Speaker 1: Welcome a Strillians. I'm Joel Webber and I'm Eric bel Tunis.
Speaker 1: So we had a plan and then as usual, you
Speaker 1: were like, wait, I got a better plan. What's your
Speaker 1: better plan for this episode? The better plan is, um, look,
Speaker 1: crypto it just I can't escape it. Right. You had
Speaker 1: Elon Musk on Satday Live does Coin. You've had Gary
Speaker 1: Gamser of the SEC come out and talk about crypto exchanges.
Speaker 1: That's kind of maybe put a little cold water on
Speaker 1: our you know, outlook of when a bitcoin e t
Speaker 1: F might here be approved here. Then you also see
Speaker 1: up in Canada the E three e t f s
Speaker 1: and the bitcoin ETFs are relentless. Normally a new launch
Speaker 1: like comes out hard and then like trickles, these things
Speaker 1: are are right there where they were. And so you
Speaker 1: can tell there's this breadth and depth and the issue
Speaker 1: is just really taken over. And so I thought we
Speaker 1: would go over this with somebody who I consider to
Speaker 1: be like three years into the future. It's almost like
Speaker 1: we are going to get to see what the US
Speaker 1: might look like in about you know, twenty four to
Speaker 1: thirty six months. And this is Ophelia Snyder, who's co
Speaker 1: founder of twenty one shares um over in Europe, you
Speaker 1: can launch whatever you want. It's like free for all
Speaker 1: over there. And so she has a lineup of get this,
Speaker 1: fourteen different crypto et f s. I haven't even heard
Speaker 1: of three or four of them, So that's how far
Speaker 1: ahead of the curve she is. So I just would
Speaker 1: really like to get her take on how she did it,
Speaker 1: how it works, the market making, the exchanges, and just
Speaker 1: what it's like to basically manage this full line of
Speaker 1: crypto et f s, which is probably what we're going
Speaker 1: to see from big issues like Fidelity and van X
Speaker 1: some day. We're also joined by James Safered again of
Speaker 1: Bloomberg Intelligence, this time on Trillions going full crypto with
Speaker 1: Ophelia Snyder. Ophelia, James, welkn Trillions for having me. James.
Speaker 1: We're not really here for you, We're here for Ophelia,
Speaker 1: but I want to start with you. Can you set
Speaker 1: the table a little bit about what's going on in
Speaker 1: crypto right now? Eric, Eric laid a good a good
Speaker 1: groundwork here. As you talked about Elon going on SNL
Speaker 1: or all this doge coin rallying like crazy. Crypto just
Speaker 1: seems to be just part of the ecosystem. Whether you're
Speaker 1: on Twitter or in finance, no matter what you do,
Speaker 1: there's some sort of crypto being spoken about. In my area.
Speaker 1: I'm always covering anyone filing new e t F to
Speaker 1: launch bitcoin or any crypto ETF. There's now four different
Speaker 1: issuers who have filed what's called a nineteen be four
Speaker 1: and you don't need to get into the specifics, but
Speaker 1: essentially it's people filing with an exchange for a rule
Speaker 1: change to allow a bitcoin et F on US exchanges. Um.
Speaker 1: So that's what we're watching heavily in the U S. Okay,
Speaker 1: so Aphilia, welcome to trillions and and look like you're
Speaker 1: talking to a lot of Americans who who you know,
Speaker 1: don't have access to your products. And you know here
Speaker 1: you are from the future, so so talk to us
Speaker 1: from the future. And what are we missing out on?
Speaker 1: So I think when when I think about Europe and
Speaker 1: crypto ATPs and a t S, um, we've been incredibly lucky. Uh.
Speaker 1: The all of our products are based about this was
Speaker 1: market and the Swiss took a completely different approach to
Speaker 1: crypto regulation, which was right out of the gate. Let's
Speaker 1: get it defined, let's get a structure in place, let's
Speaker 1: tell people what they can and can't do. It's a
Speaker 1: very well defined box. If you're willing to plan it,
Speaker 1: you can get a lot of fleeway within that box.
Speaker 1: And I think we've spent a lot of time talking
Speaker 1: to both our unregulators and other regulators trying to get
Speaker 1: them comfortable with this. And it took a very long
Speaker 1: time to get this product structure right. Um. We did
Speaker 1: it at a point in time when there was no
Speaker 1: infrastructure really, so you had regulatory clarity but no infrastructure,
Speaker 1: which is a completely different landscape that I think a
Speaker 1: lot of these US applicants rendering where there is infrastructure,
Speaker 1: they just don't have clarity on the regulatory side. Um.
Speaker 1: So for us, it became an exercise in figuring out
Speaker 1: understanding what that sandbox we could play in would look like,
Speaker 1: figuring out how to fit into it really well, and
Speaker 1: then figuring out how to actually launch a thing that
Speaker 1: no one had done before that all of the traditional
Speaker 1: like et F players, no one would help you. This
Speaker 1: was no one was willing to actually help you operationalize product,
Speaker 1: and so we ended up getting a really interesting crash
Speaker 1: course in like the plumbing of what it takes to
Speaker 1: make an E t F function. Uh, and that ended
Speaker 1: up being where we spent most of our time and
Speaker 1: product developments, the complete opposite of the U S landscape.
