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Speaker 1: Welcome. Achillian's I'm Chill Webber and.

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Speaker 2: I'm Eric Belchernas.

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Speaker 1: Eric. Everyone thought that crypto and bitcoin were going to

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Speaker 1: go away, maybe well not everyone, but some people. And

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Speaker 1: then all of a sudden, SBF went down and Bitcoin

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Speaker 1: kept coming and kept coming and kept coming, and here

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Speaker 1: we are at a high that we haven't seen for

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Speaker 1: more than eighteen months, and a lot of that enthusiasm

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Speaker 1: is about the prospect of an ETF.

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Speaker 2: Yeah, no, this is huge.

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Speaker 3: Ever since Blackrock I shares filed in I think it

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Speaker 3: was June of twenty twenty three, there's been a lot

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Speaker 3: of excitement about spot ETF approval, the SEC lawsuit with

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Speaker 3: Greyscale that was another huge catalyst, and then we've seen

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Speaker 3: very very good news in terms of these legal documents

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Speaker 3: getting updated, which shows the SEC working with issuers. So

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Speaker 3: we are basically, if this has been a ten year journey,

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Speaker 3: let's call it a marathon, we're literally in.

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Speaker 2: The last mile. We're a mile twenty six. So it's

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Speaker 2: a big deal.

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Speaker 3: This marriage has been, you know, something in the mix

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Speaker 3: for again a decade, and when it finally happens, there's

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Speaker 3: a lot of you know, it's like building a bridge

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Speaker 3: to the Advisor World in particular. And so you know,

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Speaker 3: we thought one of the main players is ARC and

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Speaker 3: twenty one Shares. They were honestly filed before black Rock.

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Speaker 3: They deserve credit for having probably the most vision of

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Speaker 3: figuring out this is the cycle, and so their filing

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Speaker 3: is actually the one that has the first deadline in January.

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Speaker 3: So because of them, we're probably going to see an

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Speaker 3: ETF on January tenth, or at least approval by then.

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Speaker 3: And so yeah, it's great to have both sides of

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Speaker 3: that prospectus, both ARC and twenty one Shares.

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Speaker 2: On the cast today.

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Speaker 1: So joining us, we've got Kathy Wood of ARC and

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Speaker 1: Aphelia Snyder of twenty one Shares, this time on Trillions.

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Speaker 1: Let's talk about a bit points and more. Kathy, Aphelia,

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Speaker 1: welcome back to Trillions.

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Speaker 4: Thank you, Joel, thank you Eric.

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Speaker 5: It's good to be back.

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Speaker 1: Okay. So Eric described this as a marathon. We're in

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Speaker 1: a mile the miles sprint to the finish line. Are

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Speaker 1: we going to get across that finish line?

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Speaker 5: I think this is the perennial question, and I I

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Speaker 5: think I've pretty consistently said the same thing on this,

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Speaker 5: which is that if you would like a different outcome,

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Speaker 5: A pattern break is a good thing.

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Speaker 6: I have to give twenty one Shares a lot of

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Speaker 6: credit on that, because you know, we were denied and

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Speaker 6: denied and we just kept filing, and it was because

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Speaker 6: twenty one shares, you know, the grip, the gumption, the determination,

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Speaker 6: which which is very much in keeping with the way

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Speaker 6: we work as well. So I think that's why we're

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Speaker 6: first in line.

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Speaker 1: Okay, so there's this January date that's going to happen

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Speaker 1: the tenth. Eric says, what's going to happen on the tenth?

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Speaker 5: Everyone is very focused on the tenth makes a ton

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Speaker 5: of sense. Completely understand why it's not how this works actually, right,

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Speaker 5: These windows aren't quite as clean as what people seem

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Speaker 5: to say, right, So it's completely conceivable that it's before.

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Speaker 5: It's completely conceivable. You know, we hear something day of.

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Speaker 5: If you look at previous rejections and delays and approvals,

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Speaker 5: the day of is not necessarily like the key window.

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Speaker 5: But I think from the minute you here go, what's

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Speaker 5: going to happen is it's going to boil down to

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Speaker 5: who's actually ready to go, because and it's not just

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Speaker 5: a question of like the regulatory or a documentation critical

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Speaker 5: critical component, but has everybody actually operationally set up these

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Speaker 5: products in the background, because the SEC says, go whether

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Speaker 5: whatever that ends up being, you're going to have everyone

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Speaker 5: jump at the same time, and it's going to fundamentally

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Speaker 5: be a question of who's got aps on board? Are

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Speaker 5: the custodians ready, are the accounts open? Have you actually

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Speaker 5: completed the process it's the exchange ready to go? Like

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Speaker 5: how much of this have you actually operationalized? And I

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Speaker 5: think that's a much bigger deal at an infrastructure level

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Speaker 5: than anybody thinks right now.

