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Speaker 1: Welcome to Trillions. I'm Joel Webber and I'm Eric belchionis

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Speaker 1: Eric in Business Week. Recently, we UM had an interview

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Speaker 1: and story with SEC Commissioner Gary Ginsler, which you know

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Speaker 1: I sort of helped initiate, and one of the main

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Speaker 1: things that I just wanted to understand was what the

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Speaker 1: SEC is going to do about a potential bitcoin ETF.

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Speaker 1: What about his comments resonated with you. Yeah, so we've

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Speaker 1: been tracking this for oh seven years now. I called

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Speaker 1: to Kentucky Derby for e t F nerds since the

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Speaker 1: Winkelvoss filed in I believe it was when bitcoin was

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Speaker 1: trading at by the way, UM, the all these e

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Speaker 1: t s have been followed with the SEC, and you know,

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Speaker 1: when you look at what really has taken place over

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Speaker 1: those years, it's all been e t F that would

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Speaker 1: track bitcoin like the way g l D tracks gold.

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Speaker 1: So that would be a physically backed even though people

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Speaker 1: mocked me for saying physically on Twitter, but it's physically

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Speaker 1: backed as you can get. In other words, it would

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Speaker 1: store the bitcoin and track the spot price the way

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Speaker 1: g l D tracts gold. However, Gamsler has come in

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Speaker 1: and we thought he would be a little more lenient

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Speaker 1: on bitcoin because he was an expert in it um.

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Speaker 1: But he has come in and really been a little

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Speaker 1: concerned about approving physically back bitcoin ETFs because they are

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Speaker 1: filed under the Securities Act of three, which is a

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Speaker 1: looser rule than the Act, which is a more has

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Speaker 1: more protections. That's what all your mutual funds and most

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Speaker 1: e t f s are registered under. So there's a

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Speaker 1: lot more protections in there, and I think he feels

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Speaker 1: more comfortable if an e t F that track Bitcoin

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Speaker 1: were fall into there. So the only way to go

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Speaker 1: through the forty Act and be bitcoin is to use futures.

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Speaker 1: What happened in the days after we published that story. Yeah,

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Speaker 1: So since he said that in the story came out,

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Speaker 1: there has been I believe there's now five bitcoin ETFs

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Speaker 1: that are now filed that would track futures under the

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Speaker 1: forty So there's almost like a new Kentucky Derby forming

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Speaker 1: in the shadow of the bigger one, and it sounds

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Speaker 1: like that's what's you know. If all goes well and

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Speaker 1: he is a man of his word, it will probably

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Speaker 1: see these futures ets approved in November UM as early

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Speaker 1: as November at least, and uh, that's what we're gonna get.

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Speaker 1: So we should really look into how they work. And

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Speaker 1: we have two people on today who literally run bitcoin

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Speaker 1: future strategies into fun structure, so I think we could

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Speaker 1: get real inside look at how they're going to work

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Speaker 1: in the pros and cons of them. Okay, So joining

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Speaker 1: us for this episode Steve Hawkins of Horizon Ets. He's

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Speaker 1: coming back on You may remember him from the SHREWM

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Speaker 1: episode a couple of months ago. And then Simmy and

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Speaker 1: Hyman at pro Shares, who just a couple of weeks

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Speaker 1: ago launched one of these future strategy this time on Trillions.

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Speaker 1: A look into the Future of Bitcoin Futures ecs. Simmey

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Speaker 1: and Steve, Welcome to Trillians, Thanks for having me. Thank

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Speaker 1: you for having me again. Mat. Okay, Simmey and I

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Speaker 1: want to start with you because this your your product

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Speaker 1: came out literally just a couple of weeks ago. How

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Speaker 1: did you come up with this idea because it was

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Speaker 1: something that you put in motion obviously months ago. Well,

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Speaker 1: we've actually been uh you know, focused on the on

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Speaker 1: the bitcoin space for quite a while. Um, but we did. Indeed,

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Speaker 1: we're very proud A couple of weeks ago to be

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Speaker 1: the first market to bring the first bitcoin exposure in

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Speaker 1: a mutual fund. It's ticker btc f X. That's our

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Speaker 1: Bitcoin strategy pro fund. We have both pro shares et

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Speaker 1: f s and pro funds mutual funds at our organization UH.

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Speaker 1: And this is indeed a strategy that utilizes futures for

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Speaker 1: exposure to bitcoin and puts that in a forty act

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Speaker 1: mutual fund, as Eric was indicating, and I always like

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Speaker 1: to be careful with e C SEC lane which the

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Speaker 1: strategy was allowed to come to market. Remember, the SEC

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Speaker 1: doesn't approve anything, they allow things to come to market.

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Speaker 1: But we were really excited to be first on this one.

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Speaker 1: And so let me ask you how this works. Right,

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Speaker 1: So this filing is called a Bitcoin Strategy fund, which

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Speaker 1: is what all of the new filings are sort of called.

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Speaker 1: And they're all active, right, So this is an active strategy.

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Speaker 1: How does it A typical future z et F like UM,

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Speaker 1: you know, natural gas or something would take the front

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Speaker 1: two months probably and then just try to roll them

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Speaker 1: constantly to keep exposure. Does this go beyond those front

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Speaker 1: two months? Does it use other funds like some of

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Speaker 1: these UH filings are saying they can use futures and

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Speaker 1: or other funds like presumably a Canadian Bitcoin fund or

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Speaker 1: something um So, can you just really take us through

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Speaker 1: how the strategy works and what it holds. Sure, So

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Speaker 1: the basic intendency to use the front month contracts for

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Speaker 1: exposure and the benefit of that historically is that the

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Speaker 1: correlation voluntility and beta of those front month contracts to

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Speaker 1: spot bitcoin is really high. Now we are an active funds,

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Speaker 1: so that means we do have some ability around the

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Speaker 1: margin to manage the role. You know, you've got a

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Speaker 1: roll from at the end of the month, you got

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Speaker 1: a roll to the next month. So we have some

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Speaker 1: ability as an active fund to say, oh, we see

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Speaker 1: a lot of liquidity today, we're gonna roll a little

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Speaker 1: more than we intended a little less tomorrow. And there

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Speaker 1: is a little bit of a room around the edges

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Speaker 1: to think about, you know, where the collateral behind the margin,

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Speaker 1: the the uh the futures contracts are invested. But still

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Speaker 1: the primary intent for the exposure is to be invested

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Speaker 1: in those front month contracts. So how's it going so far?

