1
00:00:02,520 --> 00:00:06,160
Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,

2
00:00:06,640 --> 00:00:10,160
Speaker 1: And this is Bloomberg Crypto, a daily Bloomberg I Heart podcast.

3
00:00:10,560 --> 00:00:19,760
Speaker 1: It's Friday, July one. One of the most closely watched

4
00:00:19,760 --> 00:00:22,560
Speaker 1: fights in crypto. Might sound a little obscure, but it's

5
00:00:22,600 --> 00:00:26,160
Speaker 1: really important. It pits a company called gray Scale Investments

6
00:00:26,320 --> 00:00:30,080
Speaker 1: against the U S Securities and Exchange Commission, a crucial regulator,

7
00:00:30,640 --> 00:00:33,680
Speaker 1: and it involves so called exchange traded funds, or e

8
00:00:33,800 --> 00:00:37,159
Speaker 1: t s, which are a very popular type of investment vehicle.

9
00:00:37,800 --> 00:00:40,760
Speaker 1: Gray Scale has been lobbying regulators to allow it to

10
00:00:40,800 --> 00:00:43,839
Speaker 1: convert one of its existing crypto products, one of the

11
00:00:43,880 --> 00:00:47,720
Speaker 1: biggest in the market, into an e t F. This week,

12
00:00:48,040 --> 00:00:52,160
Speaker 1: the SEC rejected their petition. Gray Scale has been very

13
00:00:52,159 --> 00:00:54,680
Speaker 1: clear that they've been preparing for a fight and that

14
00:00:54,760 --> 00:00:57,760
Speaker 1: they intend to take that fight to court. They've geared

15
00:00:57,840 --> 00:01:02,440
Speaker 1: up accordingly. Earlier this they hired Donald Varelli, a top

16
00:01:02,440 --> 00:01:06,240
Speaker 1: White House lawyer during the Obama administration. Bloomberg reports that

17
00:01:06,319 --> 00:01:08,920
Speaker 1: Kasey Greifeld joins me to examine why this fight is

18
00:01:08,959 --> 00:01:16,800
Speaker 1: so important to cryptozy. Thank you so much for joining us.

19
00:01:17,480 --> 00:01:21,840
Speaker 1: Please explain what is going on here? So we're talking

20
00:01:21,840 --> 00:01:26,360
Speaker 1: about e t F. My favorite topic are exchange traded funds,

21
00:01:27,000 --> 00:01:31,959
Speaker 1: and it's basically packaging an entire portfolio into a fund

22
00:01:31,959 --> 00:01:38,360
Speaker 1: that port of bonds. Everything basically except physical bitcoin can

23
00:01:38,400 --> 00:01:40,520
Speaker 1: be put into an e t F. It's a great question.

24
00:01:40,560 --> 00:01:43,560
Speaker 1: Everyone in the crypto ecosystem wants to know that answer,

25
00:01:43,680 --> 00:01:46,360
Speaker 1: and there's not a good one. So when you think

26
00:01:46,400 --> 00:01:49,760
Speaker 1: about the SEC, they let the first derivatives backed crypto

27
00:01:49,800 --> 00:01:53,560
Speaker 1: funds launched in October, they haven't approved a physically backed

28
00:01:53,880 --> 00:01:57,520
Speaker 1: bitcoin e t F. Uh, It's unclear why. It could

29
00:01:57,680 --> 00:01:59,560
Speaker 1: have to do with the fact that if you think

30
00:01:59,560 --> 00:02:03,200
Speaker 1: about bitcoin derivatives, for example, they oversee the CME, the

31
00:02:03,280 --> 00:02:08,560
Speaker 1: Chicago Mercantiles Exchange theme. Yeah, the SEC oversees the CME

32
00:02:08,919 --> 00:02:12,440
Speaker 1: where these derivatives trade, but the SEC doesn't have any

33
00:02:12,520 --> 00:02:16,480
Speaker 1: oversight into crypto exchanges. That could be a reason, but

34
00:02:16,639 --> 00:02:19,400
Speaker 1: it is a real frustration point for the industry. But

35
00:02:19,480 --> 00:02:21,800
Speaker 1: there's a slightly wild thing that you said, which is

36
00:02:21,840 --> 00:02:27,280
Speaker 1: like physical bitcoin literally impossible in the digital asset context.

