Spot bitcoin ETF decision: What an approval could mean for crypto at large

John Palmer, CBOE Digital president, joins ‘Squawk Box’ to discuss the latest developments in the approval process for spot bitcoin ETFs, what an approval could mean for crypto at large, and more.

>>> WELCOME BACK TO “SQUAWK BOX.” THE CRYPTO COMMUNITY EXPECTING A CALL FROM THE S.E.C. ANY DAY NOW ON THE APPROVAL OR REJECTION OF THE SPOT BITCOIN ETFs, THOUGH APPROVALS ARE PRETTY WIDELY EXPECTED AT THIS POINT. JOINING US NOW, JOHN PALMER IS THE PRESIDENT AND CEO OF DIGITAL.

IT’S A SEPARATE ENTITY FROM PARENT COMPANY CBOE GLOBAL MARKETS, WHICH IS THE LISTING AGENT, OR I SHOULD SAY, EXCHANGE FOR SPOT BITCOIN ETFS. THEY’RE NOT INVOLVED IN THE PROCESS OF LAUNCHING THE ETFs, BUT IT WOULD BENEFIT FROM THEIR APPROVAL. WHAT DO YOU THINK WE’RE GOING TO

HEAR, AND IS THERE A WRINKLE IN WHAT WE MIGHT HERE? >> I THINK YOU’VE SEEN QUITEA LOT OF PROGRESS MADE REALLY LAST COUPLE OF WEEKS, EVEN YESTERDAY. YOU KNOW, WE SAW SOME BACK AND FORTH BETWEEN THE COMMISSION AND THE ISSUERS ON THE S-1s. I THINK THAT’S GOOD SENTIMENT, RIGHT?

PROGRESS HERE IS GOOD. YOU’RE SEEING THE AGENCIES ENGAGE. YOU’RE SEEING THE ISSUERS ENGAGE AND ALL THE FILINGS FROM THE EXCHANGES ARE ALL UP TO DATE AT THIS POINT FROM WHAT WE CAN SEE. >> LET’S ASSUME THAT THERE’S AN APPROVAL. DO YOU THINK THERE ARE CERTAIN

ONES THAT GET APPROVED. ALL OF THEM GET APPROVED AT THE SAME TIME. HOW DOES THAT WORK, AND WHAT DOES IT MEAN IN TERMS OF, AS THEY GET LAUNCHED, HOW MUCH BITCOIN THEY’RE GOING TO BE BUYING IN THE MARKET, WHAT THAT DOES TO THE PRICE, HAVE WE

ALREADY BOUGHT THE RUMOR, SELL THE NEWS? WHAT’S THE THOUGHT? IT’S OBVIOUSLY A PRETTY BIG COMPETITIVE MILESTONE, RIGHT? WE HAVE QUITE A FEW DIFFERENT ISSUERS WITH FILINGS, THE S.E.C. HAS DIFFERENT DATES FOR DIFFERENT RULE FILINGS ON THE EXCHANGE SIDE THAT THEY CAN APPROVE.

BUT SO THERE’S A COUPLE OF DIFFERENT SCENARIOS. THEY CAN, AS YOU MENTIONED, APPROVE OR APPROVE THEM ALL AT ONCE. TIME WILL TELL, I THINK, BETWEEN TODAY AND TOMORROW HOW THAT’S ACTUALLY GOING TO GO. AND YOU STILL HAVE THE S-1 ASPECT THAT HAS TO BE MADE EFFECTIVE, RIGHT?

SO WE’VE SEEN THE AGENCY ENGAGE WITH THE ISSUERS ON THAT. AND SO BOTH OF THE RULE FILINGS AND THE S-1s HAVE TO BE BOTH APPROVED AND MADE EFFECTIVE BEFORE THEY CAN ACTUALLY LIST IT. >> IMPACT ON PRICE. FOR THOSE WHO HAVE BEEN

SPECULATING THE LAST MONTH OR TWO OR THREE NOW THAT THIS DAY IS GOING TO COME, HAS IT MOVED AS MUCH AS IT’S GOING TO MOVE? IS THIS THE DAY GETS ANNOUNCED, IT MOVES ANOTHER, YOU KNOW, 20, 30 — WHAT ARE WE TALKING ABOUT HERE?

>> IT’S HARD TO EXPECT. WE HAVE TO SEE HOW THE CAPITAL FLOWS INTO THE ETF. I THINK AN APPROVAL IS BULLISH, BUT WE’VE SEEN A BIG MOVE RECENTLY. THE BEST PART HERE IS THAT THERE ARE GOING TO BE ADDITIONAL INVESTORS THAT GET ACCESS TO

BITCOIN THAT MAYBE DON’T REALLY WANT TO NATIVELY HOLD IT THEMSELVES, RIGHT? >> I TOLD YOU IT WAS GOING TO MOVE 15%, BUT I DIDN’T TELL YOU WHICH WAY. >> I DON’T THINK I WOULD BE SURPRISED. >> AND — RIGHT, BUT —

>> IT’S LIKE THAT EVERY DAY, PRACTICALLY. >> BUT PICK A WAY, UP OR DOWN? >> I THINK IT DEPENDS ON WHICH WAY THE APPROVAL. WHETHER IT’S APPROVED OR NOT APPROVED. >> I’M SAYING IF IT’S APPROVED. >> I THINK IT’S LIKELY WE SEE MORE OF AN UPSIDE THAN A

DOWNSIDE. >> AND DO YOU SEE IT BECOME SOMETHING — WE’VE HAD PEOPLE ON THIS BROADCAST, KATHY WOODS SAYS IT GOES TO $500,000. WE HAD PEOPLE YEARS AGO COME ON SAY IT WOULD BE $1 MILLION OF BITCOIN. DO YOU THINK THAT’S DIRECTIONALLY WHERE THIS ALL GOES?