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Speaker 1: Because obviously this is something that as Eric said, he's

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Speaker 1: been watching for seven years. There's been a ton of

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Speaker 1: people interested in it, you come out with something that

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Speaker 1: is a close approximation of what everybody is gonna be. Uh,

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Speaker 1: moving towards and instant feedback. How's it going. It's going

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Speaker 1: pretty well from our perspective. We've seen the flows started

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Speaker 1: to come in. Uh. And look, it's also been a

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Speaker 1: period where where you know, bigcoin is on the rise,

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Speaker 1: so that brings some extra highballs and the fund is

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Speaker 1: doing what it's supposed to do, and we're seeing some

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Speaker 1: nice flows, and um, I just want to get wonky

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Speaker 1: real quick. I know Steve's waiting in the wings, but

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Speaker 1: we just got to get through this mutual fund real quick. Um,

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Speaker 1: this mutual fund. Right, So a lot of the filings

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Speaker 1: that are coming into the SEC will say something along

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Speaker 1: the lines of we're going to attrack futures and potentially

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Speaker 1: some other funds that whole bitcoin and I guess that

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Speaker 1: and I think some of you mentioned o t c s,

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Speaker 1: o CC trusts, which would mean GBTC, does this one

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Speaker 1: hold any of those? Was that in the language, And

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Speaker 1: do we think that Genzler will actually filter out ones

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Speaker 1: that have that? And because now we're seeing filence come

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Speaker 1: in and just say just futures um and there's some

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Speaker 1: talk that those are the ones will approve any thoughts

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Speaker 1: on all that, So I don't want to sort of

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Speaker 1: guess as to what the sec might do or what

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Speaker 1: they're sort of signaling. But you know, back to my

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Speaker 1: earlier point, because we are active, that means we do

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Speaker 1: have a sum ability to think about how the cash

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Speaker 1: is invested, particularly the margin behind those those contracts, so

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Speaker 1: we can use a few things other than cash. Again,

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Speaker 1: it's not the dominant intent of the strategy that the

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Speaker 1: strategy parts perspectives indicates a focus on those front run

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Speaker 1: traffic contracts, but there's a little bit of ability to

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Speaker 1: think about where the where the cash is sitting. And

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Speaker 1: just to be clear, the Act requires funds that hold securities,

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Speaker 1: whereas you can fall into the thirty three Act and

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Speaker 1: not hold securities. And bitcoin isn't a security, right, so

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Speaker 1: you file into the forty Act because you're not. Futures

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Speaker 1: aren't securities either, But you get the margin and you

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Speaker 1: buy treasuries with them, and then presumably that's what you're holding.

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Speaker 1: Therefore you get through. Am I right on that or

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Speaker 1: am I missing anything? I'm gonna focus on. I think

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Speaker 1: what's important to the investor in the distinction between the

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Speaker 1: forty and the thirty three Act, because for for folks

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Speaker 1: who are tuning in UH thirty three, the thirty three

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Speaker 1: Act is a common structure for commodity exposure as compared

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Speaker 1: to the forty Act structure, which by these are named

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Speaker 1: for the year in which they were they were put

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Speaker 1: in place, nineteen thirty three and nineteen forty The key distinction.

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Speaker 1: As an investor, there is a real benefit to being

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Speaker 1: in a forty Act, and that is perhaps most importantly

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Speaker 1: the avoidance of the annoying K one. Most thirty three

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Speaker 1: Act funds will generate a K one. You gotta deal

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Speaker 1: with that when you file your taxes. When you're in

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Speaker 1: forty acts space, get plain old ten ninety nine. So

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Speaker 1: that's probably the most salient difference from an investor's perspective. Okay, Steve,

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Speaker 1: I want to bring you in here, um because in

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Speaker 1: addition to to the shroom conversation that we've had with you,

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Speaker 1: you're also in the bitcoin space, which basically sounds like

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Speaker 1: a pretty fun job. How do you get what you read? Okay,

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Speaker 1: may want it to so what you read on the

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Speaker 1: thirty three forty Acts and what's your distinction, Well, I

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Speaker 1: mean I would I would just step back for a

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Speaker 1: second and look at it from our perspective. So we

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Speaker 1: launched our Bitcoin Features Index tracking EKF back in April

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Speaker 1: this year. We were in a race with a few

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Speaker 1: other um I would say digital let's call it digital currency,

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Speaker 1: uh eric from a digital not physical asset perspective. Um.

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Speaker 1: So we had our synthetic futures based product. They had

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Speaker 1: their digital asset hole in the physical digital currency themselves,

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Speaker 1: and we really thought that our regulators in Canada were

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Speaker 1: actually gonna go down the same route as what the

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Speaker 1: SEC has said. And so we believe that we were

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Speaker 1: going to be able to get the first bitcoin ECF

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Speaker 1: to market here in North America using futures as the

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Speaker 1: underlying asset class rather than the physical digital currency. We

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Speaker 1: just did really didn't think that they could get there

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Speaker 1: on the market making and all of the sort of

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Speaker 1: issues around liquidity that could occur directly with the holding

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Speaker 1: the digital asset in the e t F custody account,

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Speaker 1: if you can even call it that, and getting like

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Speaker 1: the regulators themselves understanding the custody and the risks around

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Speaker 1: custody of the digital asset themselves, and I think that's

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Speaker 1: exactly what has you know, been holding up the SEC

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Speaker 1: for very very long with all of the comment letters

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Speaker 1: that we've seen on the pasta on the physical bitcoin filing.

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Speaker 1: So that's why we went really hard down the route

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Speaker 1: of the futures based et F here and and obviously

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Speaker 1: the regulators approved the physical digital asset e t F

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Speaker 1: before the futures and we were quote unquote novel and

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Speaker 1: uh um, so we we had to go down that

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Speaker 1: road and we uh you know, launched about a month

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Speaker 1: after them. The physical products themselves are a little bit

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Speaker 1: over a month. And you know, from our pay from

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Speaker 1: our take, we really truly believe that futures is the

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Speaker 1: best place for from this asset class to get exposure. Still, um,

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Speaker 1: we believe that you know, all of the market the

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Speaker 1: efficiency of market making and how an e t F

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Speaker 1: actually works is best through underlying futures exposure in the

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Speaker 1: et F. And that's both long and also we you know,

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Speaker 1: we launched uh inverse bitcoin shortly after that because we're

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Speaker 1: giving these things as trading vehicles and if people want

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Speaker 1: to use them as trading vehicles, um, then we believe

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Speaker 1: that the futures is really the best place to go,

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Speaker 1: and that's why we agree with the SEC in that regard. Well,

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Speaker 1: but let's let's dive into this. So unfortunately came out

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Speaker 1: a month after the physically backed ones um. And but

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Speaker 1: whether you're looking at the gold area where the futures

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Speaker 1: gold ETF has one percent of the assets in the

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Speaker 1: physically back gold ETFs like g l D and i

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Speaker 1: AU in your case, this one has about one percent

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Speaker 1: of what the physically backed big et F has in Canada,

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Speaker 1: it's a very almost exact parallel, which basically shows the

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Speaker 1: same thing people just wanted physically backed. But you're saying

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Speaker 1: that futures are better. Um, seems against the grain. Like

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Speaker 1: even someone I know you want to say, I want

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Speaker 1: people to use the bitcoin futures at F, but like

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Speaker 1: it just seems like nobody would agree with that. Well

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Speaker 1: one first to market, eric, Right, So if if our

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Speaker 1: big right here's ETF was first to market, you would

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Speaker 1: not be seeing a hundred to one from an assets perspective, right. Um,

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Speaker 1: it's just underling becoen exposure that they were going for,

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Speaker 1: and it was who was providing the first and access

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Speaker 1: to it in a liquid vehicle that could be traded

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Speaker 1: on the exchange every day. I mean, we had a

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Speaker 1: closed end fund here in Canada or a couple of

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Speaker 1: closed in funds that had over a billion dollars of assets,

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Speaker 1: and you know they were trading at premium to the

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Speaker 1: net asset value every day. Guess what happened to that

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Speaker 1: premium on the day that a bitcoin ETF got listed.

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Speaker 1: It's now trading at a ten percent discount, right like,

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Speaker 1: because the people don't want to be locked up into

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Speaker 1: a vehicle that they can't trade in and out of

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Speaker 1: on a regular basis. And you know, when you look

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Speaker 1: at the efficiency of what et f s do in

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Speaker 1: the marketplace, market makers have to trade this. They have

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Speaker 1: to provide a bid us spread and they have to

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Speaker 1: be able to hedge that exposure and actively trade that

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Speaker 1: hedge as they buy and sell units in the marketplace.

