the thought process on this to just to something that we, that we were involved in a in a workshop during Mexico tech week, Jose, you and I and several other speakers, just presenting the whole concept of Bitcoin treasuries for any kind of tech startup or any kind of company, and overall and you, you mentioned the independence level that El Salvador had by adopting Bitcoin. You talked about your own company's ability to during different market cycles, to extend your runway, because you had Bitcoin on your treasury. So what would you say to other companies about the importance of thinking about a Bitcoin Treasury strategy, no matter what business they're in and and how have you seen that affect your journey as a founder?

Jose: 46:41

I mean, it just for me, Bitcoin is, is just a beauty, and it's really, it's incentives people. It's not like I was, you know, illuminated. It's just incentives. Really puts those incentives in front of you, and people just move that way, because it's what, it's more convenient and it's better for you. So I think every single company, every single startup, should start putting some bitcoin on the balance sheet, but not just that, like really understanding Bitcoin, and that changes. Number one, your time preference. For me, that's everything. So you start eating better. You start taking taking care of yourself, valuing other things, not just money, and work like family relationships, being a more balanced person and and that's going to help your business at the end of the day, you know, it's like they say, work smart, not hard. So Bitcoin really changes you, your psyche as a person is it lowers your time preference, so you start thinking in decades, decades, not not, you know, months or year and between helps you think on decades, because you have that cushion that can help you. If there's a drought or there's like hard times, you have that cushion that can help you, you know, go through bad timings and not bring people that you are not aligned with your vision. So, and the other thing is just it also, at the same time, you become very efficient at spending, because, you know, the opportunity cost in the future of those Bitcoins. So it's just like, Yeah, I have more cushion, but at the same time, like I'm very, very, very jealous on how to use that cushion, like you will not do it. You won't waste money. For me, that's the end of the day, is you don't waste money. Because imagine a busy you know, let's put the other situation in my case, if I, instead of being my money and having Bitcoin, someone just give me $10 million they just gave it to me out of the blue, my story will be completely different, like I would have wasted all that money throw it in marketing and hiring people and just going over it really fast, and probably will be broke if I didn't raise another round and probably out of business. The other way around is like, Okay, we have Bitcoin there, but we were so jealous at spending the money, and not just that, like it also made us better person to take care of our health. And the whole culture in the company is like that. It's not like we don't want workaholics here. We want people that value their time, their family life. You know, you need to be a balanced person, to be productive, to be creative, to be, you know, at your best. And I think Bitcoin really gave us that, and it's just understanding Bitcoin and the incentives that gives you that it's not that we are better person than others, it's just that we learn Bitcoin. And I think anyone that learns Bitcoin are going to become this way.

Israel: 49:48

You hit on some very important points there, Jose and very well said, because, yeah, it's true. I mean, it gives you back time. It allows you to plan for the future. I think I've heard you before call it monetary defense. And, and, yeah, you're right. I mean, when, when you're thinking in a currency, pick whatever government currency that is, you know, pesos, dollars, whatever it is. I mean, we all actually just subconsciously already understand that it's, it's something that loses value. That's why people, for decades, you know, even pre Bitcoin, have looked for ways to just park their purchasing power somewhere. Maybe that was during some decades, the stock market, during some decades, real estate, or a combination of these more traditional assets. But now, of course, Bitcoin gives you many, many benefits. And I truly encourage anyone listening, as you were mentioning Jose, to look into this. I mean, just study the basic incentive structures and realize that it can benefit no matter who you are, right? I mean, a very, a very traditional business, just from a fundamental and starting point, it's going to protect your purchasing power. And then there's this whole other, you know, technological side of it, that's, you know, get, that gets a little more, you know, more technical, but the the network itself also provides, which, of course, Lynne and I cover quite a bit, a lot of different ways to plug into this, you know, essentially new internet for for value transfer. And the the opportunities, I mean, and the doors that are opening up are are just countless. I mean, it really is, at times, even like too much to grasp off the back of that. Jose, what's what's exciting you the most for the coming few years? I mean,