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Speaker 6: It's been interesting as different firms. We've been doing due

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Speaker 6: diligence with different firms, and you know, some of those

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Speaker 6: who have filed really haven't haven't issued ETFs before, so

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Speaker 6: you know they're they're trying to figure out, wait a minute,

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Speaker 6: who do we choose among this field of perhaps twelve

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Speaker 6: if they approve twelve at the same time, and they're

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Speaker 6: really thinking about, okay, how do I'm only going to

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Speaker 6: pick three? Maybe so, and they're beginning to delineate, Okay,

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Speaker 6: this is what these are my checkboxes.

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Speaker 5: And I think one of the things that's so undervalued

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Speaker 5: is clients service and client support. So obviously there's actually

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Speaker 5: a third piece here, which is resolut and in some

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Speaker 5: of the distribution on that side, Like at the end

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Speaker 5: of the day, this is going to come down to

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Speaker 5: you're going to get a go are you ready to

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Speaker 5: actually do it? Is the thing you're bringing to market

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Speaker 5: high quality because one of the things that I think

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Speaker 5: the world is sick of is crypto products that are

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Speaker 5: both more expensive and less good than what you normally get.

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Speaker 5: That that's not going to work anymore. So it's going

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Speaker 5: to be a question of are you bringing something that's

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Speaker 5: high quality, can you do it quickly? And are you

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Speaker 5: going to be able to actually help clients. Client service

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Speaker 5: is huge. You've got advisors who are looking at entirely

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Speaker 5: new asset classes for the first time, like are you

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Speaker 5: ready to answer those questions? Because they're going to have

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Speaker 5: them and you need to actually have answers and have

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Speaker 5: a way to support them through that process. So I

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Speaker 5: think you're going to see a flurry of operational activity

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Speaker 5: followed by a very steep educational curve for the client

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Speaker 5: base as they try to get up to speed and

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Speaker 5: try to figure out like what are we doing here?

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Speaker 5: Most CIO's offices don't have a policy on crypto yet,

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Speaker 5: and if they do, it's negative. So what's going to

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Speaker 5: happen here in terms of their need to be responsive

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Speaker 5: to their own customer bases. As they start to allow

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Speaker 5: product on platforms, they start to get comfortable making allocations.

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Speaker 5: It's going to be a very critical time for cryptos

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Speaker 5: and industry in terms of welcoming a whole new cohort

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Speaker 5: of players. And it actually goes back to it, and

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Speaker 5: I mean, this is this is the whole core of

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Speaker 5: ARC right. This is about research and education and providing

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Speaker 5: people who are curious about this space for the gateway.

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Speaker 6: Our first research piece on bitcoin was in two thoy

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Speaker 6: fifteen when it was two hundred and fifty dollars and

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Speaker 6: we asked the simple question that it was a white paper,

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Speaker 6: can bitcoin serve the three rolls of Money? And we

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Speaker 6: did that in collaboration with Art Laugher, and when he

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Speaker 6: really understood what this was, he said, I've been waiting

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Speaker 6: for this since they closed the gold window in nineteen

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Speaker 6: seventy one, so twenty fifteen, and then the next year

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Speaker 6: we wrote Ringing the Bell for a New asset class Bitcoin,

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Speaker 6: Ringing the Bell for a New asset class. So we've

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Speaker 6: been trying to educate the market. And I remember in

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Speaker 6: the early days twenty fifteen especially, you know, many people

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Speaker 6: dismissed us. That's a marketing gimmick. Bitcoin market nothing but

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Speaker 6: a marketing gimmick. So we've come a long way.

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Speaker 3: Oh yeah, absolutely. I was skeptical of myself. I remember

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Speaker 3: the first one filed, the winklevoss etf in twenty thirteen,

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Speaker 3: bitcoin was ninety nine dollars, so I knew about it,

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Speaker 3: and I'm kicking myself for not buying any because it

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Speaker 3: was I remember it was. I was doing a TV

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Speaker 3: hit around then about the filing and Matt Miller was

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Speaker 3: way more up to speed than I was.

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Speaker 2: I could have acted then, but I was like, this

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Speaker 2: seems so silly.