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Speaker 1: What are they hedging against any bitcoin et F right now,

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Speaker 1: whether it be physical or future space. They are using

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Speaker 1: futures because that's the only vehicle that they can trade

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Speaker 1: intra day to hedge their underlying buying and selling activity.

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Speaker 1: And guess what if your futures bas ETF and your

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Speaker 1: market maker is using futures to hedge their exposure. They're

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Speaker 1: getting one to one direct contra you know, contraining UH exposure.

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Speaker 1: When that happens with a bitcoin digital currency physically back ETF,

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Speaker 1: they're trading futures against it, there's gap and there's always

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Speaker 1: going to be gap risk in that regard, and you know,

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Speaker 1: it is what it is from that perspective, and so

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Speaker 1: we believe that again as the market sort of UH

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Speaker 1: evolves here and becomes matures from a from a market

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Speaker 1: efficiency perspective in trading bitcoin, there's more bigcoin products out there,

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Speaker 1: we believe that investors will lean towards where markets are

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Speaker 1: more efficient from a trading perspective, and the e t

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Speaker 1: F should trade it more efficiently. You know, we can

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Speaker 1: accept futures UM and deliver features as part of the

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Speaker 1: creation redemption baskets again making it more efficient for the

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Speaker 1: UM liquidity providers in the marketplace. So it's it's a

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Speaker 1: very very different asset. I'm not a trader, I'm a

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Speaker 1: norm e UM futures isn't something I normally think about

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Speaker 1: touching UM. So how does this market work? What do

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Speaker 1: I need to know about it? Who listed them? How

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Speaker 1: big of a market place are we talking about here?

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Speaker 1: Can you guys break that down for me, so I'll

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Speaker 1: start with you. Yeah, so among the benefits of the

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Speaker 1: futures market is the regulation. The futures market UH is

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Speaker 1: governed by the c m E and the c FTC.

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Speaker 1: There is a central clearinghouse that you know, ensures that

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Speaker 1: you know trades are not the folded upon and that

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Speaker 1: those are really important aspects. Again, we can't be in

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Speaker 1: the mind of the SEC, but we know what the

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Speaker 1: what the advantages are. And exactly the Steve's point, the

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Speaker 1: more that there are opportunities for for bitcoint exposure, the

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Speaker 1: more volume and the more liquidity we see in these markets.

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Speaker 1: But even in and and so, you know, simply you're

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Speaker 1: buying a futures contract for what the market thinks the

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Speaker 1: price of big point would be a month from now.

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Speaker 1: And as we as I mentioned, the tracking of that

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Speaker 1: has been pretty close to spot. But everybody likes to

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Speaker 1: talk about role cost. That's everybody's favorite thing to talk about.

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Speaker 1: It was any and Eric was gonna ask me, So

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Speaker 1: I'm just I will throw a couple of comments I

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Speaker 1: think before you even ask. He's so upset he didn't

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Speaker 1: get to ask it. So I'll just pretend he asked it.

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Speaker 1: So think about this, he's in my head. In bitcoin

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Speaker 1: spot bitcoin, I think it was up about three d

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Speaker 1: and five per cent. If you looked at a strategy

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Speaker 1: that you know, approximated rolling one month contracts, you would

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Speaker 1: have gotten about two eighty five. So everybody goes, oh

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Speaker 1: my god, there was roll cost. The market was up

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Speaker 1: three oh five. I mean, the only way there's meaningfully

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Speaker 1: positive role cost is when market participants think the thing

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Speaker 1: is going up. That's first principles in jargon e terms,

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Speaker 1: the future is the unbiased estimator of the future spot price.

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Speaker 1: So yeah, I mean, if it's up three oh five

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Speaker 1: and you've got two eighty five, I don't think anybody's

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Speaker 1: gonna be so worried about that. In a more normalized environment,

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Speaker 1: it's very likely roll costs would be smaller. And the

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Speaker 1: more of us that get involved in this, the more

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Speaker 1: liquid the stuff is. That being said, I think ultimately

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Speaker 1: there will be many different ways to get exposure. And

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Speaker 1: also this these point, they all come with costs. We

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Speaker 1: know how big that premium and discount is to the

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Speaker 1: thing or things that are trading over the counter. We

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Speaker 1: don't even it's it's hard to even get your hands

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Speaker 1: around the opaqueness of the transaction cost if you're trying

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Speaker 1: to get a digital wallet. So there's no freeway to

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Speaker 1: get exposure. It's like the stickers on all on all

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Speaker 1: the you know, on all the e T s. You

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Speaker 1: know you you cannot get the exact return of the

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Speaker 1: theoretical index. It doesn't exist. Eric, are you gonna try

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Speaker 1: and ask a question about world costs? Now? Send it

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Speaker 1: my way, Eric, send it my way. And yeah, okay,

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Speaker 1: So yeah, look, I agree, that's a very good point.

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Speaker 1: I mean, you're up to eighty five. We we always

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Speaker 1: say that about the shiny object lane. Nobody cares about

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Speaker 1: fees over there, because if you hit it, you're you're

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Speaker 1: you're you're tripling the S and P like arc right,

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Speaker 1: nobody cares they charge whatever. So many five basis points, um,

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Speaker 1: So I get it. I think maybe let's put it

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Speaker 1: into proportion of the fact that when physically backed e

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Speaker 1: T f s, if they were to come out, probably

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Speaker 1: would track more of that upside but also the downside.

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Speaker 1: So I don't know, it just seems to me that

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Speaker 1: in general, and I'm not Look, the futures are a

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Speaker 1: fine way to get exposure to many different areas. Typically, though,

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Speaker 1: if you can get it the physical physically back way,

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Speaker 1: people tend to prefer it like we went up in

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Speaker 1: Canada and just discussed that and in gold. Um. But

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Speaker 1: the idea I think is just that humans that are

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Speaker 1: investors generally just want something that tracks the price, you

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Speaker 1: know that, they just want the Kelly Blue Book value,

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Speaker 1: like just don't complicate this for me. That would be

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Speaker 1: my one pushback on that. But to your point, if

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Speaker 1: there's nothing else in the market, like if Steve's fund

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Speaker 1: had gotten out a month before the physically backed I

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Speaker 1: think he would have been bigger, had liquidity and been

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Speaker 1: been stronger. So in Simeon's case, let's say these futures

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Speaker 1: et f s come out, um and they're out for well,

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Speaker 1: let's let's just start there. How do you think the

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Speaker 1: SEC is going to approve or allow these? Are they

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Speaker 1: gonna put out like all four or five at once?

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Speaker 1: Will they pick some? How much do you attention and

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Speaker 1: assets do you think they'll get relative to let's say

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Speaker 1: a physically back to e t F getting introduced, which

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Speaker 1: we think would be ten billion dollars within a month.

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Speaker 1: So one let's look at physical gold versus a digital

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Speaker 1: currency wallet, right, and who custodies that, how has it held?

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Speaker 1: Is their risk to that underlying asset. Can somebody hack

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Speaker 1: your vault at Fort Knox and remove your gold and

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Speaker 1: sell it somewhere else? This is not gold finger anymore, right,

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Speaker 1: But cybersecurity and hacking is like, this is something we

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Speaker 1: have to live with for the rest of our lives.

