More than one month into spot bitcoin ETF trading: Here’s what you need to know

David LaValle, Grayscale Investments global head of ETFs, joins ‘The Exchange’ with CNBC’s Bob Pisani to discuss how accurately spot bitcoin ETFs are tracking the price of the underlying asset, Grayscale’s high fee relative to competitors, and more.

CONGRATULATIONS. THE BIG LAUNCH HAPPENED LAST MONTH. TEN SPOT BITCOIN ETFs LAUNCHING, INCLUDING YOURS. TWO QUESTIONS. NUMBER ONE, HOW IS THE TRACKING? ARE THEY ACCURATELY TRACKING BITCOIN? AND HOW ARE THE FLOWS? WHAT KIND OF INVESTOR INTEREST ARE YOU GETTING? >> SO THE TRACKING HAS BEEN REALLY REMARKABLE.

WE’VE SEEN THE BITCOIN ETFs REALLY DOING A GREAT JOB OF HOLDING VERY TIGHT, TRACKING THE FUNDS VERY TIGHTLY. AND WE HAVE SEEN A LIQUIDITY PROFILE THAT’S BEEN INDICATIVE OF WHAT WE ANTICIPATED. WE HAVE A TEN-YEAR TRACK RECORD AND OVER A MILLION INVESTORS AND OVER $20 BILLION IN ASSETS.

SO WE’RE SEEING WHAT WE ANTICIPATE. >> ARE YOU HAPPY WITH THE FLOWS? YOU HAD 26 BILLION, YOU HAD AN EXISTING FUND. YOU CONVERTED IT, I SEE ABOUT $6 BILLION IN OUTFLOWS. NOT BAD. MODEST INFLOWS INTO THE REST OF THEM. ARE YOU HAPPY WITH WHERE YOU ARE RIGHT NOW?

YOU HAVE ABOUT $20 BILLION FROM ’26. DO YOU WANT MORE? HOW WOULD YOU CHARACTERIZE WHAT’S HAPPENING? >> WHEN YOU’RE A LEADER IN THE MARKET AND HAVE THE LARGEST FUND AND THE PRODUCT THAT IS LOOKED TO FOR THE GREATEST LIQUIDITY AND FOR BOTH INVESTMENT

OPPORTUNITY AND ALSO AN ACCESS VEHICLE, YOU’RE GOING TO SEE OUTFLOWS. WE ANTICIPATED THOSE OUTFLOWS. WE’RE REALLY HAPPY TO SEE THAT THE PRODUCT IS BEHAVING AS DESIGNED, TRACKING THE UNDERLYING ASSET VERY TIGHTLY. AND CANDIDLY, BOB, THIS PRODUCT IS BRAND NEW AND WE DIDN’T KNOW

HOW IT WAS GOING TO WORK. WE’RE REALLY EXCITED ABOUT THAT. >> IT WAS AMAZING TO WATCH DAY BY DAY, THEY KEPT WATCHING THE FEES. YOU’RE CHARGING 1.5%. EVERYBODY ELSE IS ZERO OR 19, 20 BASE I POINTS AFTER SIX MONTHS. ARE YOU GOING TO KEEP THAT FEE?

>> THE FEE IS ONE COMPONENT TO THE PRODUCT AND THE DECISION TRACK THAT AN INVESTOR WILL MAKE. WHEN YOU LOOK AT TEN-YEAR TRACK RECORD AND LIQUIDITY CHARACTERISTICS OF THE PRODUCT, THOSE ARE OTHER FACTORS. >> YOU CAN’T GO TO A TRAIN STATION WITHOUT SEEING A GRAY

SCALE AD. YOU SEEM TO BE IN A BLITZKRIEG TRYING TO CONVINCE THE COUNTRY EVERYBODY SHOULD INVEST IN THE BITCOIN ETF. >> ETFs STARTED WITH S&P 500 EXPOSURE 30 YEARS AGO. 20 YEARS AGO, THEY BROUGHT GOLD TO MARKET. THIS IS ANOTHER, YOU KNOW, POINT

OF EVOLUTION AND MATURITY FOR THE ETF MARKET. BRINGING BITCOIN TO THE BROADEST RANGE TO INVESTORS IN A TRANSPARENT FASHION. >> CAN YOU CONVINCE ADVISERS TO BUY BITCOIN? THERE’S A WHOLE BIG PROGRAM WHERE YOU’RE ON A BLITZKRIEG TO CONVINCE EVERYONE IT’S SAFE. GARY GANZLER FIRED A BROAD SHOT

ACROSS THE BOW, WHO ADMITTED WE LOST THE GRAY SCALE’S CASE, BUT YOU ARE REQUIRED TO FOLLOW REGULATION, AND THAT’S A WARNING SHOT SAYING YOU, INVESTMENT ADVISERS, BETTER BE CAREFUL ABOUT RECOMMENDING BITCOIN AND MAKE SURE IT’S APPROPRIATE FOR THE PEOPLE THAT YOU ARE ADVISING.

THAT SEEMS TO BE A SHOT ACROSS THE BOW. YOU’RE SAYING YOU COULD GET SUED EASILY. >> THERE’S A COUPLE OF THINGS. THIS IS ABOUT COIN INVESTING INTO THE REGULATORY PERIMETER. WE RESPECTED THE PROCESS. WE HAD A DISAGREEMENT BUT SETTLED THAT. WE’LL RESPECT THE PROCESS AT ALL

OF THOSE PLATFORMS AND ALL THE INDEPENDENT ADVISER PLATFORMS AND THE WIRE HOUSE PLATFORMS TO ENSURE WE’RE GOING THROUGH DUE DILIGENCE PROCESS, THAT THEY UNDERSTAND WHAT OUR PRODUCT IS. IT’S GOT A TEN-YEAR TRACK RECORD AND IT’S THE LARGEST IN THE WORLD. AND ALSO THAT THEY UNDERSTAND

WHO GRAY SCALE IS. I’VE LONG SAID NOT EVERY ETF IS CREATED EQUALLY, AND WE WILL COMPLY WITH REGULATORY STANDARDS, AS WELL. >> SO YOU ARE CONVINCED THAT YOU CAN SHOW PEOPLE THIS IS THE PATH? I ALWAYS JOKE ABOUT BITCOIN FOR GRANDMA, BUT IT MAY NOT BE SUIT

ABLE FOR THAT. YOU THINK THERE IS A CLEAR LEGAL PATH THAT THIS IS WHAT YOU NEED TO DO TO RECOMMEND BITCOIN TO INVESTORS. IT’S A NEW PRODUCT, IT’S HARD TO FIGURE OUT. >> WELL, INDEPENDENT WEALTH MANAGEMENT PLATFORMS HAVE THEIR PROCESS OF DUE DILIGENCE.

WE ARE GOING TO COMPLY WITH THAT, AND WE THINK THAT ETFs HAVE LONG BEEN BUILDING BLOCKS FOR CLIENTS, AND HAVE DEMOCK ATIZED INVESTING FOR THE BROADEST RANGE OF ASSET CLASSES. THIS IS A NEW EXAMPLE OF THAT. NOW THESE PLATFORMS UNDERSTAND WHAT AN ETF IS AND UNDERSTAND