DO YOU THINK THERE’S SORT OF A CAP ON WHAT IT IS? DO YOU THINK EVERY INVESTOR IN THE WORLD DECIDES THAT THEY NEED TO HAVE SOME PORTION OF THEIR ASSETS IN BITCOIN? >> I THINK IT DEPENDS ON HOW MUCH WE CAN SEE FLOW IT IN, RIGHT?

BITCOIN RIGHT NOW MARKET CAP IS JUST OVER $915 BILLION, SO EVEN A SUCCESSFUL ETF LAUNCH IN ONE YEAR COULD BE $10 OR $15 BILLION IN AUM. THAT WOULD BE QUITE SUCCESSFUL COMPARED TO SOME OF THE MOST SUCCESSFUL ETF LAUNCHES. EVEN THAT IS, WE’RE ONLY TALKING

1 TO 2% OF THE CURRENT MARKET CAP OF BITCOIN. SO HOW MUCH IS THAT REALLY GOING TO INFLATE THE PRICE TO THE LEVELS THAT YOU MENTIONED, $500,000 OR $1 MILLION? TIME WILL TELL. BUT AGAIN, WE ALSO KNOW THERE’S A FIXED SUPPLY OF BITCOIN.

SO WHAT — HOW THAT IMPACTS THE SUPPLY AND DEMAND DYNAMICS OF THE MARKET AND HOW MUCH CAPITAL IS ACTUALLY FLOWING INTO THE ETFs, I THINK WILL BE VERY FOCUSED — >> AND WHAT’S GOING TO HAPPEN TO THE PRICE ANDFOCUSED. WHAT’S GOING TO HAPPEN TO THE

PRICE AND THE FEES AROUND THESE ETFs? PART OF ME SAYS IT’S GOING TO BE CLOSE TO ZERO. NOTHING PARTICULARLY DISTINCT ABOUT ANY OF THESE FUNDS. >> IT’S A DIFFERENT QUESTION. I THINK YOU SEE DIFFERENT EXPENSE RATIOS AND PRICING ACROSS SIMILAR ETFs IN TODAY’S WORLD.

THE FEES OF THE DIFFERENT ISSUERS CONVERGE OR NOT, TIME WILL TELL. THERE’S THAT COMPETITIVE NATURE. >> IS THERE ALWAYS GOING TO BE A DISCOUNT ON THESE ETFs? YOU LOOK AT THE GRAYSCALE ETF AND THERE’S ALWAYS BEEN A MASSIVE DISCOUNT. >> THERE’S THE EXPENSE SIDE OF

IT, SO HOW THEY MANAGE THAT AND HOW LARGE THE EXPENSES WILL IMPACT WHAT THEY’RE GOING TO GET ON THE RETURN — >> WHAT DO YOU THINK ABOUT THE FOLKS WHO HAVEN’T GONE INTO THIS? ARE WE GOING TO SEE A VANGUARD,

ALL OF A SUDDEN, WHICH HAS BEEN ON THE SIDELINE JUMP IN? DO YOU THINK THERE’S ALWAYS GOING TO BE A GROUP OF FOLKS IN FINANCE THAT ARE JUST LIKE, WE’RE NOT DOING THIS? >> I DO. I THINK THERE ARE GOING TO BE FOLKS THAT MAYBE WILL ALWAYS SAY

THAT’S NOT FOR US, THIS IS OUR CORE BUSINESS, SO THIS IS WHERE WE’RE GOING TO STAKE. YOU’LL HAVE THOSE THAT ARE MAYBE ON THE LEADING EDGE OF THE SPIRIT OF DIFFERENT TYPES OF PRODUCTS AND OFFERING THEM. FOR THE FOLKS THAT AREN’T IN THE

BUCKET YET OR AREN’T AT THE TABLE READY TO LIST, THEY’RE GOING TO WATCH THIS AND SEE HOW SUCCESSFUL IT IS. >> BULLISH FOR A COINBASE, BULLISH FOR A ROBINHOOD? NOT? BECAUSE PEOPLE WILL BUY IT AS ETFs INSTEAD? HOW DO YOU THINK ABOUT THE EXCHANGE UNIVERSE?

>> WE RUN A SPOT EXCHANGE WITH DIGITAL. FROM MY PERSPECTIVE THERE’S A COUPLE OF DIFFERENT POINTS. YOU’LL BE ABLE TO ACCESS BITCOIN THROUGH AN ETF AND NOT HAVE TO BIANNUALLY. YOU’LL HAVE THOSE PARTICIPANTS ENTERING THE MARKET. I DON’T THINK SOMEBODY ALREADY TRADING BITCOIN IS GOING TO

TRADE ETF OVERBITCOIN. THEY’VE ALREADY MADE THAT JOURNEY. YOU’LL HAVE PENSION FUNDS, THEY’RE GOING NEED A PLACE TO HEDGE. SOMETIMES THEY HEDGE NATIVELY. SOMETIMES THEY MIG