Richard Green: Pristine Collateral — The Future of Bitcoin Finance

Welcome to the Investing News podcast. I'm Megan Zeter. Today, we're joined by Richard Green of RootsDoc Institutional to discuss Bitcoin's utility beyond a store of value. RootsDoc Institutional is an arm of RootsDoc labs, a company that develops infrastructure to build defy products anchored to Bitcoin security. RootsDoc's sidechain allows Bitcoin to gain smart contract programmability and scalability without sacrificing its security or becoming a new speculative asset. Mercado Bitcoin, Latin America's largest digital asset platform, has tokenized over $20 million in private credit real-world assets on the RootsDoc sidechain and is targeting over $100 million in RWA issuances on RootsDoc by mid-2026. Richard, thanks for being here. Thank you for having me on. So let's just dive right in. Investors are obviously thinking how they can put their holdings to work. The short Bitcoin sidechain is like RootsDoc and I'd love to dig into whether yield infrastructure like yours involves the asset or the risk-six core purpose and also what that means for retail holders and institutions who are paying custody fees without getting any return. Yeah, that's a great question. And so I think firstly, thinking about the infrastructure side of things, the infrastructure of Bitcoin predominantly has grown massively in the past two to three years, whether that be custodial offerings who are now at a trad-fi level. And so that has meant that people have entered the market who are probably not previous entrants. They were more trad-fi investors or hedge funds and things like that. And so if you were to ask that question of does adding yield on to an asset like Bitcoin, kind of go against everything that it was built for, well, the audience has changed. It used to be those maxi Bitcoiners who truly believed that Bitcoin is the only asset which we believe it is as well. But it's the only thing and there is nothing else you can do with it. Well, what we're seeing with Bitcoin and the beauty of it is that it's evolving as an asset. It's growing up itself as the new entrance come in. And so it is an incredible store of value. It has got an incredible compounded annual growth rate over time in compared to basing currencies and things like that. But people are also then very used to having yield on top of a current account. So whether that be the retail side who come along and say, "Yep, I'm investing because I believe in Bitcoin. I believe what it stands for. I hope to gain in the upside." Which is obviously decreasing over time. Hopefully we'll get to big prices in the future. But that is, it's also a good thing that that slows down a little bit because it declines the volatility. And so they're also looking for that, okay, 2-3% of super safe and secure yield. And then on the institutional side, it's the same thing. As a hedge fund, you are needing to put your money to work. You can't just sit as an idol asset. And gone are the days of Bitcoin appreciating a thousand percent. And so when they have things like custodial fees ranging to 10 to 50 basis points, they have to be thinking, "What am I doing to make Bitcoin work harder? Because my investors, my LPs, are wanting a greater return." And so the key is finding that gap between what stays true to Bitcoin. And also stays true to what people want without going into the previous historical 30-40% yield offerings and super high, really relating it to the more trad-fi experience. So then do you see productive Bitcoin? Is that the next evolution of Bitcoin or do you, is this still a niche side story? Is it a spot price? No, I don't think it's a niche side story at all. I think that it is the next step. And I think that it is the next step for a group of investing users, whether that be retailer institutional. Bitcoin's next steps in many other ways could be into the payment space, right? As we start to grow on lightning and rootstocking and those kinds of networks. But it is definitely a big step because it is being financialized in a way, whether that be the Bitcoin ETFs, whether that be the futures markets that are being offered on it, perpetuals and things like that. The Bitcoin is being brought into the world of traditional finance and into the use cases that there are within that. And so I think that what it offers more and more is innovation for all of the participants who are building on top of that. So that could be a fintech who wants to offer 3% on top of a savings account, a Bitcoin savings account. Or it could be something where they're wanting to, for a professional investor, offer perpetual trading and things like that for them to be able to hedge the trading strategy. So it is definitely something where it is people are seeing the spot price becoming less volatile. Its growth and draw downs becoming less. So naturally they go, well, what is the next step? Now my view and my view always has been for Bitcoin is that if you hold Bitcoin from year one to year 30, you are going to have an incredible store of value. So that's where the spot price is the most important thing. And that is where the store of value comes from, right? But there