Speaker 1: Could we break this down a little bit so explain,
Speaker 1: because I think people are interested. If you're starting an
Speaker 1: E t F, what do you need? What is the
Speaker 1: plumbing and just how did you accomplish it? If you
Speaker 1: break down a need t up to what it actually is, right,
Speaker 1: it's a box that you put stuff in that has
Speaker 1: to trade at the same value as the components of
Speaker 1: what's inside the box. It's really all it is, right,
Speaker 1: And the closer you get these two things to work together.
Speaker 1: The way in which you actually make that happen is
Speaker 1: a combination of some pretty intense data distribution, some pretty
Speaker 1: intense like calculations that come around that, and an ability
Speaker 1: to interact with marketing makers efficiently and then actually get
Speaker 1: them securities into their hands. Right. Ultimately, that's what you're doing.
Speaker 1: We take in crypto, we give you a security. We
Speaker 1: need to do that in such a way that the
Speaker 1: contents of the box and the box with its contents
Speaker 1: in it trade roughly at the same tis. But normally
Speaker 1: you would go to a stage tree to b N
Speaker 1: Y and say hey, I would like to set up
Speaker 1: this box, and they will manage the funds in, the
Speaker 1: funds out, the data distribution, the fund accounting calculations, all
Speaker 1: the administration of your fund, all of the legal structuring.
Speaker 1: There are companies that do that. There are underwriters, there's
Speaker 1: a ton of people who do package things to make
Speaker 1: these products work, and it becomes like the role of
Speaker 1: NESSEA manager becomes quite different, and that you really come
Speaker 1: in not to operationalize a product, but to run a strategy.
Speaker 1: The difference in in crypto is that, so roll back
Speaker 1: the clock, no one had the technical infrastructure to do
Speaker 1: this because you basically have two separate systems. You have
Speaker 1: securities that need to do stuff and you have crypto
Speaker 1: that needs to do a different set of things. They're
Speaker 1: not really well connected in any way, so you actually
Speaker 1: had to we had to build infrastructure to bridge that.
Speaker 1: We ended up creating a platform that actually manages all
Speaker 1: of your subscriptions and redemptions, the ins and outs of
Speaker 1: the product. Our relationships with market makers are fund accounting
Speaker 1: all the way through the custody reconciliations, and it basically
Speaker 1: plugs into our own platform, and we had to develop
Speaker 1: a house because at the time no one could serves it. Okay,
Speaker 1: So I guess it's it's good to jump in, and
Speaker 1: I guess one thing we start with is just talking
Speaker 1: about the reasons the SEC has denied all these bitcoin
Speaker 1: et f or crypto ETFs in the past. Asket and
Speaker 1: get your views on them first is one of the
Speaker 1: They're concerned about NAV calculation and being the market is
Speaker 1: so segmented on many different exchanges. Um there's no like
Speaker 1: central authority and just getting an accurate NAV, which from
Speaker 1: my point of view, we've seen plenty of issues where
Speaker 1: navs are inaccurate, especially in the fixed income market. Even
Speaker 1: in the US we saw it during the pandemic. I
Speaker 1: don't see it as an issue, but it's evident in
Speaker 1: the SEC's replies that they're concerned about it. So I
Speaker 1: guess first, I guess would be about a question about
Speaker 1: arbitrage and market makers and how your products are working
Speaker 1: and how you think it will work in the US.
Speaker 1: So we don't really see any substantial premiumser discains from
Speaker 1: a market making infrastructure perspective, it's quite straightforward at this point,
Speaker 1: like we've been running these products for three years. They
Speaker 1: almost three years they are They trade quite easily, cryptos
Speaker 1: very liquid. It has uniqueness in its settlement structure. UM
Speaker 1: that has certain considerations. Let's just do some really coal
Speaker 1: stuff that has its own drawbacks, and I think ultimately
Speaker 1: you don't see a ton of issues in terms of
Speaker 1: market making and accuracy and in trading and those types
Speaker 1: of things. The way we've structured our products, we don't
Speaker 1: do cash curations at all, so we don't really trade. Now.
Speaker 1: Now it becomes a rough No one really uses it
Speaker 1: for anything, either for trading the products actively although we
Speaker 1: publish I nows and things like that, or for creations reductions,
Speaker 1: which is not something we do. We actually price everything
Speaker 1: in Kryptic makes it much more transparent. You look at
Speaker 1: an entitlement model out of gold people love to talk
Speaker 1: about big point is, you know the expiration of gold.