37
00:02:27,400 --> 00:02:30,160
Speaker 1: So when we're talking about the difference between you know,

38
00:02:30,400 --> 00:02:32,679
Speaker 1: when we say a physical bitcoin back to e t F,

39
00:02:32,880 --> 00:02:35,880
Speaker 1: versus a derivative bitcoing back BTF, Like, how does that

40
00:02:35,880 --> 00:02:38,680
Speaker 1: really shape out in practice? Right? So in e t F,

41
00:02:38,720 --> 00:02:41,000
Speaker 1: which again it hasn't been approved, it would be basically

42
00:02:41,080 --> 00:02:44,320
Speaker 1: the e t F holding x amount of bitcoin to

43
00:02:44,400 --> 00:02:47,440
Speaker 1: back up x amount of assets, similar to the gray

44
00:02:47,480 --> 00:02:50,280
Speaker 1: skilled bitcoin trust, which we'll talk about because you haven't

45
00:02:50,280 --> 00:02:53,400
Speaker 1: seen these physically backed e t F could to prove basically,

46
00:02:53,440 --> 00:03:01,760
Speaker 1: these frank and funds have sprung up where you have

47
00:03:01,800 --> 00:03:04,880
Speaker 1: a bunch of trusts, for example, that hold crypto that

48
00:03:05,040 --> 00:03:08,560
Speaker 1: own a certain amount of coins, whereas these derivatives backed

49
00:03:08,720 --> 00:03:12,360
Speaker 1: e t f s obviously they hold derivatives and in

50
00:03:12,400 --> 00:03:16,720
Speaker 1: so in this case, futures on on crypto prices, bitcoin

51
00:03:16,800 --> 00:03:20,680
Speaker 1: prices specifically, so great scale has this trust, it is

52
00:03:21,240 --> 00:03:23,880
Speaker 1: a non trivial market player, and that it is the

53
00:03:23,960 --> 00:03:30,320
Speaker 1: single largest crypto slash bitcoin holding trust listed in the

54
00:03:30,440 --> 00:03:34,440
Speaker 1: United States. They really want to convert it to an

55
00:03:34,480 --> 00:03:37,600
Speaker 1: e t F. Why is that conversion so important to them?

56
00:03:38,240 --> 00:03:41,160
Speaker 1: So it gets into obviously how an e t F

57
00:03:41,200 --> 00:03:42,760
Speaker 1: is set up, and it's a little bit nitty gritty,

58
00:03:42,800 --> 00:03:45,120
Speaker 1: but basically e t F s you're able to create

59
00:03:45,480 --> 00:03:48,520
Speaker 1: and redeemed shares to sort of shift with market demands.

60
00:03:48,560 --> 00:03:51,480
Speaker 1: So you have these specialized traders. They're known as authorized

61
00:03:51,480 --> 00:03:56,360
Speaker 1: participants and as demand cools. They can destroy shares and

62
00:03:56,400 --> 00:03:59,360
Speaker 1: that keeps sort of the price of the bitcoin, or

63
00:03:59,520 --> 00:04:01,400
Speaker 1: rather the price of the e t F, inline with

64
00:04:01,440 --> 00:04:04,800
Speaker 1: the net asset value. What it truly holds that entire

65
00:04:04,840 --> 00:04:07,800
Speaker 1: process doesn't exist when it comes to these trusts. These

66
00:04:07,840 --> 00:04:11,960
Speaker 1: trusts can't redeem shares, they can only create shares, So

67
00:04:12,000 --> 00:04:14,920
Speaker 1: as you can imagine, sort of the price of these

68
00:04:14,960 --> 00:04:17,719
Speaker 1: trusts can get way out of whack with the actual

69
00:04:17,760 --> 00:04:20,040
Speaker 1: net asset value, which is exactly what's happened here. And

70
00:04:20,040 --> 00:04:22,000
Speaker 1: when we're talking about the net asset value, we're talking

71
00:04:22,000 --> 00:04:26,479
Speaker 1: about the value of the underlying stuff exactly that's that's

72
00:04:26,520 --> 00:04:29,719
Speaker 1: in the trust. And in the case of gray scales,

73
00:04:30,080 --> 00:04:33,120
Speaker 1: where what has happened there, It's like, is their net

74
00:04:33,160 --> 00:04:36,200
Speaker 1: asset value bigger than where they're trading, is it smaller?