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Speaker 1: And will somebody be able to at some point in

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Speaker 1: time hack Gemini Trust and figure out how to take

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Speaker 1: money out of the digital currency e t F? That's there,

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Speaker 1: you know what, I don't know, but I'm not going

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Speaker 1: to take that chance, and I'm not if I'm invested

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Speaker 1: in my gold physical goal EPF. I know that I'm

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Speaker 1: not going to lose my physical gold anywhere, at any time,

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Speaker 1: under any circumstances unless somebody misplaces it, which I don't

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Speaker 1: think can happen either, because you know, we have a

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Speaker 1: very very strong settlement cycle and way of trading gold

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Speaker 1: and physical gold, even gold futures. But with digital currencies,

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Speaker 1: when you're dealing with you know, exchanges that are getting

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Speaker 1: hacked from time to time, You're dealing with custody arrangements

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Speaker 1: which you're getting hacked from time to time, you're dealing

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Speaker 1: with a lot of unknowns, as Simeon was saying, with

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Speaker 1: respect to the actual trading of the fit you know,

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Speaker 1: of the digital bitcoin, and it will be very very

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Speaker 1: interesting when sort of we have interim financial statements coming

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Speaker 1: out right now for the physical uh bitcoin ets here

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Speaker 1: in Canada, and we really don't know that underlying trading

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Speaker 1: costs and custody costs and flow through costs until we

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Speaker 1: get This will be the first public reporting period for

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Speaker 1: those et f s, so it'll be very very different

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Speaker 1: from that perspective. I also wanted to say, like also

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Speaker 1: to Simeon's point, when you're looking at the backwardation in

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Speaker 1: contango of you know, the features curves for bitcoin, you know,

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Speaker 1: since the inception of the bitcoin futures back to it

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Speaker 1: wasn't really only until like the last twelve months, even

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Speaker 1: less like ten months where we saw this huge sort

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Speaker 1: of you know, contango effect which started creating tracking air

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Speaker 1: between sort of BTC one on a long term basis

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Speaker 1: versus uh spot Bitcoin. And to Simeon's point, like we

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Speaker 1: created a five day rolling features index and you know,

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Speaker 1: on a one year basis right now we're about you know,

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Speaker 1: thirty five percent behind. Um. You know that three hundred uh,

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Speaker 1: you know three and one percent return of BTC one right,

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Speaker 1: and you know our role in futures. There's a cost

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Speaker 1: to it, and it's only really been in the last

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Speaker 1: year since bitcoin has been going straight up from your

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Speaker 1: point of ars to sixty. Something's going to happen during

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Speaker 1: that period. From a from a contango perspective, in the

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Speaker 1: future is curve. It's just you know, reality. But when

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Speaker 1: you normalize it, and when you normalize gold to gold,

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Speaker 1: futures like this is a marketplace where we believe that

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Speaker 1: futures will be again the best tracking vehicle because you've

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Speaker 1: got to take the contango with the backwardation, and as

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Speaker 1: you know, we see bitcoin slide, the backwardation really fits

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Speaker 1: nicely into allowing us to really make up some of

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Speaker 1: that gap. Um, as long as we're fully invested, which

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Speaker 1: is you know, what all our ets are hoping to be.

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Speaker 1: But I mean Simeon's might be a little bit different

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Speaker 1: because it's active. Ours is passive and invested at all times.

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Speaker 1: So Simeon, I want to ask you, um uh, you

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Speaker 1: know you coming out just recently and then all of

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Speaker 1: a sudden you see all these new of filings, handful

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Speaker 1: of them that that Eric mentioned earlier. I'm sure you've

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Speaker 1: had a chance to look at them. What do you

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Speaker 1: what do you make of of those um of those offerings. Yeah,

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Speaker 1: we have filed for an ETF. We're in the quiet period,

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Speaker 1: so there isn't much else I can say other than

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Speaker 1: we filed and uh. This is a this is a

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Speaker 1: rapidly evolving and maturing space. I think when we get

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Speaker 1: to some steady state, there will be multiple ways for

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Speaker 1: investors to get exposure to bitcoin. And I think perhaps

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Speaker 1: one of the best things that you can do as

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Speaker 1: an investor is try to split up the underlying use

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Speaker 1: case for bitcoin with the from the alternatives. As an investor,

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Speaker 1: I think that's really important and it gets lost if

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Speaker 1: you're trying to do this research because you know, whether

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Speaker 1: it's the anonymity, the functioning of the blockchain, uh, the

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Speaker 1: evolution of defy, all those things that are part of

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Speaker 1: the underlying value proposition of bitcoin or any other cryptocurrency

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Speaker 1: are are critical to you know what will drive its

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Speaker 1: price over time. But you don't need a smelter to

432
00:24:11,840 --> 00:24:14,879
Speaker 1: invest in gold, so those things are not necessarily the

433
00:24:14,960 --> 00:24:19,600
Speaker 1: relevant question. The relevant question as more ways are allowed

434
00:24:19,680 --> 00:24:21,960
Speaker 1: to come to market. To get exposure is to ask

435
00:24:22,040 --> 00:24:26,360
Speaker 1: yourself the questions of as an investor, trade off the call,

436
00:24:26,520 --> 00:24:29,040
Speaker 1: the the transaction costs of being all the in the

437
00:24:29,119 --> 00:24:32,240
Speaker 1: spot market, in the futures market, if there is ultimately

438
00:24:32,320 --> 00:24:35,440
Speaker 1: that choice, the tradeoff of being in a forty act

439
00:24:35,680 --> 00:24:38,200
Speaker 1: versus a thirty three act in terms of your you know,

440
00:24:38,320 --> 00:24:41,360
Speaker 1: personal tax positions or your predilection for a K one.

441
00:24:41,600 --> 00:24:44,359
Speaker 1: So I think that's what's really important, because that can

442
00:24:44,400 --> 00:24:46,840
Speaker 1: get so lost so fast because you go into the

443
00:24:47,400 --> 00:24:50,360
Speaker 1: into the al Gores Worldwide Web and you you try

444
00:24:50,400 --> 00:24:52,679
Speaker 1: to figure out what's going on with bitcoin, and all

445
00:24:52,720 --> 00:24:55,480
Speaker 1: of a sudden you're reading the Setoti paper and you

446
00:24:55,560 --> 00:24:57,800
Speaker 1: don't know how that's gonna help you. So I think,

447
00:24:58,080 --> 00:25:00,280
Speaker 1: if if there's a piece of to take away here

448
00:25:00,840 --> 00:25:04,520
Speaker 1: as an investor focused on the relevant distinctions in what

449
00:25:04,680 --> 00:25:08,359
Speaker 1: it means to you as an investor, leave the underlying

450
00:25:08,600 --> 00:25:11,680
Speaker 1: use case commentary perhaps a little bit to the side

451
00:25:11,720 --> 00:25:20,000
Speaker 1: for that for that evaluation. Okay, let's take a step

452
00:25:20,080 --> 00:25:23,159
Speaker 1: back and look at what might transpire. So, you know,

453
00:25:23,240 --> 00:25:26,360
Speaker 1: we just talked about there's other filings. So here's exactly

454
00:25:26,440 --> 00:25:29,920
Speaker 1: what Gensler said that everybody has honed in on which

455
00:25:30,040 --> 00:25:33,040
Speaker 1: is quote. I anticipate there will be filings with regard

456
00:25:33,119 --> 00:25:35,720
Speaker 1: to et s under the forty Act. When combined with

457
00:25:35,880 --> 00:25:39,080
Speaker 1: the other federal securities laws, the forty Act provides significant