Speaker 1: Treat it like that, price it that way. It makes
Speaker 1: a ton of sense UM in the same way you
Speaker 1: would have like an ounce per you know, ounces per
Speaker 1: share and a gold ETF like j l D structure
Speaker 1: that works really well. It's really transparent, and then you
Speaker 1: sort of get away from some of these pricing issues.
Speaker 1: UM from having them actually be impactful to the product itself.
Speaker 1: I think the broader question you're asking is about crypto
Speaker 1: pricing now, right, it seemed as though the SEC was
Speaker 1: really prime to approve it this year. My over under
Speaker 1: his septem Dave Nadig, who knows a lot, His is
Speaker 1: in August, because that's exactly six months after Canada, which
Speaker 1: is we always follow Canada. Reggie Brown, who is more
Speaker 1: plugged in than either of us, says January anyway, regardless
Speaker 1: of two Sorry, um, time's flying. Uh. Here's what Gamser
Speaker 1: said though about bitcoin exchanges. We need greater investor protection
Speaker 1: here there. We don't have a federal regime overseeing the
Speaker 1: crypto exchanges. There's a gap in our system. Now again,
Speaker 1: it almost seems like if he wants to make all
Speaker 1: of the crypto exchanges perfect or or as good as
Speaker 1: say the stock market, it could be a long time.
Speaker 1: Others say, well, he's just saying that to buy space
Speaker 1: and time. It's like, all right, look, give me a
Speaker 1: couple of months here. I'm gonna say that just to
Speaker 1: pour more cold water than I need. But here's my point.
Speaker 1: Aren't these the same exp changes that all the issuers
Speaker 1: are using and it seems to be working fine. Oh
Speaker 1: so I have a controversial opinion. I guess um, I
Speaker 1: am not anti regulation. I'm actually I think it's great ideas.
Speaker 1: I think as long as we have regulatory clarity, the
Speaker 1: rest is fine. I don't think crypto as a industry
Speaker 1: has any problem with meaning. Whatever standard it is people
Speaker 1: want to have that. I think the problem is no
Speaker 1: one's ever said the standard. It's a different issue. I
Speaker 1: see it in Switzerland right that. The reason our business
Speaker 1: is able to grow the way it is is because
Speaker 1: we have a very defined set of roles. We follow them.
Speaker 1: As long as we follow them, everything is great and
Speaker 1: there's no risk associated with that. I guess my question
Speaker 1: is do you feel, as somebody who operates with the
Speaker 1: exchanges and your market makers have to use them, do
Speaker 1: you think they need more investor protection or are they okay?
Speaker 1: You can have an e t F operating and have
Speaker 1: them in the ecosystem of the e t F. I
Speaker 1: think a practical perspective to fine. I don't think you're
Speaker 1: gonna each exchange is slightly different. They'll have slightly different
Speaker 1: ways of doing things. I don't think there's anything that's
Speaker 1: that materially problematically different, I think. But to go back,
Speaker 1: I think the point, the bigger point is even if
Speaker 1: there's nothing that needs to be changed, it would be
Speaker 1: great if there was a bar that everybody could just meet.
Speaker 1: And you've met the bar, and I get this almost
Speaker 1: like a chicken in the egg situation. The U S E.
Speaker 1: T F and US exchange volume, Like, we are the
Speaker 1: liquidity capital of the world, and we have the best
Speaker 1: market makers in the world. Um, there's so much capital
Speaker 1: going in here. And if these market makers that are
Speaker 1: in the US and a U S E. T F
Speaker 1: comes to market, I almost feel like allowing that to
Speaker 1: happen would clean up anything that's going on. I mean,
Speaker 1: these market makers are not going to be besting around
Speaker 1: or getting pushed around. Uh So it's it's a little
Speaker 1: bit like I said, it's a little bit of a
Speaker 1: chick in the egg situation. If you bring these people
Speaker 1: in here, it's going to clean up the Market's going
Speaker 1: to tighten up the market, you would say. Where I
Speaker 1: was saying that a couple of years ago. Now the
Speaker 1: market is a completely different world. It's way more mature
Speaker 1: than it was even in so we we actually just
Speaker 1: in some analysis on this the market is pretty tight cocontested.
Speaker 1: Like you actually look at statistically what's happening across a
Speaker 1: variety of different crypto markets, they all moved together. It's
Speaker 1: really tightly grouped. There's nothing odd happening in that. And
Speaker 1: I think part of the thing that has changed in
Speaker 1: the past several years in the crypto markets is a
Speaker 1: lot of those market makers that you're talking about are
Speaker 1: playing in this pool, either directly as corporates, but you
Speaker 1: also have a lot of ex traders that came from
Speaker 1: those shops who have entered with the crypto market, partially
Speaker 1: because there was money to be made in that arbitrree trade.