75
00:04:36,240 --> 00:04:39,080
Speaker 1: Like what's the direction. It's so interesting if you look

76
00:04:39,120 --> 00:04:41,880
Speaker 1: at the long term chart, because for years, the price

77
00:04:41,920 --> 00:04:44,960
Speaker 1: of the trust traded at this enormous premium to the

78
00:04:45,000 --> 00:04:48,360
Speaker 1: net asset value of the actual coins and gray scale.

79
00:04:48,640 --> 00:04:50,680
Speaker 1: As a result, there were a bunch of shares created.

80
00:04:51,080 --> 00:04:54,360
Speaker 1: Now you're in an environment this dynamic is that you've

81
00:04:54,360 --> 00:04:57,440
Speaker 1: had all this demand. Cool people have sold their GBD

82
00:04:57,560 --> 00:05:01,240
Speaker 1: shares in the secondary market, but those shares that were created,

83
00:05:01,480 --> 00:05:04,719
Speaker 1: hundreds of millions of shares, can't be destroyed. So now

84
00:05:04,800 --> 00:05:07,720
Speaker 1: the price of the trust is trading at an enormous

85
00:05:07,800 --> 00:05:10,240
Speaker 1: discount to the net asset value. The last time I checked,

86
00:05:10,240 --> 00:05:14,679
Speaker 1: it was somewhere between below, which is obviously not something

87
00:05:14,720 --> 00:05:18,200
Speaker 1: they're super happy with and not necessarily something those shareholders

88
00:05:18,200 --> 00:05:21,279
Speaker 1: are super happy with, exactly. And Gray Skill has argued

89
00:05:21,320 --> 00:05:23,400
Speaker 1: if this was converted into an e t F, you'd

90
00:05:23,400 --> 00:05:26,279
Speaker 1: see that discount repaired immediately if you were able to

91
00:05:26,279 --> 00:05:30,359
Speaker 1: have that ap process and I authorized participants exactly, and

92
00:05:30,480 --> 00:05:33,440
Speaker 1: I think they've argued it would unlock something eight billion

93
00:05:33,440 --> 00:05:37,200
Speaker 1: dollars in value if that discount was repaired. That's their position,

94
00:05:37,240 --> 00:05:39,400
Speaker 1: and so that's really why that they were putting so

95
00:05:39,480 --> 00:05:42,119
Speaker 1: much muscle behind trying to get the SEC to approve

96
00:05:42,120 --> 00:05:44,320
Speaker 1: a spot at coin e TF. But of course the

97
00:05:44,400 --> 00:05:47,440
Speaker 1: SEC has now made it clear that they're going to reject,

98
00:05:47,480 --> 00:05:50,000
Speaker 1: and they have rejected that et F application, So it

99
00:05:50,000 --> 00:05:52,479
Speaker 1: sounds like the next step is the lawsuit. Yep, the

100
00:05:52,600 --> 00:05:54,840
Speaker 1: next step is the lawsuit, and they filed that within

101
00:05:55,000 --> 00:05:58,440
Speaker 1: an hour of that SEC denial. They were watching and waiting,

102
00:05:58,560 --> 00:06:03,279
Speaker 1: so suggest that they were expecting a denial. We'll be

103
00:06:03,400 --> 00:06:06,080
Speaker 1: right back with more from Katie Griidfeld talking about gray

104
00:06:06,120 --> 00:06:20,320
Speaker 1: Scale's unsuccessful bid to converse its bitcoin trust into an ETF. So, Kathy,

105
00:06:20,440 --> 00:06:22,960
Speaker 1: what exactly where gray Scale doing to make their case

106
00:06:23,000 --> 00:06:25,680
Speaker 1: to regulate those then? What does that effort look like?