458
00:25:39,080 --> 00:25:42,440
Speaker 1: investor protections. Given these important protections, I look forward to

459
00:25:42,520 --> 00:25:46,040
Speaker 1: the staff review of such filings, particularly if those are

460
00:25:46,160 --> 00:25:51,520
Speaker 1: limited to the CME traded bitcoin futures. Now, all of

461
00:25:51,600 --> 00:25:55,760
Speaker 1: the filings, the first three filed, including your SIMI and Vanac,

462
00:25:55,800 --> 00:25:59,119
Speaker 1: yours and invest Go have this language which says the

463
00:25:59,240 --> 00:26:02,440
Speaker 1: fun and test intends to invest in pooled investment vehicles,

464
00:26:02,840 --> 00:26:06,080
Speaker 1: including e t f s that invest directly or indirectly

465
00:26:06,160 --> 00:26:09,560
Speaker 1: in bitcoin. This The last two that came in, Valkyrie

466
00:26:09,760 --> 00:26:14,960
Speaker 1: and Galaxy, simply say we're only futures. They don't have

467
00:26:15,200 --> 00:26:20,480
Speaker 1: that e t f s indirect bitcoin sentence. Does that matter?

468
00:26:20,960 --> 00:26:24,520
Speaker 1: And how do you see the approval working? You think

469
00:26:24,520 --> 00:26:27,200
Speaker 1: they'll approve all five at once, because when you file

470
00:26:27,280 --> 00:26:29,760
Speaker 1: forty actors, you're on like a seventy five day clock, right,

471
00:26:29,840 --> 00:26:32,280
Speaker 1: so it seems like the first one filed could be

472
00:26:32,320 --> 00:26:33,960
Speaker 1: out first. I don't just give me your take on

473
00:26:34,040 --> 00:26:38,199
Speaker 1: all that. I can't really opine on what the SEC

474
00:26:38,520 --> 00:26:40,920
Speaker 1: might do, which which which I know you'd love for

475
00:26:41,000 --> 00:26:44,840
Speaker 1: me to do. I we don't know, We really don't know. Um,

476
00:26:45,160 --> 00:26:47,560
Speaker 1: it's pretty clear from the language that you know Gensler

477
00:26:47,680 --> 00:26:49,840
Speaker 1: is a fan of futures and a forty act. But

478
00:26:50,280 --> 00:26:53,040
Speaker 1: at that nuanced level, you know, all I can really,

479
00:26:53,280 --> 00:26:57,680
Speaker 1: you know, respond to is yeah, we're active and we

480
00:26:57,840 --> 00:27:01,560
Speaker 1: have that flexibility to manage at cash collateral collateral in

481
00:27:01,640 --> 00:27:03,880
Speaker 1: a little bit more flexible ways than maybe some folks

482
00:27:03,920 --> 00:27:07,119
Speaker 1: who are who are painting that a little bit more narrowly. Steve,

483
00:27:07,680 --> 00:27:10,119
Speaker 1: the SEC can't harm you. You're up there in Canada.

484
00:27:10,240 --> 00:27:12,440
Speaker 1: What do you think about that sentence? Do you think

485
00:27:12,480 --> 00:27:14,560
Speaker 1: that will matter? And he'll prove just the two that

486
00:27:14,680 --> 00:27:17,960
Speaker 1: said only futures or what's your taking? Well, I wish

487
00:27:18,080 --> 00:27:21,520
Speaker 1: our regulator had the same thought process as against h

488
00:27:21,680 --> 00:27:23,560
Speaker 1: first and foremost, because that I would have been first

489
00:27:23,560 --> 00:27:28,120
Speaker 1: in marketplace. But that said, I you know, I believe, um,

490
00:27:29,240 --> 00:27:31,639
Speaker 1: you know, he's really honing in on the fact of

491
00:27:32,240 --> 00:27:35,800
Speaker 1: how can they get comfortable from a regulatory perspective around

492
00:27:36,320 --> 00:27:40,560
Speaker 1: custody and trading of the underlying assets when this is

493
00:27:40,640 --> 00:27:44,080
Speaker 1: such a new and you know every day it's changing

494
00:27:44,200 --> 00:27:47,280
Speaker 1: with respect to how you can access digital currencies or

495
00:27:47,320 --> 00:27:51,520
Speaker 1: any and and you know how you can hold digital currencies. So, um,

496
00:27:51,760 --> 00:27:56,080
Speaker 1: this is an unregulated cross border currency UM asset and

497
00:27:57,280 --> 00:28:00,480
Speaker 1: it's just completely unknown for them. But having the related

498
00:28:01,040 --> 00:28:04,840
Speaker 1: uh CMME listed features governed by the CFTC is sen

499
00:28:04,920 --> 00:28:08,280
Speaker 1: Emen saying, um, you know you have full on margin accounts,

500
00:28:08,560 --> 00:28:11,840
Speaker 1: segregated margin accounts with a different trust, which is what

501
00:28:11,960 --> 00:28:14,520
Speaker 1: we have had to do with with our e t F.

502
00:28:15,080 --> 00:28:17,600
Speaker 1: You know, these are all I think these are all

503
00:28:17,640 --> 00:28:21,240
Speaker 1: the comfort levels that is giving the regulator saying, I

504
00:28:21,320 --> 00:28:23,440
Speaker 1: think we can get there now with the sort of

505
00:28:23,600 --> 00:28:26,359
Speaker 1: e t F futures based and I think you know

506
00:28:26,440 --> 00:28:28,679
Speaker 1: all the I think there's five or six filings now

507
00:28:28,720 --> 00:28:31,760
Speaker 1: which are features based specifically in the US. I believe

508
00:28:31,920 --> 00:28:35,000
Speaker 1: that they're all going to get approved um and I

509
00:28:35,080 --> 00:28:39,600
Speaker 1: believe that hopefully. I believe that the SEC will approve

510
00:28:39,680 --> 00:28:42,520
Speaker 1: them all together, Like if they're going to prove one there,

511
00:28:42,600 --> 00:28:45,560
Speaker 1: they should be approving all of them together roughly around

512
00:28:45,600 --> 00:28:47,680
Speaker 1: the same time. So for the people that are on

513
00:28:47,720 --> 00:28:51,560
Speaker 1: defence with their their physical ones, um, you know, like

514
00:28:51,760 --> 00:28:54,920
Speaker 1: the cryptoins and the wise and the first trust. You know,

515
00:28:55,040 --> 00:28:57,680
Speaker 1: I think they should be getting there, you know, futures

516
00:28:57,720 --> 00:29:01,200
Speaker 1: based filings in a SAP so that they can get

517
00:29:01,280 --> 00:29:04,040
Speaker 1: onto the uh the train with the rest of the

518
00:29:04,200 --> 00:29:07,560
Speaker 1: filings like uh you know, pro Chairs and and UH

519
00:29:07,960 --> 00:29:11,760
Speaker 1: and Galaxy and invest Goo and Vanac and those guys

520
00:29:11,840 --> 00:29:14,240
Speaker 1: who I think will leave the charge. If not, then

521
00:29:14,400 --> 00:29:18,200
Speaker 1: I think they're going to be watching as uh these

522
00:29:18,600 --> 00:29:21,600
Speaker 1: you know, US issuers get to marketplace with their first

523
00:29:22,320 --> 00:29:26,959
Speaker 1: futures based TTF. And to your point, in Canada, they

524
00:29:27,080 --> 00:29:31,200
Speaker 1: allowed this bitcoin ETF to come out one day alone

525
00:29:31,800 --> 00:29:34,040
Speaker 1: and then they let somebody else come out day two.