Speaker 1: And so you now have both quite literally those firms
Speaker 1: as well as the people who used to run that
Speaker 1: trading and have that experience entering the space, and you
Speaker 1: ended up with a much tighter market. I think to
Speaker 1: some degree, we're there, right. You have these big players
Speaker 1: playing in the pool, and it's helped tremendously in terms
Speaker 1: of the maturity of market. Like I run across it
Speaker 1: a lot, like people I knew in previous lives who
Speaker 1: are not hopping up in crypto, I think probably true
Speaker 1: for all of us. Is not that common anymore. The
Speaker 1: other big story that's happening this week is the Colonial
Speaker 1: pipeline ransomware hack. And again I totally understand that the
Speaker 1: vast majority of people who own bitcoin aren't um criminals.
Speaker 1: And yet you know, here's the downside of of bitcoin,
Speaker 1: which is that it can still be used and it's anonymous,
Speaker 1: or it can be used anonymously, and there's this underworld
Speaker 1: that will attract regulatory ire when it's used as as
Speaker 1: ransom And so is there how big of a fear
Speaker 1: do you have about regulatories? Got Tory bodies in America
Speaker 1: actually just never wanting to make let this thing go
Speaker 1: mainstream as long as it's anonymous. But you know, maybe
Speaker 1: you take away the anonymity and it might change things.
Speaker 1: I think anonymity and crypto is sort of a red herring.
Speaker 1: Nothing about crypto is that anonymous unless you're trading privacy
Speaker 1: points that there are coins that are designed to do that,
Speaker 1: and that's a different market. But you're talking about bitcoin
Speaker 1: and whether or not bitcoin is anonymous. You can run
Speaker 1: analytics on chain to figure out where every piece of
Speaker 1: crypto that you're receiving in a transaction from what it
Speaker 1: was mine through today you're never gonna be able to
Speaker 1: do that with the US dollar. I think part of
Speaker 1: it is just a lack of understanding of how we
Speaker 1: could use that structure. And I think if to go
Speaker 1: back to the question of regulation, I think if you
Speaker 1: have infrastructure around that, you're not going to actually have
Speaker 1: a real real issue there because being pseudonymous persons being
Speaker 1: actually anonymous or right different, and bitcoin especially is pseudonyms, right,
Speaker 1: you get a string that is used. But ultimately, if
Speaker 1: you're going to bring those assets into a like any
Speaker 1: kind of sat on ramp, and you're trying to get
Speaker 1: that out of this system and into something else, you're
Speaker 1: inevitably going to have to clear some form of ky
Speaker 1: C a m L, and they're going to run what
Speaker 1: amounts to a background check on your specific piece of
Speaker 1: curtough from the day it was born until the day
Speaker 1: it's hitting that account. And you can't really do that
Speaker 1: in the same way with the U S doll. So
Speaker 1: we talked about everyone has their over unders. The Van
Speaker 1: Neck filing, as I mentioned, is the first one, and
Speaker 1: we have the The deadline will be November tenth about
Speaker 1: where the SEC either has to fully approve or fully
Speaker 1: deny that filing UM. I mentioned there's three others that
Speaker 1: are going through that process right now. There's like twelve
Speaker 1: different issuers that are in this in this uh in
Speaker 1: this race to potentially launch a bitcoin etf UM. So
Speaker 1: what what if you had to pick a date. I'm
Speaker 1: sure you talk to these people. I'm sure they've reached
Speaker 1: out to you for questions about different things. UM what
Speaker 1: what over under would you put it out? Do you
Speaker 1: think we're gonna see one? Or do you think we're
Speaker 1: gonna see one? I agree with the range broadly. I
Speaker 1: think I'm slightly to the latter end of that. I
Speaker 1: think late late Q four is probably more realistic than
Speaker 1: early Q four, so I don't sometimes November December is
Speaker 1: probably where I would put it, very very late. I
Speaker 1: do think a lot has changed, including Canada's. Canada is
Speaker 1: a lot close for US than Europe, and I think
Speaker 1: that physicality actually matters. They have a history of launching
Speaker 1: e t f s ahead of US in groundbreaking asset
Speaker 1: classes and they've been doing fine. I mean, they're their
Speaker 1: premiums are tight, They've seen a lot of action both
Speaker 1: up and down UM, and now they've got into ether.
Speaker 1: There's a multiple ethere e t f S. I also
Speaker 1: think you now have more context around trading behavior in
Speaker 1: much more robust markets around like you, corporate actions in
Speaker 1: crypto like things like forks are ultimately just corporate actions, right.
Speaker 1: There's not a material different between that and the stock
Speaker 1: split or that and any kind of spin off. The
Speaker 1: pretty similar to other stuff that we have that exists
Speaker 1: in normal and financial infrastructure. I also think you've finally
Speaker 1: seen those happening in a more robust trading environment. One
Speaker 1: of the big questions is within like trading behavior around
Speaker 1: these things network stability. I think a lot of those
Speaker 1: questions have been answered as well. So purely like technical stuff,
Speaker 1: we've actually seen a much more robust cycle. Like we've
Speaker 1: gone through forks in our products, We've gone through all
Speaker 1: sorts of different things, and it's never cause an issue.