107
00:06:25,720 --> 00:06:29,000
Speaker 1: What what did they do to try to persuade regulators? Well,

108
00:06:29,000 --> 00:06:32,960
Speaker 1: they hired really a rock star legal team for former

109
00:06:33,160 --> 00:06:36,560
Speaker 1: US Solicitor General Don Varilli was part of that effort.

110
00:06:36,560 --> 00:06:40,240
Speaker 1: They hired him in June. They also have motivated this

111
00:06:40,360 --> 00:06:44,360
Speaker 1: letter writing campaign. The SEC has actually received thousands of

112
00:06:44,440 --> 00:06:48,359
Speaker 1: letters from people writing in asking beseeching the SEC to

113
00:06:48,400 --> 00:06:53,080
Speaker 1: convert GBTC into an e t F. Obviously that didn't

114
00:06:53,520 --> 00:06:56,839
Speaker 1: quite make it. Dent on that note, Actually, our colleagues

115
00:06:56,880 --> 00:07:00,120
Speaker 1: at Bloomberg Markets on Bloomberg TV spoke with the ray

116
00:07:00,120 --> 00:07:03,800
Speaker 1: Scale Investment CEO Michael Sonenshein back in March. Let's listen

117
00:07:03,800 --> 00:07:06,320
Speaker 1: to what he had to say. I think all options

118
00:07:06,320 --> 00:07:08,680
Speaker 1: are on the table. I think certainly it's important that

119
00:07:08,760 --> 00:07:11,480
Speaker 1: between now and the end of that two forty day

120
00:07:11,520 --> 00:07:15,120
Speaker 1: process which ends in early July, that the SEC hears

121
00:07:15,160 --> 00:07:19,480
Speaker 1: from as many investors as possible, as well as academics, policymakers,

122
00:07:19,840 --> 00:07:22,280
Speaker 1: everybody has an opportunity to weigh in on this issue,

123
00:07:22,520 --> 00:07:24,800
Speaker 1: and all of that is in fact considered as the

124
00:07:24,880 --> 00:07:27,480
Speaker 1: SEC weighs the issue in front of them. That was

125
00:07:27,520 --> 00:07:29,960
Speaker 1: a pretty explicit warning of what was to come. As

126
00:07:29,960 --> 00:07:38,000
Speaker 1: they've now confirmed that they're absolutely suing the SEC. They're

127
00:07:38,000 --> 00:07:39,480
Speaker 1: not the only people who want this to happen, though.

128
00:07:39,520 --> 00:07:42,760
Speaker 1: There are various other folks who have also tried to

129
00:07:42,880 --> 00:07:47,160
Speaker 1: get US regulators to approve their physically backed bitcoin ECF

130
00:07:47,240 --> 00:07:49,160
Speaker 1: and in each case the regulations has been like no,

131
00:07:49,640 --> 00:07:53,120
Speaker 1: big time. There is a long line of broken hearts

132
00:07:53,200 --> 00:07:56,400
Speaker 1: of you know, the SEC rejecting the spot this coin

133
00:07:56,720 --> 00:08:01,280
Speaker 1: approvals basically since the Winkle Bostwans back in I think

134
00:08:01,280 --> 00:08:03,560
Speaker 1: the first application was filed, so there's there's a pretty

135
00:08:03,560 --> 00:08:06,360
Speaker 1: long history of this. Regulations don't seem to have come around.