526
00:29:34,800 --> 00:29:36,760
Speaker 1: It was already like too late. It was so I

527
00:29:36,840 --> 00:29:39,960
Speaker 1: agree they probably should approve all at once, given what

528
00:29:40,040 --> 00:29:41,680
Speaker 1: they saw in Canada. And then they I think they

529
00:29:41,760 --> 00:29:44,479
Speaker 1: corrected and the three ether e t s all got

530
00:29:44,520 --> 00:29:46,600
Speaker 1: approved and allowed to launch the same vein and it

531
00:29:46,680 --> 00:29:49,400
Speaker 1: was more of an even fight. Correct But that's how

532
00:29:49,960 --> 00:29:52,000
Speaker 1: that's how big first the market. Now back to you, Simeon.

533
00:29:52,400 --> 00:29:54,440
Speaker 1: Now you have a mutual fund that's futures and there's

534
00:29:54,440 --> 00:29:57,040
Speaker 1: an e t F that let's say the e t

535
00:29:57,160 --> 00:30:00,400
Speaker 1: F s get filed, I mean launched. What about pacity?

536
00:30:00,480 --> 00:30:03,320
Speaker 1: Somebody brought up capacity where they thought, well maybe the

537
00:30:03,400 --> 00:30:05,480
Speaker 1: mutual phone is approved, because the mutual phone can always

538
00:30:05,520 --> 00:30:09,440
Speaker 1: stop taking new assets. The e t s can't. Do

539
00:30:09,560 --> 00:30:11,920
Speaker 1: you think if there's futures et f s approved and

540
00:30:12,040 --> 00:30:14,920
Speaker 1: they really get a lot of flows, is their capacity

541
00:30:15,040 --> 00:30:19,040
Speaker 1: concerns that you and you can't close you know, the

542
00:30:19,120 --> 00:30:21,440
Speaker 1: e t F to new creations or I guess you can,

543
00:30:21,560 --> 00:30:25,560
Speaker 1: but it would just annoy everybody. Yeah, I mean there's

544
00:30:25,560 --> 00:30:28,680
Speaker 1: a couple of pieces to that. First, the uh um,

545
00:30:29,400 --> 00:30:32,000
Speaker 1: it's it's likely that capacity limits is something that will

546
00:30:32,080 --> 00:30:36,360
Speaker 1: increase and and uh ameliorate over time. So there are

547
00:30:36,480 --> 00:30:39,240
Speaker 1: limits two thousand limits on the front month traffic. That's

548
00:30:39,280 --> 00:30:40,920
Speaker 1: about if you had it all up, it's about four

549
00:30:40,960 --> 00:30:44,400
Speaker 1: underd and fifty million dollars in today's bitcoint price. But

550
00:30:44,560 --> 00:30:47,600
Speaker 1: also remember we are active, so that gives us, that

551
00:30:47,680 --> 00:30:50,880
Speaker 1: does give us the opportunity around the around the edges

552
00:30:50,920 --> 00:30:54,520
Speaker 1: to manage that process. So I think it's manageable. Um.

553
00:30:55,240 --> 00:30:57,480
Speaker 1: You know, we would have no intent to convert the

554
00:30:57,560 --> 00:31:00,040
Speaker 1: mutual fund We have me as I said, profile and

555
00:31:00,120 --> 00:31:03,040
Speaker 1: pro chairs has we have mutual funds and e t

556
00:31:03,240 --> 00:31:06,520
Speaker 1: f s on the platform, so we would anticipate that

557
00:31:06,600 --> 00:31:11,040
Speaker 1: those codesists for us. I would add to the Semings point,

558
00:31:11,080 --> 00:31:13,400
Speaker 1: you can there's there. The see me has a limit

559
00:31:13,480 --> 00:31:15,000
Speaker 1: on the front month that you can own, and it

560
00:31:15,080 --> 00:31:17,680
Speaker 1: also has an overall limit. So like we had to

561
00:31:17,720 --> 00:31:21,680
Speaker 1: build into our prospectives the ability to UM go to

562
00:31:23,440 --> 00:31:25,880
Speaker 1: a certain limit on the overall fund and we could

563
00:31:25,920 --> 00:31:29,640
Speaker 1: go we could move outside of sort of the the index,

564
00:31:29,680 --> 00:31:31,920
Speaker 1: and we can actively manage the portfolio to the index

565
00:31:31,960 --> 00:31:33,920
Speaker 1: based on what we were allowed to get exposure to.

566
00:31:34,240 --> 00:31:37,040
Speaker 1: So if that meant owning the front month, the second month,

567
00:31:37,120 --> 00:31:40,840
Speaker 1: the third month contracts UM so that we were approximating

568
00:31:40,920 --> 00:31:43,880
Speaker 1: the performance of the front month or the rolling front

569
00:31:43,920 --> 00:31:45,560
Speaker 1: month index, you know, that's what we had to do.

570
00:31:45,680 --> 00:31:48,480
Speaker 1: And the Semings point, as there are more and more

571
00:31:48,600 --> 00:31:52,080
Speaker 1: products that are coming to marketplace, um, you know, there's

572
00:31:52,240 --> 00:31:55,840
Speaker 1: significantly more trading volume in those underlying bitcoin futures, which

573
00:31:55,880 --> 00:31:59,239
Speaker 1: we've seen effectively pick up almost every month since they

574
00:31:59,320 --> 00:32:02,160
Speaker 1: launched into seventeen. There was a bit of a lull

575
00:32:02,240 --> 00:32:06,560
Speaker 1: in twenty eighteen, but like the number of contracts outstanding

576
00:32:07,000 --> 00:32:10,320
Speaker 1: basically has increased every single month, which is and it's

577
00:32:10,320 --> 00:32:13,480
Speaker 1: provided more depth to marketplace, more liquidity for us to

578
00:32:13,560 --> 00:32:16,760
Speaker 1: be able to trade and you know, we have been

579
00:32:16,840 --> 00:32:19,840
Speaker 1: in discussions with the CME UM I can openly say

580
00:32:20,040 --> 00:32:23,080
Speaker 1: for over two years now to try and get them

581
00:32:23,160 --> 00:32:26,520
Speaker 1: to move those contract limits and give us exemptions away

582
00:32:26,600 --> 00:32:30,080
Speaker 1: from those contract limits. And you know, because we actually

583
00:32:30,360 --> 00:32:35,280
Speaker 1: you know, licensed the semi features UM you know, pricing

584
00:32:35,320 --> 00:32:38,160
Speaker 1: and index that the that they had UM. You know,

585
00:32:38,280 --> 00:32:40,160
Speaker 1: they've been very very open to talk to spend it

586
00:32:40,280 --> 00:32:43,320
Speaker 1: and understand the issues. And you know it's something that

587
00:32:43,400 --> 00:32:45,200
Speaker 1: we have to deal with our market makers all the time.