Speaker 1: And you can actually watch the impact of those actions
Speaker 1: across networks and you're not seeing, you know, substantial issues
Speaker 1: with network performance. I think that's also quite hopeful. So
Speaker 1: it's a question that comes up a lot. So um
Speaker 1: it was it might have been February of March. I
Speaker 1: was just tooling around on E t F GO, which
Speaker 1: is like I just I call it the leaderboard, and
Speaker 1: I sworked by flows, I sworked by performance, and I
Speaker 1: did your to date return and did everything. A lot
Speaker 1: of times i'll screen out other countries or leverage, but
Speaker 1: I did the whole Enchilada. This is nine thousand and
Speaker 1: ninety two E t f S. Number one, by far
Speaker 1: in your date return is one shares Finance b n
Speaker 1: B E t P. Number two by far is twenty
Speaker 1: one shares Ripple x r P E t P. And
Speaker 1: then you've got number five, You've got number seven, you've
Speaker 1: got number ten. You're basically like you're all over the leaderboard.
Speaker 1: And this is out of nine thousand E t f S.
Speaker 1: So I guess let's just start with your product line
Speaker 1: and starting I think people get bitcoin and ethereum at
Speaker 1: this point. You know what is binance? How did that
Speaker 1: launch come about? B and B is a coin native
Speaker 1: to the finance system, and great long winded way of
Speaker 1: saying it basically is sort of like a rewards park
Speaker 1: inside of one of the largest currency So finance is
Speaker 1: like the eight underpound guerrilla in terms of trading volumes.
Speaker 1: They are massive global. If you trade crypto, chances are
Speaker 1: you either touch you touch finance and some They are
Speaker 1: kind of everywhere and offer massive range of crypto services.
Speaker 1: And one of the things that happened is basically they
Speaker 1: came out with this token that would allow you to
Speaker 1: do a number of things within their ecosystem, and they
Speaker 1: may also built a centralized applications on top of that,
Speaker 1: and it lets you do a lot of things within
Speaker 1: the finance network UM that are quite unique. On the
Speaker 1: back of the coin based IPO, there was a lot
Speaker 1: of excitement around the exchange business and I think for
Speaker 1: the first time people having a real understanding of what
Speaker 1: the crypto exchange business actually looks like from a monetary
Speaker 1: perspective UM and Finance is substantially larger UM, and so
Speaker 1: you ended up with a a structure where this specific token,
Speaker 1: even though it is absolutely not Finance ectually, it does
Speaker 1: represent a participation in their ecosystem, and that was really exciting,
Speaker 1: and it was substantially undervalued apparently, and so you had
Speaker 1: a really fascinating just jumped here between these two markets
Speaker 1: and people got very excited about it. If you couple
Speaker 1: that with the fact that Finance has rolled out in
Speaker 1: the past several months a couple of really interesting new
Speaker 1: projects that expand its reach into things like defied um
Speaker 1: it's been doing incredibly well. Uh. That product came about
Speaker 1: because we have a pretty unique, I think, approach to
Speaker 1: crypto products, which is that we really wanted to make
Speaker 1: sure that people have real access two interesting underlying assets
Speaker 1: we launched. We have a the largest products we in
Speaker 1: the world for these types of products and do it
Speaker 1: because ultimately we wanted to bring them into mainstream and
Speaker 1: give people access to them in an easy way. Because
Speaker 1: while I think for people in crypto, binance is pretty
Speaker 1: common infrastructure, for people who maybe aren't in crypto, signing
Speaker 1: up the binance maybe quite a reach, and we wanted
Speaker 1: to find a way to bridge that and allow people to,
Speaker 1: you know, still get access to the sector. UM. I
Speaker 1: guess the binance tokens like one simple example to lay
Speaker 1: it out for somebody who's not familiar, you, everyone has
Speaker 1: to pay fees when you're trading on an exchange, right,
Speaker 1: there's exchange fees. That's how coin base makes all the money.