136
00:08:06,400 --> 00:08:09,520
Speaker 1: We may be facing some interesting legal challenges from a

137
00:08:09,760 --> 00:08:16,040
Speaker 1: like practical non billionaire, non trust owning perspective, Why do

138
00:08:16,280 --> 00:08:20,160
Speaker 1: other participants in crypto care about this fight, like, what

139
00:08:20,240 --> 00:08:25,320
Speaker 1: does the existence of a spot bitcoin ECF unlock? More broadly,

140
00:08:25,600 --> 00:08:27,240
Speaker 1: the argument that you would hear is that it could

141
00:08:27,280 --> 00:08:30,160
Speaker 1: potentially bring more people into the industry. I mean, at

142
00:08:30,160 --> 00:08:33,760
Speaker 1: this point, probably everyone who wants to buy bitcoin has

143
00:08:33,800 --> 00:08:37,280
Speaker 1: probably found a way too. But think about, you know,

144
00:08:37,440 --> 00:08:40,520
Speaker 1: retirement accounts, for example, they probably don't want to set

145
00:08:40,600 --> 00:08:43,480
Speaker 1: up crypto wallets and the likes and have to deal

146
00:08:43,520 --> 00:08:46,040
Speaker 1: with keys, etcetera, etcetera. Buying an e t F is

147
00:08:46,160 --> 00:08:48,719
Speaker 1: much easier. And then you think about, you know, your

148
00:08:48,760 --> 00:08:51,000
Speaker 1: average investor who maybe doesn't want to deal with all

149
00:08:51,040 --> 00:08:53,520
Speaker 1: of that. Either, they can buy and trade e t

150
00:08:53,720 --> 00:08:57,600
Speaker 1: f s on their brokerage platforms, So that's an argument.

151
00:08:57,640 --> 00:08:59,720
Speaker 1: And also if you think about the different ways that

152
00:09:00,080 --> 00:09:03,040
Speaker 1: retail and normal investors can get access right now, they

153
00:09:03,040 --> 00:09:06,000
Speaker 1: can go to coin base and somewhat are you get

154
00:09:06,080 --> 00:09:08,840
Speaker 1: ripped off on the fees? Whereas e t s they

155
00:09:08,880 --> 00:09:13,400
Speaker 1: tend to have lower costs their tax efficient that enables

156
00:09:13,400 --> 00:09:15,800
Speaker 1: them to have lower expense ratios than other types of

157
00:09:15,800 --> 00:09:18,320
Speaker 1: products for example. So the argument that folks might make

158
00:09:18,360 --> 00:09:21,640
Speaker 1: here is, even if you are not a highly motivated billionaire,

159
00:09:22,000 --> 00:09:24,880
Speaker 1: you as a retail investor would potentially benefit from having

160
00:09:25,240 --> 00:09:28,280
Speaker 1: more access to these kinds of financial products exactly. And

161
00:09:28,280 --> 00:09:31,080
Speaker 1: I mean you've seen e t F expand that access

162
00:09:31,120 --> 00:09:33,800
Speaker 1: in the past. If you think about the commodity markets,

163
00:09:33,840 --> 00:09:37,480
Speaker 1: for example, you know a normal person really can't four

164
00:09:37,520 --> 00:09:41,000
Speaker 1: gold bars exactly, or by barrels of oil. And for

165
00:09:41,040 --> 00:09:43,560
Speaker 1: the fixed income markets too, I mean, getting that access

166
00:09:43,559 --> 00:09:46,520
Speaker 1: through e t F s is easier if you are

167
00:09:46,559 --> 00:09:53,200
Speaker 1: a normal person. So they file this lawsuits, as you say,

168
00:09:53,240 --> 00:09:56,120
Speaker 1: within an hour of the rejection. What are the next

169
00:09:56,160 --> 00:09:58,640
Speaker 1: steps from here? It's a great question. So we actually

170
00:09:58,640 --> 00:10:01,640
Speaker 1: spoke to Gray Scale CEO Michael Sonenshine on TV on

171
00:10:01,720 --> 00:10:04,920
Speaker 1: Thursday asking him that question. What is your end game?