588
00:32:45,240 --> 00:32:48,920
Speaker 1: But to your point, Eric, you know, under Canadian law,

589
00:32:49,000 --> 00:32:51,240
Speaker 1: we have the ability to cap the et F very

590
00:32:51,360 --> 00:32:54,360
Speaker 1: very quickly and easily. And you know the one thing

591
00:32:54,440 --> 00:32:56,640
Speaker 1: we don't want to happen though, is we don't want

592
00:32:56,680 --> 00:32:59,320
Speaker 1: this to turn into a closed end fund UM. You know,

593
00:32:59,480 --> 00:33:01,600
Speaker 1: we wanted to stay an open ended fund that you

594
00:33:01,680 --> 00:33:03,560
Speaker 1: know people have the We don't want to trading in

595
00:33:03,640 --> 00:33:05,880
Speaker 1: a premium. It's a closed in fund. You will never

596
00:33:05,880 --> 00:33:08,480
Speaker 1: have day to discount because they always have the ability

597
00:33:08,800 --> 00:33:12,160
Speaker 1: unit holders always have the ability to sell and readeem UM.

598
00:33:12,280 --> 00:33:14,600
Speaker 1: But buying it, if we have no more capacity to

599
00:33:14,720 --> 00:33:17,520
Speaker 1: add exposure, then it typically will end up trading like

600
00:33:18,040 --> 00:33:19,960
Speaker 1: a closed in fund, and trading in a premium. We

601
00:33:20,040 --> 00:33:22,680
Speaker 1: just don't want that. So we're hoping to see me

602
00:33:22,880 --> 00:33:25,800
Speaker 1: to hoping that everybody. You know, we're putting a little

603
00:33:25,840 --> 00:33:27,960
Speaker 1: pressure on the CEME and as that market has become

604
00:33:28,240 --> 00:33:33,920
Speaker 1: significantly deeper, will relax those individual contract limits that we're

605
00:33:34,400 --> 00:33:38,760
Speaker 1: up against the currently, Steve, how big do you think

606
00:33:40,040 --> 00:33:42,040
Speaker 1: your product can get? Then? What do you think the

607
00:33:42,080 --> 00:33:44,800
Speaker 1: potential is? Well, I mean we saw like if we

608
00:33:44,880 --> 00:33:47,520
Speaker 1: were first to market list I'm just gonna say hypothetically, like,

609
00:33:48,000 --> 00:33:49,760
Speaker 1: you know, we saw a billion dollars come in in

610
00:33:49,840 --> 00:33:52,080
Speaker 1: the first week, right, I mean like if we had

611
00:33:52,440 --> 00:33:54,760
Speaker 1: brought a billion dollars in in the first week, um,

612
00:33:54,840 --> 00:33:56,960
Speaker 1: and used dollars like we would have been capped out

613
00:33:57,000 --> 00:33:58,800
Speaker 1: in the front month contract. We would have been moving

614
00:33:58,840 --> 00:34:01,560
Speaker 1: in the second month. Um. Wait wait, wait, time out,

615
00:34:01,640 --> 00:34:06,440
Speaker 1: time out. So let's actually that's fascinating. Let's actually grow

616
00:34:06,560 --> 00:34:09,400
Speaker 1: this too, because you're using the same futures. So how

617
00:34:10,080 --> 00:34:12,719
Speaker 1: how much could Bitcoin futures et F as a whole

618
00:34:12,800 --> 00:34:18,040
Speaker 1: as a group have in assets US dollars before you're

619
00:34:18,120 --> 00:34:23,440
Speaker 1: capped out? Any One fund is capped right, but multiple

620
00:34:23,520 --> 00:34:26,560
Speaker 1: funds are not. I say, okay, so but one fund

621
00:34:26,560 --> 00:34:30,600
Speaker 1: would be a billion, one fund could be a billion dollars. Yes, yeah,

622
00:34:31,560 --> 00:34:33,400
Speaker 1: it could be a little bit different for pro shares

623
00:34:33,480 --> 00:34:36,480
Speaker 1: between because the one having a fund and one having

624
00:34:36,520 --> 00:34:38,520
Speaker 1: an e t F and both of them, I don't

625
00:34:38,560 --> 00:34:40,680
Speaker 1: believe that both of them from my own personal view,

626
00:34:40,680 --> 00:34:43,600
Speaker 1: I don't believe both of them have the ability to

627
00:34:43,800 --> 00:34:46,200
Speaker 1: go up to that two thousand front month contract limit

628
00:34:46,840 --> 00:34:50,080
Speaker 1: um under the way that I've read the semi rules.

629
00:34:50,400 --> 00:34:53,520
Speaker 1: But I could be mistaken, and I'm I'm not Simon's lawyer,

630
00:34:53,560 --> 00:34:55,160
Speaker 1: and I'm not going to give him advice there. But

631
00:34:55,719 --> 00:34:59,440
Speaker 1: you know, it's an entity uh limit per se and

632
00:35:00,080 --> 00:35:02,759
Speaker 1: to the extent. And you know, one of the issues

633
00:35:02,800 --> 00:35:05,640
Speaker 1: that we were running into is the trading partners when

634
00:35:05,680 --> 00:35:07,920
Speaker 1: it comes to the you know that there there's a

635
00:35:08,040 --> 00:35:12,759
Speaker 1: limited number of fcms in the US that are willing

636
00:35:12,840 --> 00:35:15,400
Speaker 1: actually to trade at the bitcoin features, and then the

637
00:35:15,520 --> 00:35:18,960
Speaker 1: margin around those is significantly different. Like when you're putting

638
00:35:19,040 --> 00:35:21,520
Speaker 1: up you know, five percent margin on a on a

639
00:35:21,560 --> 00:35:25,960
Speaker 1: gold features contract, we're putting up forty two on a

640
00:35:26,000 --> 00:35:29,680
Speaker 1: bitcoin futures contract. Very very different way of of operations

641
00:35:29,800 --> 00:35:33,759
Speaker 1: for us and managing these underlying portfolios. The one really

642
00:35:33,840 --> 00:35:36,480
Speaker 1: nice thing that's happened though, you know, recently this year though,

643
00:35:36,880 --> 00:35:39,800
Speaker 1: is the addition of the mini Bitcoin features, so that

644
00:35:40,680 --> 00:35:44,520
Speaker 1: in itself has actually allowed us to really give us

645
00:35:44,520 --> 00:35:47,360
Speaker 1: the ability to define tune the exposure in the ets

646
00:35:47,400 --> 00:35:50,680
Speaker 1: to making sure that we're almost a hundred percent matching

647
00:35:50,719 --> 00:35:52,560
Speaker 1: all the time, so you know, we have up to

648
00:35:53,160 --> 00:35:56,240
Speaker 1: you know, one one bitcoin future when when big bitcoin

649
00:35:56,280 --> 00:35:59,160
Speaker 1: features five contracts and if we're able to add in

650
00:35:59,280 --> 00:36:02,239
Speaker 1: a you know, a mini contract to round out the

651
00:36:02,719 --> 00:36:05,719
Speaker 1: exposure where we need to. Um, it's been a lot

652
00:36:05,800 --> 00:36:10,400
Speaker 1: better for us to manage that way. And Timmy and

653
00:36:10,440 --> 00:36:12,160
Speaker 1: how how how about you? How big do you think

654
00:36:12,320 --> 00:36:14,960
Speaker 1: your product can get? And then how would that compare

655
00:36:15,160 --> 00:36:19,160
Speaker 1: if the if the et F version were approved. Yeah,

656
00:36:19,239 --> 00:36:21,120
Speaker 1: I don't I don't want to throw a specific number

657
00:36:21,200 --> 00:36:24,279
Speaker 1: out there because again, because we're active, that gives us

658
00:36:24,320 --> 00:36:27,200
Speaker 1: a little bit of an ability to to manage around

659
00:36:27,640 --> 00:36:30,320
Speaker 1: if there's enough liquidity to put a little bit past

660
00:36:30,360 --> 00:36:33,080
Speaker 1: the front month to you know, to to think cleverly