Speaker 1: If you use the binance token to pay your fees,
Speaker 1: the dollar amount or the actual amount you're paying is
Speaker 1: a little less. It's like an incentive to use the
Speaker 1: binance coin. That's how it's like one of the things
Speaker 1: that started out as UM. So just throw that in there,
Speaker 1: and then I guess my next question is you guys,
Speaker 1: we we've talked about it. There's a whole bunch will
Speaker 1: probably get into some of these other products, but it
Speaker 1: goes back to the regulatory framework. Like in the US
Speaker 1: and Canada and many other places, they're allowing bitcoin, they're
Speaker 1: allowing etheroryum, but like no one else is going further
Speaker 1: than that at this point in most other markets. UM
Speaker 1: there's some index based products, But how did the can
Speaker 1: you talk you keep mentioning the regulatory friendlick from the
Speaker 1: Swiss Swiss point of view, but how did it go
Speaker 1: when you guys were launching all these things other than
Speaker 1: the if you're going to call them widely accepted bitcoin
Speaker 1: and etheroryum. Do you have things like a crypto basket,
Speaker 1: you have UM tesos, you have all these different bitcoin
Speaker 1: forks like bitcoin, cash, Cardiano, UM, Stellar x RP polk again,
Speaker 1: Polka dot um, all of them. Can you just explain
Speaker 1: how like that conversation went with regulators if at all? Sure, UM,
Speaker 1: we've been doing this for i mean, relative to tript
Speaker 1: a long time. The first product we came out with
Speaker 1: was actually an index, and at the time it was
Speaker 1: the only one in the world. Actually, I think I
Speaker 1: don't know they're there are a couple now in other industries,
Speaker 1: but none in in this format um. The conversation with
Speaker 1: regular nes ends up boiling down to a couple of things,
Speaker 1: which is there's a bunch of stuff on. There are
Speaker 1: no fly list, which has to do with it's not
Speaker 1: a security it's not you know, you're not doing bactor
Speaker 1: I keo. You know, they have this list of criteria. Basically,
Speaker 1: if you're able to meet all of those criteria and
Speaker 1: show them that there is you know, sufficient liquidity, real
Speaker 1: trading pairs against fiat um and some stability in the network,
Speaker 1: they are able to get comfortable with it. The interesting
Speaker 1: stuff comes in when we get away from like a
Speaker 1: planet vanilla tractor. So we have products that have yield
Speaker 1: in them. For example test as being a good example
Speaker 1: of that, where you can actually have a yield generating component,
Speaker 1: and that's where we end up having more nuanced conversations
Speaker 1: when we're trying to introduce new features like that. Otherwise
Speaker 1: it comes down to network stability, some seasoning metrics, some
Speaker 1: volume metrics, and some technical ones related to how the
Speaker 1: specific crypto asset is structured, is that its own chain,
Speaker 1: is it based on another one? How has it actually
Speaker 1: been built? Ends up being a large part of the conversation. Okay,
Speaker 1: so you sorry you lost me at tasos and that's
Speaker 1: part of my question here. You've got ethereum and bitcoin
Speaker 1: and ripple. I get all those, but like days of
Speaker 1: Cardono polka dot, what what are those? And how do
Speaker 1: you decide what you're going to do and what you're
Speaker 1: not going to do the way we think about product
Speaker 1: is there are products that we need to have because
Speaker 1: we as a company have an enormoutheumatic conviction around them,
Speaker 1: and we'll launch them mos back like even if we've
Speaker 1: never had institutional client aspects for it. We either are
Speaker 1: some products we're like, okay, there's a real thesis here.
Speaker 1: We believe in this. We will bring something like this
Speaker 1: market because we think it should exist. Um, there are
Speaker 1: products that we will we feel maybe less strongly about,
Speaker 1: but we're willing to launch anyway if there's sufficient demand
Speaker 1: for them, if people are really interested, Um, we're willing
Speaker 1: to do that. And we have a really brought produ
Speaker 1: drane as a result of that, because we do try
Speaker 1: to be unbiased in that approach. We try to make
Speaker 1: sure that you know, anything that we think meets the
Speaker 1: criteria or a product selection perspective, we're going to do that,
Speaker 1: especially if we have clients who want it. How are
Speaker 1: people using your products, how are they putting them in portfolio?
Speaker 1: Either from a retail perspective or or an institutional one,
Speaker 1: so we get both, um, a pretty good mix between
Speaker 1: the two. Actually, for fully, construction is interesting. So it
Speaker 1: used to be a real challenge to get people to
Speaker 1: allocate you know, a few basis points here and there too,
Speaker 1: because it has really nice impacts a statistical perspective on
Speaker 1: your portfolio. And it was a lot of that kind
Speaker 1: of selling and a lot of you know, vision alignment
Speaker 1: and trying to explain to people what they might actually did.
Speaker 1: The markets changed a lot. Now you actually see people clients,
Speaker 1: some arts who are building portfolios of our products, which
Speaker 1: was the original intent, like run your own index, here's
Speaker 1: the components and make it what you wanted to do.
Speaker 1: Will package them for you because we have ideas on
Speaker 1: things that are interesting that we think will return well.
Speaker 1: But also you know, paintment of all the colors of
Speaker 1: the wind here, there's a ton you can do with
Speaker 1: the components, and that's how we've envisioned our products, and
Speaker 1: we actually see clients doing that for the first time,
Speaker 1: actual institutions saying, Okay, we're going to allocate you know,
Speaker 1: some to x raps and bitcoin. We're gonna hold some
Speaker 1: polka dot, but we're definitely not going to hold you know,
Speaker 1: this Cardano making this up obviously because they actually have
Speaker 1: a thesis around us and we're seeing people do that
Speaker 1: for the first time. So one thing we're talking about here,
Speaker 1: as I mentioned, there's potentially twelve issuers maybe more that
Speaker 1: want to launch a bitcoin or crypto et F in
Speaker 1: the US. And I mean, if you're all launching one
Speaker 1: bitcoin ETF, I mean there's gonna be a have to
Speaker 1: be waste to differentiate. So I guess one, how do
Speaker 1: you see people differentiating? Obviously it's gonna be fees, maybe branding.