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Speaker 3: I don't know, it just seemed like, I don't know,

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Speaker 3: like almost like a little bit of a fun craze,

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Speaker 3: like something that would just go away, like a fad. Anyway,

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Speaker 3: I want to go and talk. I know, Kathy, you've

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Speaker 3: been into You bought GBTC in the early days with

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Speaker 3: ARKK and you made it was a huge trade. It

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Speaker 3: was a powered a lot of your returns early on,

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Speaker 3: so I know you were in it early. Now Ophelia

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Speaker 3: twenty one shares is over in Europe. You're launching all

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Speaker 3: these ETFs. At some point you guys met and like,

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Speaker 3: I guess talk me through that and then the filing

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Speaker 3: in April, I mean, and like, how you guys work

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Speaker 3: together on this.

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Speaker 5: It's actually a lovely story. Kathy and I have known

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Speaker 5: each other for a while, like way way before this

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Speaker 5: partnership was public. I was like a super green that

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Speaker 5: had just started my company, going to my first like

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Speaker 5: gathering of people who know stuff about ETFs, and I

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Speaker 5: sat down next to Kathy at lunch and we started

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Speaker 5: talking and there was such a wonderful alignment between our

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Speaker 5: philosophies as firms or views on crypto. We come at

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Speaker 5: this from a very different perspective. I'm a total like

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Speaker 5: wonk for structuring and things and rags, and I think

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Speaker 5: Kathy definitely comes with more of a visionary technology perspective.

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Speaker 5: And we just got talking. It was such a good

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Speaker 5: match that we we kept in touch, and I was

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Speaker 5: building an ETF business for the first time and transparently

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Speaker 5: had a long way to go and learning how to

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Speaker 5: do that, and it turned into I think a very

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Speaker 5: productive and very enjoyable, like friendship and relationship and that

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Speaker 5: sort of it was the genesis of these products.

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Speaker 6: So I can give you a little bit more inside

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Speaker 6: scoop here. This was at the annual ETF comfab called Denostia,

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Speaker 6: and I remember, yes being late to the lunch, sitting

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Speaker 6: next to Ophelia, and then she started talking and I said,

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Speaker 6: I know what school you went to, and I know

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Speaker 6: what school within the school you went to. You went

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Speaker 6: to Stanford, the Earth System School at Stanford. And she

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Speaker 6: was shocked because nobody knows about that. But if you'll

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Speaker 6: remember Chris Bernisky, he was our first crypto analyst, and

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Speaker 6: I heard Ophelia talking and thinking in the way that

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Speaker 6: he did, so that's what really got us going.

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Speaker 4: And then I definitely understood early.

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Speaker 6: On how much into the ops and infrastructure and plat

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Speaker 6: form part of the business Aphelia was and it was

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Speaker 6: not what I do. But I said, I want you

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Speaker 6: to meet Tom Stout, who's our COO, because he loves

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Speaker 6: the same things that Aphelia does, and we were looking

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Speaker 6: for someone who could help us with the platform play,

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Speaker 6: the infrastructure play associated with bitcoins. So you know, very

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Speaker 6: quickly we p came fast friends professionally as well.

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Speaker 3: So you got together, you're filing for this ETF. Like,

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Speaker 3: do you guys talk every day now? Because we're sort

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Speaker 3: of at the eleventh hour here, Like how often are

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Speaker 3: you communicating? Or Kathy, do you just sort of like

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Speaker 3: let Ophelia drive this because you've got the stocks to pick?

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Speaker 2: I mean, how does this work?

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Speaker 6: Like I guess today, I think Aphelia and Tom talk

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Speaker 6: at least once a day if I'm no more, if

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Speaker 6: not more, and we get together, you know, I'm update

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Speaker 6: it all the time, but we get together regularly to

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Speaker 6: compare notes and you know, just make sure that we're

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Speaker 6: all on the same page. It's it's you know, we

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Speaker 6: have to get everything right. This is really important.

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Speaker 5: And one of the things to rize is we already

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Speaker 5: have five funds out as part of this partnership, right,

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Speaker 5: and we already have a suite of crypto ETFs. They

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Speaker 5: came to market a couple of weeks ago. So it's

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Speaker 5: not just a question of I think Kathy and I

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Speaker 5: and not just a question of Tom and I. At

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Speaker 5: this point, there are touch points across essentially every layer

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Speaker 5: of our organization, and as there we're already in the

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Speaker 5: trenches operating product together.

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Speaker 6: Yeah, our marketing teams. Our marketing teams are working very

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Speaker 6: closely together. Our research teams are working very closely together.

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Speaker 6: So it's across the both organizations.

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Speaker 2: Okay, And so these new funds you okay, So for.

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Speaker 3: People who don't know, obviously the main headlining act is

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Speaker 3: the spot bitwinn etf race, but there is this sort

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Speaker 3: of under card with the futures. And obviously there was

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Speaker 3: a Bitcoin Futures ETF put out, then Ether futures were approved.

