Flood gates open after “spot bitcoin” approval?

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Ofilia uh 21 shares you’re partnering with Kathy for the Bitcoin application um a lot of the old school wirehouses and wealth management platforms have not been allowing access to to these Bitcoin products I believe UBS for example is not allowing their advisors to buy Spot Bitcoin ETFs is a spot Bitcoin ETF more

Likely to broaden the institutional participation that seems to be the game but I’m not sure that’s going to happen necessarily your your thoughts the short answer is yes um these are rappers people understand they’re used to them they fit within their existing infrastructure and I think that’s a really important piece um

I think Futures products well they they certainly have a place in the market um have typically been viewed as as more complex in some respects and so I think there’s been a little bit more hesitancy there um these are a bit more plain vanilla or at least as plain vanilla as

They can get while still being in crypto and I think that makes this a little bit easier I think it also removes you know assuming these things do move forward and get approved it removes some of of the regulatory uncertainty around these products because at the end of the day

Um you know the role of advisers is to you know manage their clients money and and provide them with access to high quality product and I think you know taking some of that regulatory uncertainty out of the mix can certainly improve um accessibility yeah and you and Kathy are also launching recently a

Suite of Bitcoin and ethereum Futures ETFs as well right yes that’s correct all right Kathy let’s go ahead do you want to say something no we we think there’s actually certainly room for both and I think that might be where this ends up I think we’re going to end up

Seeing both types of products with with different use cases for different um user bases and I think that’s a big part of at least our ethos is always been to you know meet customers where they’re at in their crypto Journey um so having that combination of both Futures and

Spot product really puts us in a position to do that and do you you think there’s a a customer for each one is there one a reason someone might want a Futures and Y jump in any one of you but I’ll ask you a few you uh why a customer

Want a Futures product versus a spot product necessarily there’s a variety of different reasons why that might be the case I think spot products have a tendency to be um a little a little simpler and have a more broad-based appeal and that goes to you know your

First question around why we think this is really a broadening moment in terms of access but you know Futures products um also certainly have a role and you see that in other commodity markets as well especially around um you know having significant liquidity uh potentially more sophisticated strategies that are interested in using

Futures Kathy so let’s assume the SEC approves the application this week or whatever what kind of impact would a Bitcoin ETF have on bitcoin I mean we all saw this big runup the minute Black Rock announced they were interested it was 30,000 and then it went now it’s over 45 40,000

They can’t help but think this is logically an anticipation of a spot Bitcoin ETF so is this a sell on the news event or not uh I think a lot of people have been saying that it uh probably will be a sell on the news event but so many

People are saying that now that I’m beginning to have doubts we we we are seeing an anticipatory move but you know the Institute the move of Institutions into this new asset class and that is what we are talking about here a new asset class which uh with a another diversifier institutions can increase

Their returns per unit of risk because of the low correlations I think that’s going to be very appealing and if institutions with trillions of dollars under management just put uh you know 0.2 or 0.5% in that could really move the needle so we think the move has been

Anticipatory uh and uh um and it makes sense it makes sense there’s a a scarcity value uh now evolving it’s becoming a scarce asset at 19.5 million uh Bitcoin outstanding it can only go to 21 and 15 million uh of those 19 and A5 million are in what we would call strong

Hands uh they haven’t moved their Bitcoin in the last 155 days you know Yan you’re an old hand at this is there what there’s a thing we call the S&P inclusion effect when when a stock is announced going into the S&P it runs up going up to that we this happened with

Uber just a little while ago and it happened in a a very big way with with Elon Musk uh and with Tesla and you can’t help but think there is such a thing as an inclusion effect if all of a sudden there’s a lot of people are anticipated buying a product whether

It’s going into the S&P or whether it’s becoming a Bitcoin ETF product the product runs up what happened was perfectly rational so just Riff on what Kathy was saying yeah know I mean listen I think Kathy is right that there is a short-term position positioning in front

Of this approval but what people are missing is to take a step back and you’re in a great setup I think for investors who are going along Bitcoin number one the FED has stopped raising interest rates so as a store of value it and gold should benefit from that