is a lot of innovation that can be built on top of Bitcoin. I'm curious how conversations with institutions have changed with this huge pullback, shocking pullback that we've seen in Bitcoin spot price. Are they more open to doing something with the coins that they're holding? Or are they having, are they displaying more risk off attitude? Yeah, a great question. Again, it depends very much on the investor and where they're coming from. If they are a defy native hedge fund or a defy native retail investor, they've seen this before. They've lived through four cycles of this and this is the best performing drawdown of the bear markets that we've seen. And so I think they're just carrying on as normal because they see that long term view. If you are looking at the same with the defy hedge funds, if you're looking at the family office is the wealth managers, their entry into the space is based off of a reason, which is majority a long term hold. And so they might have allocated three to seven percent of their portfolio towards Bitcoin. And so again, if they are day trading or if they're looking at this on a quarterly basis, then yes, that is a concern for them. But the conversations I think are pretty similar because the people who are adopting it come in and say, yeah, this is something where we're wanting to build generation or wealth, where we are wanting something for the generations below us as a family office are wanting to in 20 years time for our children or our grandchildren to say, okay, we've got Bitcoin as part of our portfolio, we always will have. I think the question becomes is more of are you additive to your Bitcoin portfolio at this moment in time? Are you going to be doing, be taking a stronger conviction? And that's where you go back to the Bitcoiners who are bye bye bye great means more Bitcoin for me at a low price, but probably the more realistic and non-defying investors looking and going, okay, risk off. Let's see what other assets there are. Let's in this quarterly investment call go for AI stocks or go for gold and silver and then those kinds of things. What makes Bitcoin secured rails like rooftop attractive for private credit and RWA's versus other established venues on Ethereum and Solana? Yeah, absolutely. Rootstock is EVM compatible, which basically means if you build on Ethereum, you can build on Rootstock. So that's a great point. You are opening your doors to not only the innovation of the smart contracts on Ethereum, but also to the users of Ethereum because they if they are having Ethereum tokens, they can obviously port over into a rack to Bitcoin and RBTC. And so why that's really beneficial is these real world assets were predominantly and are predominantly able to be accessed by dollar holders, right? Or other token holders and the Bitcoin side of things is has been a bit of a closed door to real world asset offerers tokenized stocks and things like that. And so where we see there being a real opportunity is that those people who hold Bitcoin have a significant amount of their portfolio, probably in Bitcoin. But they might also want to choose a yield bearing asset that is linked to an RWA. So that's where Rootstock comes in and are of these integrations like this can help and what are they looking for within those rails? They're looking for security and that is the core thing. If you're going to part as a Bitcoin holder, if you're going to part with your Bitcoin to move to a wrapped version of Bitcoin, it has to be the most secure rail possible. Rootstock, we have about 80% of the hash rates of the miners securing the layer one, securing Rootstock. So that basically means 80% of the computers that are securing the blocks on Bitcoin, secure us. So we are de facto the the second most secure chain out there. And also there's things like bridge risk, counter party risk that they're looking at. And so when we're making the decision on these integrations onto chains, we're looking at partners who have a similar view on that. And Macardo, Bitcoin are amazing in that sense. As a partner, they are based in Latin America. We have a lot of heritage in Latin America as well, where we found it. But people are predominantly looking at the standard D-Fierisk, bridge risks, counter party risks, smart contract risks and those things. And at Rootstock, we are covering all of those angles with 0% that time, etc, etc. But we're offering those tokenized platforms, access to Bitcoin holders, the largest crypto digital asset holders, in the world. And that's why they choose us. Do you expect clearer US market structure rules to favor Bitcoin adjacent infrastructure like yours or will most of your traction still be outside and outside of US markets like that in America? Yeah, so we are geographically agnostic in terms of where users will come from. Obviously, the US non-exempt in terms of institutional offerings and things like that. However, the US have had this three stage approach to regulation and crypto regulation. And I've done a very good job in delivering those first two areas which were a bit of previous restrictive regulation. Moving to then actually putting in place plans and the third is going to be implementing