Jose: 51:32

really is it not knowing that's what really excites me the most, in the sense that I think we are in the face, like, imagine when the internet came about. We are in the phase where the internet was like, You need to hang up your phone so you will get a connection, and everything was really slow. And you had like this, okay, you had web, but it was like, it started like, loading like, you know, very little by little. We're at that stage in Bitcoin right now where it's not user friendly, it's very cyberpunk, people using it and doing some crazy stuff, and we've had our.com bubbles as well. And I think there's going to be crashes, but the ones that survived are going to be the next Google's the next Facebook's the next Nvidia's like. I really think that Bitcoin is going to change the world in ways that we don't understand yet, kind of like the internet, like people that really understood the internet in the 1990s Yeah, I mean, they kind of, like thought what was going to happen, but they never understood we're going to have Uber and we're going to have Google Maps, and we're Going to, like, all this stuff. It's hard to predict. And that's what excites me the most, is like, what's next for Bitcoin? And I think there's a lot of next things we have no idea they're coming, and they're gonna be game changers, and they're just gonna, you know, blow the adoption around the world. So yeah, that's what really excites me. Like, what's gonna be the new iteration. It's not iteration because the same layer underlying layer, but it's like, what's going to be the new thing that's going to really take adoption on a massive scale? And I think it's not just going to be one thing, you know, it's going to be several different things, like the internet, you needed internet, then you needed wireless, and you needed smartphones. So there were like, different technologies coming together, and I think Bitcoin is kind of going to be something like that, where you have hardware wallets, and then a layer two, and then something else, and that's going to, like, really take Bitcoin on exponential growth. We're already there, but I think just a little bit user friendly stuff is gonna, like, for example, inherent in Bitcoin, like, what happens if I die? Like, all those needed tricky parts. They're just getting easier and easier and easier with time. So I think eventually there's gonna be like this aha moment, where it's gonna be very easy for anyone to use custody Bitcoin and move around the world without having to think, oh, it's one is layer two, is lightning. It's like, no, it's just put on your phone and click it. Email was like that also. So, yeah, that's what really excites me the most, is just what we don't really know or can't predict that's going to happen, which is going to change

Lynne Bairstow: 54:19

everything. Which is really why financial services firms like yours built on Bitcoin just have such a green field ahead of them. And you know, in terms of what you're able to offer, how to make it easier for people to start owning Bitcoin and then also using it. And so I think there's, there's just, there's a lot of opportunity out there and and just want to, you know, as we start to wind it down, Jose, just throw it back to you, just to talk about your vision for Arcadia over you know, what do you see the offerings being or, how can people start following you? I'm happy that you're now more visible, you know, in conferences. This and talking more. And I think part of that has to do with your with your executive your two new executive team members, Boyd Cohen and Julene, that are assisting you on this whole strategy of being a more visible Treasury company. So what's the best way to keep up with everything that you're doing and that Arcadia is doing?

Jose: 55:21

Yeah, you can follow us on our social media. We have x, Instagram or YouTube, KDAB com as well. You'll find all the information you need there. And yeah, I mean, what I'm looking forward to future is just, you know, more synergies with the government, better regulation and make really a safe, you know, regulated space, so people can, you know, start investing with trust and have, like, very clear regulation on where to go and how to do it properly. I think, I think that's huge. The US is going in that direction. And I think that, like incentives will make it that, so that everyone else will follow. And I think that's the last hurdle for Bitcoin to really go mainstream. It's like governments accepting it, putting very clear regulation on it, and everyone gets on the game, even themselves. So that's what I see happening before the next having and we're very excited because we're going to be there to be able to capitalize on this and execute our strategy and make sure people have the instruments, you know, be ready, and make sure people can access Bitcoin when the time is right. So, so yeah, for me, this is huge, because I really do believe that a lot of people are going to start this way and then translate into spot Bitcoin on the hardware wallet. You know, it's like a Trojan horse kind of approach. So pretty excited for

Israel: 56:52

the future. Well, I think that's a great place to leave the conversation, Jose. And it will, of course, leave the links and social media handles that you mentioned in the show notes, and we definitely look forward to seeing Arcadia B's evolution in the coming months. Thanks for joining us today, and hope to have a conversation with you again in the near future.

Jose: 57:14

My pleasure guys, thank you

Lynne Bairstow: 57:15

for having me. Thank you so much, Jose. You.