Grayscale CEO Michael Sonnenshein on bitcoin ETF approval: The culmination of 10 years of work

Grayscale CEO Michael Sonnenshein joins ‘Squawk Box’ to discuss the SEC’s approval of bitcoin ETFs, the long road to regulatory approval, what it means for Grayscale and crypto at large going forward, and more.

>>> WELCOME BACK TO “SQUAWK BOX.” A WATER SHED MOMENT WITH CRYPTO INDUSTRY HAPPENING TODAY. REALLY HAPPENED YESTERDAY. 11 BITCOIN ETFs SET TO BEGIN TRADING IN TWO HOURS FROM NOW. A VERY LONG ROAD TO REGULATORY APPROVAL, PARTICULARLY FOR OUR NEXT GUEST, WHOSE GRAYSCALE

BITCOIN TRUST IS AMONG THOSE APPROVED. JOINING US NOW FIRST ON CNBC GRAYSCALE’S CEO MICHAEL SONNENSHEIN, GOOD MORNING. YOU WERE GETTING A SHOUTOUT EARLIER BECAUSE A LOT OF THIS WOULD NOT HAVE HAPPENED HAD YOU NOT PURSUED THIS IN THE WAY YOU DID.

I WANT TO ASK YOU, BROADLY, DID YOU CELEBRATE LAST NIGHT? WHAT IS GOING ON HERE? >> THE LAST COUPLE OF HOURS HAVE JUST BEEN A COMPLETE BLUR. WHEN WE GOT THAT PHONE CALL YESTERDAY THAT OUR 19 B 4 HAD BEEN APPROVED, IT WAS ALMOST AN OUT OF BODY EXPERIENCE.

>> YOU KNEW IT WAS COMING? >> YOU KNOW, I THINK WE KNEW IT WAS COMING, WE WERE OPTIMISTIC, WE WERE STEADFAST IN OUR CONVICTION AROUND THIS. BUT THIS IS REALLY THE CULMINATION OF TEN YEARS OF WORK. AND INVESTOR SUPPORT, THE GRAYSCALE TEAM, EVERYBODY HAS

BEEN WORKING TIRELESSLY TOWARD THIS OUTCOME. >> WHAT DOES THIS FUNDAMENTALLY MEAN FOR GRAYSCALE? >> IT MEANS IT IS THE BEGINNING OF HAVING GBTC TRADE ON THE NEW YORK STOCK EXCHANGE. WE HAVE NOW HAVE A WHOLE FAMILY OF INVESTMENT PRODUCTS THAT HAVE BEEN FOLLOWING VERY PRESCRIBED

LIFE CYCLE FROM PRIVATE PLACEMENT, NOW ALL THE WAY TO ETF. GBTC IS THE FIRST OF THE PRODUCTS TO DO THAT. NOW THE REST OF THE GRAY SCALE FAMILY OF PRODUCTS CAN START TO MOVE ALONG THAT CONTINUUM. >> LET ME ASK YOU A QUESTION, THOUGH.

YOU WERE IN A MONOPOLY OF SORTS PRIOR TO THIS. IF YOU WANTED ACCESS TO BITCOIN, NOT OWNING IT DIRECTLY, BUT IN THE FORM OF A FUND, IF YOU WILL, YOU WERE THE ONLY WAY TO DO IT. NOW YOU’RE GOING TO HAVE TO COMPETE AGAINST 10 PLUS OTHERS,

MANY OF WHICH ARE GOING TO TRY TO DO IT AT A MUCH LOWER FEE SCHEDULE THAN YOU DO. WHAT IS THAT GOING TO DO? >> WELL, WE HAVE BEEN PREPARED FOR A WORLD IN WHICH THERE ARE MULTIPLE SPOT PRODUCTS. WE LOOK FORWARD TO THE PATH FOR

ALL THE OTHER ISSUERS TO COME TO MARKET. OUR COURT VICTORY, OUR OPERATIONS OUR DISCLOSURES, OUR WORK WITH THE S.E.C., INVESTORS SHOULD HAVE CHOICE. BUT WE’RE COMING TO A MARK NET A DIFFERENTIATED WAY. IT IS GOING TO BE AS OF THIS MORNING THE SECOND LARGEST SPOT

COMMODITY ETF IN THE WORLD. IT HAS $28 BILLION OF ASSETS UNDER MANAGEMENT. AND OTHER ISSUERS MAY TRY AND DIFFERENTIATE ON FEES FOR GBTC, IT IS ABOUT SIZE, LIQUIDITY AND TRACK RECORD. >> ONE OF THE THINGS, I DON’T KNOW IF YOU SAW ANTHONY WAS ON

THE BROADCAST EARLIER IN THE 6:00 HOUR, HE MADE AN INTERESTING POINT GIVEN YOUR FEES ARE GOING TO BE MATERIALLY HIGHER THAN BLACKROCK OR JUST ABOUT ALMOST EVERYBODY ELSE, HE SAID, LOOK, THESE GUYS MAY NOT NEED TO GO AFTER NEW MONEY.