General positioning and then for Bitcoin itself the havening which is happening in April has always technically been a positive for Bitcoin so I think this is a big price impact event but I also think there’s there the other trends that are happening too that are positive

For Bitcoin so I I remember um when Bitcoin Futures uh were launched in October of 2021 uh they made quite a splash right at the time the volumes were huge remember B we had them on there was huge volume at that time I mean that was a

Real liquidity event and I think that was a real you know dug way on this what kind of reception you think the spot Bitcoin EF it going to be different you bring up the Futures uh Bitcoin ETFs I mean they were the first time that investors had access via the ETF lens

Right and an ETF we can all access here at the New York Stock change to our brokerage accounts uh ultimately that’s what we’re looking at when we think about ETFs uh you know ETFs provide democratized ass uh access to all these different investment vehicles investment

Styles and they do it all with with ease you know what we’re talking about today is the potential to now bring spot Bitcoin accessibility to individual investors institutional investors investors who may not feel comfortable investing outside of an exchange through a wallet or some other feature and so

The idea that you have a regulated investment vehicle like we have in the Futures based Bitcoin ETFs is becomes exciting and it’s it’s why you know we’re gearing up here at the New York Stock Exchange to be ready to trade all the different vehicles that may come to

Market here in the next week I I think the day one to to answer your question Bob will be a big thing but I think also it’s going to be a process uh the whole the whole book will not be written on day one uh because there are a lot of

Investors that have been contacting us just how do we think about allocating to bitcoin and we’re talking about financial advisors fiduciaries institutions that just to Doug’s Point did not want to uh did not want the Bitcoin Futures ETF they really wanted a spot Bitcoin product and so there are a

Lot of conversations that are going to happen so I think it’s going to take a while yeah uh Kathy you recently uh sold some coinbase stock I mean we usually consider coinbase a proxy for Bitcoin um what’s your thoughts on Bitcoin now and we sort of just ignored the larger

Philosophical issues about for the broader investing Community whether this really is an asset class at all uh and has does it satisfy does it have a significant use case for example something you would think of as a normal ass my starting point Bob just about in

There we talking to a big bull here okay in y v every there’s some look we’ve been doing gold since 1968 some investors just don’t care about store value investing but if you do my point is that Bitcoin is a compliment to gold and there have been other compliments to

Gold Silver Platinum and padium over the decades so this is just a compliment so start there and thinking about where to put it in your portfolio uh Kathy or ailia go ahead either one of you I’m GNA weigh on that use cases broadening out yeah I’ll give

Uh H props to 21 shares uh you know where uh they have launched 40 different uh products actually now 45 with the new uh funds here in the US uh and are enjoying economy of scale uh that we think this spot Bitcoin ETF is uh is

Only going to to increase and so this is going to enable uh us to serve institutions uh and we do think that institutions are missing this uh this asset class it’s been uh evolving for the past 10 years 10 plus years and uh they’ve had a lot of time to study it uh

We’ve certainly put research out there 21 shares has all of us have uh and I I do believe and stay tuned for our big ideas but this idea that it is a new asset class will come clearly through as you see the correlation uh correlation of Bitcoin to

Other asset classes out there sorry sorry uh ailia go ahead ailia you want to weigh ultimately this is a new form of Technology right not just a new asset class so you can’t really split those two pieces apart and I think that’s important here because I think yes over

Time you’ll start to see um things like Bitcoin act more like that store of value but right now actually at a technology level it’s still groundbreaking and you know there’s a lot of discussions around what what blockchains mean in terms of their relationship with AI what blockchains

Mean in terms of their relationship with Global Payments networks and monetary policy this is still all quite groundbreaking and if you look at you know where we are in terms of the adoption cycle you can think of crypto and blockchain being roughly in the mid to late 90s in terms of where the

Internet was at the time so there’s still quite a ways to go um in terms of how this actually will interact both with the World At Large and and sort of our economic systems as well as quite frankly how it will end up interacting with your portfolio and so while yes it

It has certain characteristics of the store value at this stage it’s also very much part of um a new wave of disruptive technology and that really can’t be underestimated you know I was just going to leverage off that and and basically um say that if you think about the internet early