Speaker 1: Do you think that this this new the whole DeFi
Speaker 1: regular framework has come about a lot of yield farming
Speaker 1: coming in in crypto is basically where you can earn
Speaker 1: yield on your cryptocurrencies. How do you see any of
Speaker 1: this playing into how different issues are going to differentiate.
Speaker 1: Do you have any Obviously you're not going to give
Speaker 1: away your secret sauce or what you're thinking about it,
Speaker 1: But I guess I'm just curious about how you're how
Speaker 1: you're framing this when you guys are having conversations about it.
Speaker 1: So what I've seen in Europe, interestingly, this is not
Speaker 1: the same kind of market at all as what you
Speaker 1: would expect in it traditionally. Yeah, this isn't the cheapest
Speaker 1: product is going to steal all of the assets like
Speaker 1: it doesn't. It ends up coming down to expertise, is
Speaker 1: what I've seen. Um Our clients rely on us to
Speaker 1: know what we're doing. These are highly technical products at
Speaker 1: the end of the day, and in a way that
Speaker 1: has nothing to do with the TS right. How you
Speaker 1: store crypto really matter, How you transact in crypto really matters.
Speaker 1: How you think about that, and it's not just how
Speaker 1: you set it up the first go around, it's how
Speaker 1: you maintain it over time. How how are you really
Speaker 1: going to handle your first poor without it causing massive disruptions?
Speaker 1: What does that mean for your products? How are you
Speaker 1: going to give it in that out to people are
Speaker 1: not How do you think about this, UM and it
Speaker 1: ends up coming down to, from what I've seen in
Speaker 1: the market so far, a lot of emphasis on knowing
Speaker 1: what you're doing UM and being able to make clients
Speaker 1: comfortable with the fact that you do know what you're
Speaker 1: doing in space that ends up being a major differentiator.
Speaker 1: Just real quick pivoting to the news about your firm
Speaker 1: that UM I saw two days ago about Cathy Wood,
Speaker 1: who we've had on the show a couple of times, UM,
Speaker 1: and she comes up a lot. She's always in the
Speaker 1: in the spotlight UM, and I think it's interesting. Kathy
Speaker 1: Wood is a big fan of crypto. It's not a
Speaker 1: shocker she joined your board. But how did that come about? UM?
Speaker 1: I meant Kathy a long time ago UM at an
Speaker 1: ETF conference. Uh. She and I got talking about about crypto,
Speaker 1: about a lot of things you've actually been talking about
Speaker 1: on this podcast, around what does the space look like,
Speaker 1: what does the plumbing look like, how do you think
Speaker 1: about making these products work, how do you think about
Speaker 1: the impacts of crypto on the future of what financial
Speaker 1: infrastructure looks like? All things that I love And she
Speaker 1: did as well, and we kept in touch and she
Speaker 1: became an informal advisor to the company when we were
Speaker 1: really early and trying to figure out but frankly with
Speaker 1: product market fit and how to really enter the ETS space.
Speaker 1: And so it was a really natural fit. There was
Speaker 1: a lot of a lot of vision alignment, longstanding relationship
Speaker 1: even prior to this UM and she, you know, became
Speaker 1: a became a shareholder this week and that's how we
Speaker 1: ended up with the announcement UM and how she ended
Speaker 1: up being part of the fabric of this company. Yeah,
Speaker 1: I'm gonna go on the record right now. She will
Speaker 1: launch a crypto et F in some shape or form
Speaker 1: down the road. I think it will be some kind
Speaker 1: of a crypto, you know, like active management crypto picker.