THEY NEED TO KEEP THE MONEY THEY’VE GOT. AND MAYBE BUILD UPON THAT WITH OTHER ETFs AND OTHER FUNDS. IS THAT THE STRATEGY THAT YOU’RE PURSUING OR IS THERE SOMETHING ELSE GOING ON? >> WE’RE FOCUSED ON BUILDING THE ECOSYSTEM AROUND GBTC. FOR EXAMPLE, GBTC TRADING ON THE

OTC MARKET SINCE 2015, NEVER HAD LISTED OPTIONS, RIGHT? NOW THAT IT TRADES ON NYSE, YOU CAN SEE THE DEVELOPMENT OF AN OPTIONS MARKET AROUND GBTC. YOU REALLY CAN SEE HOW INVESTORS CAN CONTINUE TO COMPILE THEIR BITCOIN EXPOSURE AROUND THE MARKET. >> WHAT IS THE DISTINCTION

BETWEEN ME GOING OFF AND BUYING THE BLACKROCK FUND VERSUS BUYING YOURS? >> IT IS ABOUT THE ASSET MANAGER BEHIND IT. WE’RE A CRYPTO SPECIALIST. WE WEATHER THE ALL DIFFERENT TYPES OF SPEED BUMPS AND ADVANCEMENTS WITHIN THE CRYPTO ECOSYSTEM FOR A LOT OF ASSET

MANAGERS AND ISSUERS, THIS IS THE FIRST TIME THEY’RE DEALING WITH THE COMPLEXITIES THAT GO INTO RUNNING THESE TYPES OF PRODUCTS. >> YOU DON’T THINK BLOCKROC BLACKROCK IS UP TO THE CHALLENGE IN. >> I’M NOT GOING TO SPECULATE ON HOW WELL OTHER ASSET MANAGERS

WILL OR WON’T NAVIGATE THAT. WHAT I CAN SAY IS OVER THE LAST TEN YEARS WE HAVE LEARNED COUNTLESS TIMES THROUGH COUNTLESS CYCLES THAT THIS IS NOT A STRAIGHTFORWARD — >> WHY ARE YOUR FEES HIGHER? >> WE TALKED ABOUT FEES, WE PROMISED INVESTORS WE WOULD

LOWER FEES, WE DID, WE REDUCED BY 25%. YOU HAVE COUNTLESS EXAMPLES ACROSS THE SPACE WHERE YOU HAVE CATEGORY LEADERS THAT ARE NOT THE LOWEST COST OPTION. >> BUT WHEN YOU LOOK AT THE SCREEN, WE PUT UP THE FEES FOR EVERYBODY ACROSS THE BOARD,

YOU’RE SIGNIFICANTLY, SIGNIFICANTLY, MULTIPLES HIGHER THAN EVERYBODY ELSE OUT THERE. >> YES. BECAUSE GBTC HAS DIFFERENTIATED CHARACTERISTICS. THERE ARE NOT — THERE ARE NO ASSETS IN THESE OTHER PRODUCTS. THEY’RE STARTING FROM ZERO. AND GBTC, AGAIN, HAS THAT MARKET LEADING LIQUIDITY. IT TRADED OVER $650 MILLION YESTERDAY ALONE.

>> BLACK ROCK IS LIKE THE BIGGEST OF THE BIG. IF YOU’RE LOOKING AT THAT LIQUIDITY AND WHERE YOU HAVE THINGS BACKED UP, I’M REALLY CURIOUS, MAKE THE CASE FOR ME WHY I SHOULD PAY 1.5% VERSUS 0 TO 0.2%? >> WE DID A LOT OF RESEARCH

AROUND THIS THE MARKET IN THE U.S. IS JUST STARTING TODAY. IF YOU LOOK AT OTHER GEOGRAPHIES AROUND THE WORLD, YOU HAVE SEEN PRODUCTS THAT HAVE FEES THAT CARRY ANYWHERE FROM 125 BASI