1990s what happened it did not the developers did not build in uh anything to enable uh Financial Services because they never thought it it would be possible this is simply completing that uh and uh we think that the efficiencies coming out of building that layer into the internet are going to be profound

Yeah uh you and I have had this discussion a long time I am not convinced this is a completely new asset class in the way we traditionally think of asset classes stocks bonds cash Commodities real estate but I am convinced Bitcoin as an ETF structure is

A far safer way for people to own it than the current structure exists where we have all sorts of disasters people forgetting their passwords stuff getting stol and so I am convinced Bitcoin is a safer way to own it despite my concerns about whether it’s a real asset class uh

And I remember what happened with gold now Gold’s been gold has been money for thousands of years uh and it has satisfied use cases clearly uh in fact it’s used in jewelry it’s used for industrial purposes it had gold has clear use cases historically and I saw

What it did the gold ETF did you were involved in that 2004 that happened I was very involved trading it we covered it to day happened down here and I remember how important it was because people gold used to be like old guys in their basement holding gold coins and

All of a sudden you didn’t need to have that problem you had a custodian in London that had a go I saw the vaults in London it is eye popping I saw the gold vaults and you like wow they there’s guards everywhere they don’t the Vol

Where it is it’s safe you can trade it on an intraday basis and you don’t have to worry somebody breaks into your basement so this is why I think it works well for a Bitcoin EF and remember what happened to Gold I’m reminiscing with Yan here it was like 400 bucks in 2004

It went to a th000 in a few years yeah listen I I think it’s very exciting for Bitcoin this development gold just to put in memory when we launched our first uh gold mining ETF in 1968 it was illegal to own gold yeah then in the 70s

They liberated the price the only way you could buy gold is through Futures contracts everyone at the series 3 and then absolutely the ET ETF the bullion ETF was a breakthrough in accessibility and cost for investors that’s one thing too the spreads we were expecting if there anything like we see in Europe

Will be much tighter than you can necessarily get on a crypto exchange so I think that’s it’s really exciting and and Doug of course you pay for this I’m talking about custodians it’s very important to have a custodian and not you know you’re putting gold in your basement or eat or Bitcoin that’s

Exactly right I mean what we’re talking you pay for that though you you do but what we were talking about here is taking Bitcoin and putting it into a regulated investment vehicle right and so there there’s a certain amount of uh investors that are looking for an ETF that’s traded specifically on in

Exchange it gives you access it gives you a vehicle you’re comfortable with maybe it meets the mandates or rules of an institution uh at the end of the day though it also brings other investors that have new and innovative ideas back into the marketplace and we saw that as

As Yan mentioned with gold all these combination complex Vehicles people trading gold in different ways we’re already starting to see it in the filings with uh with new and unique interesting filings coming along taking pieces of Bitcoin taking pieces of some of these ETFs so uh the future smell the

Press releases coming in the next few months from the New York Stock Exchange why while I have you here one of the developments that appears to have helped spot Bitcoin ETFs is the development of these surveillance sharing agreements proposed by the exchanges uh Doug briefly without getting too wonky on us

Explain how these agreements work and and this was a big point about selling this how they can detect or address fraud and manipulation it was a big point I mean this was the thing Gary genser really had a problem with that’s right uh when ETFs listed the New York

Stock Exchange and their underlying Holdings trade elsewhere the exchanges will set up these surveillance sharing agreements where regulatory departments will share data and will exchange what does that mean it sounds very fancy but what actually happens and uh imagine help people imagine you have an international ETF that’s that’s holding

Uh it’s listed and traded here at the New York Stock Exchange but it’s holding Securities that are listed on uh the London Stock Market the lsse it allows the London Stock Market these agreements to share their data with our reg Department to look for any fraudulent activity any manipulation of share

Prices and and it it sort of opens up the pathway for Regulators to speak with one another now in this case uh there was a lot of conversation about these surveillance sharing agreements along the way at the end of the day uh that’s sort of fallen out of the spotlight I

Think and and most of us have been focused more on uh the actual underly trading of Bitcoin how it’s working at the CME and some of the other Futures markets okay um given uh cathine Yan I’m going to ask you and feel you can weigh in given how many applicants there are