172
00:10:04,960 --> 00:10:07,680
Speaker 1: The end game of course being E t F conversion

173
00:10:07,800 --> 00:10:11,559
Speaker 1: if they win, that's assuming what would happen. The timeline

174
00:10:11,600 --> 00:10:14,520
Speaker 1: there is interesting. It could be nine to twelve months,

175
00:10:15,400 --> 00:10:17,760
Speaker 1: could be longer, could be shorter, but they've been guided

176
00:10:17,840 --> 00:10:20,240
Speaker 1: to expect that this will be a nine to twelve

177
00:10:20,320 --> 00:10:22,959
Speaker 1: month process. Who knows where bitcoin will be trading in

178
00:10:23,040 --> 00:10:25,080
Speaker 1: ninth to twelve months, Oh my gosh, who knows where

179
00:10:25,080 --> 00:10:27,240
Speaker 1: any of us will be in nine to twelve months,

180
00:10:27,240 --> 00:10:30,040
Speaker 1: But it should be a really interesting ride, and I

181
00:10:30,040 --> 00:10:32,360
Speaker 1: don't know, we'll see there is there is talk of

182
00:10:32,400 --> 00:10:36,680
Speaker 1: perhaps the shareholders of GBTC filing a regulation and lawsuit

183
00:10:36,720 --> 00:10:41,199
Speaker 1: to try to force redemptions changes so that GBDC actually

184
00:10:41,240 --> 00:10:45,120
Speaker 1: could redeem. But again that's a hypothetical and it's a

185
00:10:45,160 --> 00:10:47,600
Speaker 1: long shot. Well that's definitely something we would be watching

186
00:10:47,600 --> 00:10:50,280
Speaker 1: and reporting on if that does actually happen. Oh yeah,

187
00:10:50,320 --> 00:10:54,520
Speaker 1: I'm all on it. Is there any sense of you know,

188
00:10:54,559 --> 00:10:57,320
Speaker 1: I don't know whether this is like class action e

189
00:10:57,440 --> 00:10:59,000
Speaker 1: in the sense that we've seen in other parts of

190
00:10:59,040 --> 00:11:02,080
Speaker 1: crypto where just grunt oled investors get together and they're like,

191
00:11:02,080 --> 00:11:04,440
Speaker 1: we're all in this, we have complaints. Is the gray

192
00:11:04,480 --> 00:11:07,559
Speaker 1: scale lawsuit against the SEC just them? Are they joined

193
00:11:07,600 --> 00:11:11,080
Speaker 1: by any other parties? I believe it's just them, But

194
00:11:11,160 --> 00:11:13,360
Speaker 1: if you sort of look at the public opinion court

195
00:11:13,360 --> 00:11:15,520
Speaker 1: that is Twitter, it seems like a lot of people

196
00:11:15,559 --> 00:11:18,240
Speaker 1: are applauding their efforts, you know, having a crypto firm

197
00:11:18,280 --> 00:11:22,440
Speaker 1: actually sue a US regulator. I mean, this is something

198
00:11:22,440 --> 00:11:24,840
Speaker 1: that I was talking about with my editors on Wednesday

199
00:11:24,920 --> 00:11:26,960
Speaker 1: night as this news was breaking. You know, we've gotten

200
00:11:27,000 --> 00:11:30,840
Speaker 1: a lot of spot bitcoin application rejections. We haven't seen

201
00:11:31,000 --> 00:11:33,920
Speaker 1: someone go all the way and actually sue the SEC. So,

202
00:11:34,240 --> 00:11:37,480
Speaker 1: I mean, to their credit, they're they're backing up their talk.

203
00:11:38,000 --> 00:11:40,199
Speaker 1: And you haven't heard from any of your other sources

204
00:11:40,200 --> 00:11:43,160
Speaker 1: that other firms may be considering either joining that legal

205
00:11:43,200 --> 00:11:45,760
Speaker 1: action or making you know, legal maneuvers of their own.

206
00:11:46,320 --> 00:11:49,640
Speaker 1: Haven't heard that yet. And sort of conversations about what

207
00:11:49,679 --> 00:11:52,240
Speaker 1: a reg M lawsuit would look like that would be

208
00:11:52,400 --> 00:11:54,600
Speaker 1: more of a class action feeling, where it would be

209
00:11:54,880 --> 00:11:59,120
Speaker 1: probably a group of investors, gray scale bitcoin trust shareholders

210
00:11:59,120 --> 00:12:04,000
Speaker 1: getting together and ailing that. When you interviewed Sunenshine, was

211
00:12:04,040 --> 00:12:07,079
Speaker 1: there anything that he said that sounded like surprising to you?