that. I think that that will occur at the Bitcoin led one. A level first. There's been a lot of freeing up of that kind of actions under obviously Trump. And so if you I think it will continue to help us and grow. If you look, I think, is it BlackRock announced that they have just launched Biddle on Uniswap, which is a decentralized platform they've taken also some tokens of Uniswap, which you'd never be imagining. Larry think and BlackRock could be doing well, you know, they are the ones who've been imagining them to doing, but not on the stage. And so I think that the regulation will be at the lower one level first. And then I think that it will continue to grow out into what is decentralized finance? What is Uniswap doing? What are they doing? More foe. And how do we make that as secure as possible? Like predictive betting markets and things like that. It is something where it will be only positive for us as we grow out. And something that we always, you know, are super mindful of is we are regulation first in the aspect of making sure that wherever we are, it's from a legal, from legal. Could you walk us through a concrete case of how they could earn real yield using Roodstock today? And also what risks they'd be taking on on top of simple Bitcoin price risks? Yeah, absolutely. So Bitcoin holder would be holding Bitcoin in an exchange. They would come to Roodstock and they would convert Bitcoin into our wrapped version of Bitcoin, which is called RBTC. Once you have RBTC, you are able to deploy it anywhere on the blockchain. And on the blockchain, we have multiple yield bearing opportunities, such as DeFi, Unchained, something called Layerbank, which is a, borrowing a lending platform. You can go in there, put your RBTC down as one side of the borrower lend market. I'd earn a yield for being able to do that. We also work really closely with tokenized credit offerings such as Midas and have also launched a vault with mellow and tier capital. An example of that would be they would be taking their RBTC, they would be deploying it into a mellow vault and that mellow vault has a tokenized plan strategy in their operated, a tier capital. And that would be generating a return. Those returns would be paid back in RBTC into the vault and into the wallet that they would be that they would be holding it in. And so it's a super simple process, simply moving from BTC into RAPT and then depositing it into one of the areas. And in terms of the risk that they're taking on, once you move, and this is really within any version or any layer to sidechain, you're moving your Bitcoin into a wrapped version. So how secure is that wrapped version of Bitcoin? You're moving it across a bridge because you are going from one to the other. How secure is that bridge? And within Ritzock we use something called the PALPEG and that is a federated bridge. It is basically something where there are individual or we call pigna trees, but entities who oversee that, it is the most secure bridge that there is. It is unchained, custard, versus others where there is offchain, single-pastodial risk. And then obviously you have counterparsial risk. And the counterpartial risk is who are you depositing that asset into? Melo, Midas, Anticapital and things like that. And that is obviously up to you to decide what your risk level is like. However, from a Ritzock standpoint and going back to what I said earlier, the key thing for us is working with the right partners. And the partners that we have, Melo, Midas, like these are all part of where, securities, key concept. And so it is about integrating with those who lead with that as well. But yeah, it is going to be your smart contract risk, your bridging risk, your accounts, partners. It's the yield that she like comes from. Is it from lending markets, tokenized credit, the staking sales and does. And also on top of that, how sustainable is it if the risk of environment persists? Yeah, absolutely. So there's two sides. There is yield coming from a lending and borrowing market, which is obviously like a free market economy where users and situations come along and dictate the rate that they will be willing to buy a to borrow or lend Bitcoin ads. And then in terms of the tokenized strategies, those are different strategies. They could be market neutral. The majority market neutral is obviously that there is no bet on the direction of the market they're looking at things such as exchange arbitrage and generating the yield from from that. And so that's where I think you go into the how sustainable is it? Roodstock, institutional and Roodstock labs and Roodstock and the chain. We, our view is, and what we wanted to offer is the most organic, sustainable and secure yield that is out there. And so when it's non-directional, if it's market neutral, then it doesn't really matter whether the price of it goes up or down because it is taking advantage of arbitrage opportunity between the Bitcoin spot market and the futures market or it is across arbitrage opportunities on exchanges and things like that. So they're looking more of that and volatility and potential derivatives. But you know, that's something where I would say to users and