661
00:36:33,120 --> 00:36:36,239
Speaker 1: about how uh and effectively we could uh we could

662
00:36:36,280 --> 00:36:39,960
Speaker 1: manage the the the the collateral in the margin to

663
00:36:40,040 --> 00:36:42,000
Speaker 1: get a little bit more exposure. So it's it's a

664
00:36:42,120 --> 00:36:45,080
Speaker 1: little bit softer when when you're in uh when when

665
00:36:45,120 --> 00:36:48,640
Speaker 1: you're on the active side. Okay, they could also own

666
00:36:49,320 --> 00:36:52,080
Speaker 1: e t F inside. So if they get capped out

667
00:36:52,320 --> 00:36:55,160
Speaker 1: on a pro funds basis for the maximum number of

668
00:36:55,200 --> 00:36:58,480
Speaker 1: futures contracts they own, they can easily backfill with other

669
00:36:58,960 --> 00:37:01,719
Speaker 1: either futures based yes, or even some of the the

670
00:37:02,320 --> 00:37:08,000
Speaker 1: digital currency back etf here in Canada. Okay, so this

671
00:37:08,160 --> 00:37:11,680
Speaker 1: is fascinating. We went way down some wormholes. I want

672
00:37:11,719 --> 00:37:14,720
Speaker 1: to actually just back up for a second and and Simon,

673
00:37:14,760 --> 00:37:17,240
Speaker 1: I'll just ask you, how hard is it to actually

674
00:37:17,360 --> 00:37:20,600
Speaker 1: just compete with like robin hood on this front? Like

675
00:37:20,640 --> 00:37:23,239
Speaker 1: I could just open robin hood as a consumer you know,

676
00:37:23,400 --> 00:37:25,880
Speaker 1: the day trading Yahoo if you will, and like just

677
00:37:26,000 --> 00:37:28,560
Speaker 1: buy some BTC, Like, how hard is it to compete

678
00:37:28,600 --> 00:37:32,520
Speaker 1: with that? Oh? I don't think it's hard to compete

679
00:37:32,520 --> 00:37:35,399
Speaker 1: because I think it's as an alementor of mine once said,

680
00:37:35,480 --> 00:37:39,080
Speaker 1: let a thousand flowers bloom. There will be multiple ways

681
00:37:39,160 --> 00:37:43,200
Speaker 1: to get exposure to bitcoint that that will be uh,

682
00:37:43,320 --> 00:37:46,320
Speaker 1: that will have pros and cons and that will have

683
00:37:47,200 --> 00:37:51,440
Speaker 1: uh have advantages for different constituencies. Uh. There's a heck

684
00:37:51,480 --> 00:37:54,080
Speaker 1: of a lot of people out there that would not

685
00:37:54,239 --> 00:37:57,160
Speaker 1: be would not be pursuing their exposure the way you describe.

686
00:37:57,239 --> 00:37:59,520
Speaker 1: But man, when you tell them, wait, there's a mutual fund.

687
00:38:00,000 --> 00:38:03,520
Speaker 1: Oh that's pretty clean. So I think I think there's

688
00:38:03,600 --> 00:38:06,560
Speaker 1: plenty of room for for lots of ways to get

689
00:38:06,640 --> 00:38:10,440
Speaker 1: exposure and and there was certainly from our perspective and

690
00:38:10,719 --> 00:38:14,200
Speaker 1: underserved or not served at all constituency that will find

691
00:38:14,600 --> 00:38:17,840
Speaker 1: the forty act vehable vehicle to be uh quite the

692
00:38:18,160 --> 00:38:24,839
Speaker 1: attractive alternative. All right to close, Simeon, We've got Steve

693
00:38:24,960 --> 00:38:26,759
Speaker 1: this before, although I can't remember what it was, and

694
00:38:26,800 --> 00:38:29,719
Speaker 1: I'll probably asked him again. We always ask folks, what

695
00:38:29,880 --> 00:38:31,759
Speaker 1: is your favorite et F ticker that is not your

696
00:38:31,800 --> 00:38:39,520
Speaker 1: own favorite e t F ticker that is not my own? Well,

697
00:38:40,239 --> 00:38:43,520
Speaker 1: tell you to prepare, Simeon. Oh I didn't. I thought

698
00:38:43,560 --> 00:38:45,000
Speaker 1: I was going to get a list of the secret

699
00:38:45,080 --> 00:38:49,040
Speaker 1: question how can you go wrong with g L D?

700
00:38:49,320 --> 00:38:54,160
Speaker 1: So that's that's pretty And Steve, have you changed yours?

701
00:38:54,600 --> 00:38:56,560
Speaker 1: I do? I have a new favorite now, and is

702
00:38:56,560 --> 00:39:00,480
Speaker 1: because we're getting at the space specifically, but uh C

703
00:39:01,000 --> 00:39:04,640
Speaker 1: S I C K is my new favorite, especially from

704
00:39:04,640 --> 00:39:06,919
Speaker 1: the U S E T S so amazingly I don't

705
00:39:06,920 --> 00:39:09,759
Speaker 1: think we've had that one before. Yeah, they're healthcare. You know,

706
00:39:09,920 --> 00:39:14,520
Speaker 1: it's uh, it's it's it's just totally sick. So I

707
00:39:14,640 --> 00:39:16,399
Speaker 1: like it. Well then that that one's got a good

708
00:39:17,040 --> 00:39:20,799
Speaker 1: mirrored pair with Cure. I always like tickers that are

709
00:39:21,480 --> 00:39:25,120
Speaker 1: also great bands like R. E. M. Cure. There's a

710
00:39:25,160 --> 00:39:27,640
Speaker 1: couple of them there. Used to be Bono that was

711
00:39:27,640 --> 00:39:29,879
Speaker 1: a Latin America bond fund, but that close. But yeah,

712
00:39:30,320 --> 00:39:34,239
Speaker 1: good choice, Steve inspiring triple leveraged. Wow, look at you.

713
00:39:34,400 --> 00:39:36,239
Speaker 1: What are you doing in your personal account these days?

714
00:39:37,960 --> 00:39:43,200
Speaker 1: I'm playing the leverage marijuana. That's as well as inverse bitcoin.

715
00:39:43,280 --> 00:39:45,080
Speaker 1: Those are my favorites that I like to trade daily.

716
00:39:45,920 --> 00:39:47,879
Speaker 1: All right, Simme and Steve, thanks so much for joining

717
00:39:47,920 --> 00:39:51,560
Speaker 1: us on Trillions. Eric, always a pleasure, Thanks for having soon.

718
00:39:51,920 --> 00:39:59,239
Speaker 1: Thank you. Thanks for listening to Trillions until next time.

719
00:39:59,440 --> 00:40:02,080
Speaker 1: You can find us on the Bloomberg Terminal, Bloomberg dot com,

720
00:40:02,520 --> 00:40:05,640
Speaker 1: Apple Podcasts, Spotify, and wherever else you like to listen.

721
00:40:06,520 --> 00:40:08,879
Speaker 1: We'd love to hear from you. We're on Twitter, I'm

722
00:40:09,040 --> 00:40:13,440
Speaker 1: at Joel Weber Show. He's at Eric Falcinas. This episode

723
00:40:13,440 --> 00:40:17,080
Speaker 1: of Trillions was produced by Magnet Hendrickson. Frincesca Leeby is

724
00:40:17,160 --> 00:40:19,480
Speaker 1: the head of Bloomberg Podcast Bite