212
00:12:07,080 --> 00:12:08,559
Speaker 1: You know, this is this is a story that you've

213
00:12:08,559 --> 00:12:10,720
Speaker 1: been covering for a long long time at this point.

214
00:12:11,280 --> 00:12:14,600
Speaker 1: What was his vibe? Uh? Definitely not thrilled with the SEC.

215
00:12:14,800 --> 00:12:17,280
Speaker 1: That was number one. I would say. We asked him

216
00:12:17,280 --> 00:12:20,000
Speaker 1: a lot of questions that he did not answer on

217
00:12:20,040 --> 00:12:22,880
Speaker 1: live television, But I mean questions I have that I

218
00:12:22,880 --> 00:12:26,959
Speaker 1: would love answered. Is whether three Hours Capital, whether they're

219
00:12:27,000 --> 00:12:30,360
Speaker 1: still the biggest institutional shareholder. That's a big one. Also,

220
00:12:30,480 --> 00:12:35,200
Speaker 1: is there any situation in which they would liquidate liquidate GBTC,

221
00:12:35,360 --> 00:12:39,600
Speaker 1: Because if the goal is shareholder value. At this point,

222
00:12:39,640 --> 00:12:42,640
Speaker 1: obviously the SEC is digging in here and not going

223
00:12:42,679 --> 00:12:46,560
Speaker 1: to approve a conversion. I mean, your shareholders are just

224
00:12:46,679 --> 00:12:48,559
Speaker 1: left in this sort of broken fund trading at a

225
00:12:48,600 --> 00:12:52,560
Speaker 1: thirty percent discount. So how long that can continue or

226
00:12:52,559 --> 00:12:56,520
Speaker 1: how patient shareholders can be? Uh, it's an open question.

227
00:12:57,000 --> 00:12:59,480
Speaker 1: I think it's a sort of a final question. Are

228
00:12:59,520 --> 00:13:03,640
Speaker 1: there other countries that have already allowed retail investors to

229
00:13:03,679 --> 00:13:06,520
Speaker 1: get access to bitcoin through e t F s? Yes,

230
00:13:06,600 --> 00:13:09,720
Speaker 1: and that is a very annoying fact to both the

231
00:13:09,760 --> 00:13:12,600
Speaker 1: cryptal and the e t F industry participants. Do you

232
00:13:12,640 --> 00:13:16,080
Speaker 1: have physically backed bitcoin and crypto et f s in Europe?

233
00:13:16,120 --> 00:13:19,440
Speaker 1: For example, end In Canada launched their first series of

234
00:13:19,520 --> 00:13:23,240
Speaker 1: funds I think it was last February. Breaking news this week,

235
00:13:23,280 --> 00:13:26,040
Speaker 1: which is really exciting to the crypto community. You would

236
00:13:26,080 --> 00:13:30,280
Speaker 1: issue a purpose Investments say that Canadian regulators have approved

237
00:13:30,320 --> 00:13:33,240
Speaker 1: their bitcoin e t F. These products have existed in

238
00:13:33,280 --> 00:13:36,120
Speaker 1: other parts of the world for years now. How are

239
00:13:36,120 --> 00:13:39,920
Speaker 1: they performing? Not great as you would imagine, because think

240
00:13:39,960 --> 00:13:42,600
Speaker 1: of what they are. I mean, the e t F product,

241
00:13:42,640 --> 00:13:44,320
Speaker 1: at the end of the day, it's just a rapper.

242
00:13:44,559 --> 00:13:47,959
Speaker 1: So they haven't been doing great, I would say, and

243
00:13:48,000 --> 00:13:50,200
Speaker 1: if you look at in the US, you don't have

244
00:13:50,840 --> 00:13:52,680
Speaker 1: a spot bitcoin et F. Again, you have sort of

245
00:13:52,679 --> 00:13:55,080
Speaker 1: these frank and funds. You also have crypto linked equity

246
00:13:55,160 --> 00:13:59,280
Speaker 1: e t f s, which are actually far underperforming bitcoin itself.