We have 13 of them out there there’s a lot of interest in the fee structure here um and some appear to be waving fees for some time periods um Kathy I’ll start with you maybe on I I don’t know if you publish your fee structure yet

But if you can explain sort of what you’re going to be charging here for this uh for for Bitcoin ETFs sure uh the the fee structure and I I’ll preface it by saying we are not looking to maximize profitability with uh the spot of uh ETF

Uh we will we will do that more so with our actively managed ETFs but we really believe this is an important moment for uh to help with the democratization of uh Bitcoin access giving more people access access so uh that’s our primary motive uh to charge

25 basis points uh and for the first billion dollars uh uh or first six months uh free access now it this changed right it was did I I saw it was published was 80 basis points you you refiled it with with now 25 basis points is that right

Yes so originally we were just putting in there a a marker we didn’t know what uh uh how how uh the industry was going to fall out but as we were evolving our thinking we were saying wait a minute this is a special moment uh to to make a

Statement that this is a public good effectively the equivalent of a a financial superhighway uh a global monetary system a technology as ailia was saying and uh we just wanted to make sure that one of the things we communicated is we want you to feel like you can access this so uh free

For the first six months or $1 billion in a so so if I I’m just a retail investor I put $10,000 in your Bitcoin ETF there’s no fee for the first six months is that right or uh until a hits uh a billion dollars whichever happens

First okay fine Yan have you filed the Fe yeah all the fees came out pretty much this morning Bob because they’re all getting ready to basically list on Thursday okay um and so that’s not been filtered out through all the news um I don’t want to talk about the specifics

Of ours what I will say though I agree with Kathy that you know really we’re standing on the shoulders of giants and there are a lot of developers that have worked for free to build the Bitcoin Network and continue to add you know to make changes to that Network and that we

Wanted to pay respect to those developers so we’re giving part of our profits that we’re making off of this ETF but you did publish your numbers this morning right we did yeah yeah yeah it’s out out there and you don’t want to tell us what it is no you know Doug’s

Compliance people are making me really nervous brother for GR out loud um the uh but you think it it will start trading on Thursday vanc products are competitively priced and very and very well built you’re reading like an advertisement the so you but you believe it’s going to start trading Thursday

That’s okay um Kathy uh and and Yan there are a lot of reports out there that some applicants of the 13 have lined up substantial investors you want to give us any ideas um any investors lined up anybody want to say anything some people been the SE Capital was

Disclosed in a lot of the s1s that were filed this morning um and uh you know I don’t want to talk about our product too much but we had very we have very good seed Capital coming into this Kathy ailia anything yeah I don’t think seed Capital

Will be an issue Bob uh and I agree with what Yan said uh at the beginning where you know for a lot of our clients that they have to now uh do a little more due diligence uh as as um these uh ETFs come

Out and uh and and they see the s1s and so forth so uh we think it’s going to be a uh there’ll be a nice push early on and then a good nice institutional build well you heard it’s going to be you know saying one of the things that is going

To end up being incredibly important in the coming weeks and months as people start to actually do diligence on these products and and try to begin adding them to portfolios and hopefully live up to these uh expectations around a it’s going to end up coming down to how well

Vter these products how well structured are these products can they actually hold up to this um you we we’ve been running products like these for about five years um they are a little different um in a in a bunch of different ways safety security operational infrastructure just fundamentally looks different and I

Think one of the things that’s going to be very interesting over the coming weeks and months is how that ends up translating um with these audiences and with investors as they begin to actually come into the space for the first time and really understand the full range of

That complexity well there’s certainly a lot of product out there 13 of them is it your opinion the consensus is they’ll approve all of them at once is that fair yes that well we have precedent that’s what happened with ethereum future as ETFs they were all approved to launch on

The same day and I think the SEC at a high level policy-wise doesn’t want to Advantage any particular ETF issuer so I think this is a Fair Way um you know of dealing with that I don’t think this is going to be a win or take

All Market by the way I think market share will be distributed there’ll be a lot of winners and that’s fine that’s great yeah well it’s going to be an interesting week folks you heard the anticipation is building it looks like something’s going to happen 13 of them

Will be here of course reporting on all of that