Speaker 1: I think there needs to be some underlying crypto ETS
Speaker 1: first for her to use. But thoughts active crypto is
Speaker 1: really interesting, UM active crypto, I mean clearly there's there
Speaker 1: you can get alpha. I mean if you if you're
Speaker 1: good at it, you could really win. Oh. I think
Speaker 1: returns perspective active cryptose amazing. People who know what they're
Speaker 1: doing in crypto. It's unreal the kind of return to
Speaker 1: you can make, especially, I mean it's still a pretty
Speaker 1: there's a lot of volatility here you can do a lot,
Speaker 1: especially if you're actively training, if you're if you're doing things,
Speaker 1: if your thesis driven assets most certainly outperformed, you would
Speaker 1: need a pretty wide roster. Though, like I think with
Speaker 1: our products in Europe you might be able to do
Speaker 1: something like that. You would need you need a deep bench,
Speaker 1: therepy need to really be able to capture, and you
Speaker 1: would need essentially it amounts to regulatory okay, for certainly
Speaker 1: more than the big point of needs. Uh, And I
Speaker 1: think it could do very well. Okay, So what about
Speaker 1: um ultimate active manager and you know Ellen driving the
Speaker 1: doge coin to the moon? Does that does does that
Speaker 1: do crypto more harm than good? I think those generally
Speaker 1: actually is helpful, which is interesting. I think one of
Speaker 1: the big problems with crypto's approachability, and we worked really hard,
Speaker 1: how do you make somebody feel confident investing in space
Speaker 1: and a combination of you know, the fifty eight thousand
Speaker 1: dollars sticker price on bitcoin and sort of inherent technical
Speaker 1: jargon that comes around it is really not friendly. What's
Speaker 1: happening right now? We've Ellen with those with a lower
Speaker 1: price point, with all of the pieces that come with
Speaker 1: that is, it's providing a lower barrier to entry for people,
Speaker 1: and I love that. I think that's ultimately a good thing,
Speaker 1: whether it as an investment product as well or not,
Speaker 1: or whether it sticks around, is you know the network
Speaker 1: and what that ends up looking like in the long term,
Speaker 1: I am like, yeah, but I think in terms of,
Speaker 1: you know, the branding around it, the mascot, the language
Speaker 1: that people are using to describe it, I think it
Speaker 1: really does make Krypto more approachable, and I think on
Speaker 1: the net that will end up being possible. Yeah, I'll
Speaker 1: share a quick I'll share a quick anecdote. I was
Speaker 1: actually on a flight uh on on on Saturday, and
Speaker 1: the two women I sat next to when they came
Speaker 1: in and sat down and immediately started talking about how
Speaker 1: they were buying dose coin and which they were buying.
Speaker 1: More so like I was like, I can't, I can't.
Speaker 1: This was like what four hours before SNL aired. Yeah, yeah,
Speaker 1: it was like the worst trade ever that they should
Speaker 1: not punch the active crypto etf those two. But just
Speaker 1: well that to that in though, it like takes me
Speaker 1: back to like nineteen twenties pre Black Monday crash of
Speaker 1: like who yeah, exactly if you if you know nothing
Speaker 1: about this and you're hearing stuff like that, it's like shoeshine, Like,
Speaker 1: I'm out. What do you think of that, Ophelia. I
Speaker 1: think there's a fine line between really hype droven investment
Speaker 1: that you're talking about and made to bring adoption, and
Speaker 1: I think, unlike what we saw in seventeen, this time around,
Speaker 1: it feels like people actually understand what they're doing. So, yeah,
Speaker 1: it's very retail as market, but it's in a much
Speaker 1: more stable way with a nice institutional backbone, which I
Speaker 1: feel much more comfortable with as a market construction. I
Speaker 1: think the stuff around us and l is what it is. Okay,
Speaker 1: last question, um favorite E T F ticker that is
Speaker 1: not your own? Oh um, that is so hard because
Speaker 1: I totally don't come from traditionally to get background, I
Speaker 1: will say, I almost feel like this is the one
Speaker 1: guest where we should let her pick her own because
Speaker 1: she's got H O, D L, she's got Abba, she's
Speaker 1: got moon. I mean, you've got like an embarrassment of
Speaker 1: riches in your ticker lineup. Do it for one, we
Speaker 1: have to do it for all. Yeah, so listen, pick
Speaker 1: your favorite of your own and then you're non something
Speaker 1: out of your family. Okay, Um, some of the stuff
Speaker 1: around like hack I really like, which is sort of
Speaker 1: that's a good one. Top five, right, that's a top five.
Speaker 1: And I think your person is always your favorite, so
Speaker 1: totally is an epic one that is up. There's always
Speaker 1: your favorite, right, ABBA's mine? I think I like Abba better.
Speaker 1: I just want I just get dancing queen stuck on
Speaker 1: ahead and it's it's that's fine, that's a good day.
Speaker 1: You got you got keys and moon too, which are
Speaker 1: also fantastic. Uh we kid, But I'm telling you if
Speaker 1: these tickers, you could sell these tickers for over a
Speaker 1: million dollars in the US someday. Honestly, it's when you're early,
Speaker 1: you get to do a lot of cool stuff. It's
Speaker 1: one of the things that I look at with this market,
Speaker 1: like we launch your bitcoin product in January, and when
Speaker 1: you do stuff early, there's some disproportionate advantages to that.
Speaker 1: So Philias neither thanks so much for joining us on Trillions.
Speaker 1: Thank you for having it's really fun. Thanks for listening
Speaker 1: to Trillions. Until next time. You can find us on
Speaker 1: the Bloomberg Terminal, Bloomberg dot com, Apple Podcast Spotify or
Speaker 1: where where else you'd like to listen. We'd love to
Speaker 1: hear from you. We're on Twitter, I'm at Joel Webber Show,
Speaker 1: He's at Eric Pultunas. You can find James at j
Speaker 1: S E y f F and you can find Aphelia's
Speaker 1: twenty one shares at twenty one Shares Underscore. This episode
Speaker 1: of Trillions was produced by Magnus Hendrickson. Francesca Levy is
Speaker 1: the head of Bloomberg podcast by