247
00:13:59,320 --> 00:14:02,000
Speaker 1: And those so linked equity et f s are things

248
00:14:02,040 --> 00:14:05,560
Speaker 1: like here's coin Base, here's micro Strategy, here's other crypto

249
00:14:05,640 --> 00:14:09,200
Speaker 1: related companies in a pile. Essentially you have you know,

250
00:14:09,360 --> 00:14:15,800
Speaker 1: the minors ETFs, you have blockchain technology exactly exactly, and

251
00:14:16,000 --> 00:14:18,000
Speaker 1: n f T e t f s, which again don't

252
00:14:18,000 --> 00:14:20,200
Speaker 1: hold actual n f t s right, so they merely

253
00:14:20,720 --> 00:14:24,440
Speaker 1: have abstract thoughts about them, just the idea. Thank you, Katy.

254
00:14:24,680 --> 00:14:27,400
Speaker 1: You can find more of Katie's reporting on the Bloomberg terminal,

255
00:14:27,760 --> 00:14:31,600
Speaker 1: on Bloomberg dot com and on Twitter at k Greifeld.

256
00:14:32,080 --> 00:14:35,280
Speaker 1: That's k g r e I F e l D.

257
00:14:38,240 --> 00:14:42,040
Speaker 1: In June, Senators Christian Gillibrand and Cynthia Loomas introduced a

258
00:14:42,120 --> 00:14:47,200
Speaker 1: sweeping Senate bill that would regulate crypto assets. Influential crypto

259
00:14:47,240 --> 00:14:51,320
Speaker 1: insiders hailed the proposal as a great starting point, a

260
00:14:51,440 --> 00:14:55,640
Speaker 1: reception which suggests it might be perceived as relatively friendly

261
00:14:56,040 --> 00:14:59,880
Speaker 1: to the digital asset community. Hilary Allen, a law pro

262
00:15:00,040 --> 00:15:04,040
Speaker 1: ustler at American University, is a critic of the proposed legislation.

263
00:15:04,680 --> 00:15:07,520
Speaker 1: She doesn't think it goes far enough, especially when it

264
00:15:07,520 --> 00:15:11,480
Speaker 1: comes to consumer protection. Professor Allen will join me next Tuesday,

265
00:15:11,640 --> 00:15:18,000
Speaker 1: after the July fourth holiday. Here in the US, I'm

266
00:15:18,040 --> 00:15:21,520
Speaker 1: Stacy Marie Ishmael and this is Bloomberg Crypto, a daily

267
00:15:21,560 --> 00:15:24,800
Speaker 1: podcast from Bloomberg and I Heart Radio. For more shows

268
00:15:24,800 --> 00:15:27,160
Speaker 1: from I Heart Radio, visit the I Heart Radio app,

269
00:15:27,400 --> 00:15:31,880
Speaker 1: Apple Podcasts, or wherever you get your podcasts. Email your questions, comments,

270
00:15:31,920 --> 00:15:34,800
Speaker 1: or suggestions for the show to Crypto at Bloomberg dot

271
00:15:34,800 --> 00:15:39,320
Speaker 1: net and you'll find us on Twitter at Crypto. The

272
00:15:39,360 --> 00:15:43,160
Speaker 1: supervising producer of this episode is Vicky ver Galina. Associate

273
00:15:43,240 --> 00:15:47,720
Speaker 1: producer is moses On, Associate producer is thy Butler. Dest

274
00:15:47,720 --> 00:15:51,320
Speaker 1: To wonder At is our engineer. Original music by Leo Sidron.

275
00:15:51,760 --> 00:16:02,680
Speaker 1: Bloomberg's Head of Podcasts is Frances Galvi. He ai acts

276
00:16:02,880 --> 00:16:05,520
Speaker 1: as a sending a SI