to listen as rather get down into the weeds in what these offerings are and where the yield comes from. It is obviously do your own research but it's really useful and important for you to get an understanding of well, actually, am I wanting to take a directional yield strategy here where the yield is based off of appreciation of Bitcoin and other things on top of that? Or do I sit more in just the the lower risk at a time? And that's again, you know, the place where we want to get to is that an individual, you know, an individual investor and institutional investor can come along and say, I can choose here across rootstock vaults and rootstocks own curated vaults across third party vault based on my risk tolerance level and based on my legal regulatory and compliance aspects as well. Against a backdrop of tighter US rules and more mature Bitcoin cycle, do you imagine it Bitcoin as a passive macro hedge or as collateral actively cycling through the DeFi system markets on side chains? Yeah, both. I think is the answer to that. And again, completely dependent on the use goes, we have been building and we've been working with partners who have come to us and said, I have a lot of Bitcoin. I want to use that Bitcoin as collateral because I have dollar overheads. I have capital expenditures. I have working capital that I need to fund with that. And so that's where I think that there is a lot of opportunity within the utility side of things and it's also on the retail side and it's something where people might be holding a lot of Bitcoin and they need to buy a house or they need to free up some of that capital. So to be able to get a dollar loan against that is super important or whether it be for leveraging and other things. And then on the other side, the core thesis and the core belief of mine and a number of Bitcoin is out there is that Bitcoin is the most pristine collateral out there, based off of all of it, all of the functions that make it up. And as we're seeing geopolitical issues, as we're seeing currencies debasing, there's going to be more and more people, whether it be their entire wealth and more entire earnings, taking more Bitcoin on as a store of value for the future. Because again, you always have the conversations where it's you hold, if you put $100 into a savings account every month for 30 years, how much does that equate to and the millions of dollars that it equates to over time. And that's at a manual growth rate of 10% in terms of S&P growth. But with Bitcoin, it's currently in the hundreds of percent. And now I don't think that that will continue. I think that that will drop and I don't think that's a negative thing. But again, if you are looking and going, well, I can hold my currency, but it is constantly inflating or I can also hold some Bitcoin as a long-term factor. And over 20 to 30 years myself within retirement, myself within my children can look and go, okay, that's that purpose. And so, you know, those are the two aspects alongside the multitude of others of payments, freeing up the economies where payments, infrastructures, if they're not there, and Bitcoin solves that as well. So I think it will be both depending on the use case. On the institutional side, do you think that spot Bitcoin price and ETS will continue to be the main driver or do you think it will be the ability to plug Bitcoin into a yield and RWA strategy? I don't know if ESA will be. And I think the answer to that is, is it also geopolitical? Is it macro? Bitcoin has become financialized and it is something now where, you know, you look at this downturn and you say, well, what's the reason for it? And there are a lot of views of, I'm not sure, because again, with finding, Bitcoin is finding price discovery, it is, it is an asset that is going through 100 years with the price discovery. in 10 years. And so the ups and downs are pretty significant. I think what will be the drive before Bitcoin price appreciation over time is just the the the cut-hard core belief that currencies and countries will continue to devalue and continue to debase. And it will be another asset that people will want to hold. And institutions will also see it as a part of their portfolio that whether it be an inflation hedge or whether it be just a 10 to you know three five 10 year return rates is an important part of that important part of that portfolio. If you could correct one misconception about your field right now what would it be? Bitcoin is a scam. I think you're a qualified scheme. I think it's the easiest and the biggest one to go for. There are bad actors. There are bad actors in every currency. There are bad actors in every space. And within crypto there are many bad actors. But if you look at the one single pristine asset and short term is important for liquidity and so on and so forth. But people holding it for Bitcoin because they want to create generational wealth because it's very difficult to do that in other places. Richard thanks for joining us today. Thank you very much. Thanks for tuning in. I'm Megan Cedar that was Richard Greene at Rootsock Institutional and this is the investing news podcast. Also check out our website at investingnews.com.