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Speaker 3: You guys have put a bunch like five or six

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Speaker 3: products out. One of them is like an active Bitcoin

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Speaker 3: future strategy, one's an ether, one looks like it's uh blocks, right,

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Speaker 3: So these are all futures. I guess you know. Give

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Speaker 3: given when I saw these, I'm like, I get it.

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Speaker 3: But given that Spot is so close, you know, in

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Speaker 3: the futures ETFs probably going to be a little outdated.

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Speaker 3: Like you know, most advisors prefer Spot when given a choice,

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Speaker 3: like we've seen that with gold. They don't really want

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Speaker 3: to use the futures, like do you I guess give

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Speaker 3: me the logic there, given that we're so close to

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Speaker 3: the Spot, why put all these futures ETFs out.

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Speaker 5: So a couple of things here. I the premise I

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Speaker 5: agree with. I think Spot is a more accessible product

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Speaker 5: for most people most of the time. I think Future

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Speaker 5: is similar to gold. Futures are going to have a

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Speaker 5: reason to exist and are going to be a critical

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Speaker 5: part of certain profiles investments and how they choose to

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Speaker 5: enter that market. And I do believe there will be

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Speaker 5: a use case for them similar to what we've seen

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Speaker 5: in other commodity markets. Beyond that, with this suite, we

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Speaker 5: took an approach to bringing a series of highly differentiated

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Speaker 5: products right that these are not really exactly the same

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Speaker 5: as what was in the market before. At a strategy level,

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Speaker 5: we're looking at a product that is strategic allocations of

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Speaker 5: bitcoin versus ethereum, bitcoin versus cash, and a true multi

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Speaker 5: asset product. These are designed to solve a very different

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Speaker 5: set of problems for investors. Crypto is a massive, massive industry.

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Speaker 5: This is not going to be one size fit solved.

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Speaker 5: Different people are going to have different issues and this

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Speaker 5: allows customers and advisors to take advantage of our expertise

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Speaker 5: as a crypto firm. We've been doing this for five years.

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Speaker 5: ARCS expertise inactive management, some really sophisticated on chain analytics,

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Speaker 5: all of the benefit of our research and ARCS active

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Speaker 5: management as well as our operational excellence, and it really

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Speaker 5: packages these products. They're fundamentally quite different than something like

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Speaker 5: just a pure play Bitcoin spot product, because that's not

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Speaker 5: really what they're intended to do. These aren't. The vast

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Speaker 5: majority of the suite is not intended to be a

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Speaker 5: long only exposure, but rather more sophisticated exposures. Is to

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Speaker 5: take advantage of that knowledge base from us as a firm,

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Speaker 5: or actually as two firms. And so that's I think

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Speaker 5: one of the key things with why we chose to

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Speaker 5: do this. We don't believe that this is going to

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Speaker 5: be one size fitsall. We intend to provide clients with

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Speaker 5: solutions that fit their needs in this space that lets

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Speaker 5: them take advantage as much as possible of our experience

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Speaker 5: and expertise in the sector.

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Speaker 6: And I would say we have been investing on the

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Speaker 6: research side. In our team, we have three cryptoanalysts, one

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Speaker 6: of whom does nothing but on chain analytics. And what's

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Speaker 6: beautiful about this ecosystem, especially Bitcoin, but others as well

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Speaker 6: ethereum the transparency of these ecosystems gives us a lot

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Speaker 6: of information to manage actively, and so this is the

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Speaker 6: first time, while we've been developing these tools for a

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Speaker 6: number of years now, this is the first time we've

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Speaker 6: been able to activate them in a productive way. So

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Speaker 6: I'm pretty excited about that.

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Speaker 1: Okay, So obviously you do are both big bulls and

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Speaker 1: have you know a stake and where this product can go.

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Speaker 1: There's still remains plenty of naysayers, even Jamie Diamond coming

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Speaker 1: out and basically saying that if he were in the government,

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Speaker 1: he would just shut Crypto shut till day.

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Speaker 4: Yeah yeah, yeah, so crazy.

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Speaker 1: So you're still having to wrestle with a version of haters, right,

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Speaker 1: And I think the haters actually, for a while within

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Speaker 1: the last year and change kind of gained a little

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Speaker 1: bit of an upper hand with the carnage that came

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Speaker 1: out of the SBF fallout. So how do you wrestle

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Speaker 1: with that sentiment that still remains, which is like, there's

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Speaker 1: no point to this, why should I even bother?

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Speaker 6: So I'll start there. I had to defend what we

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Speaker 6: were doing throughout last year. So Terra Luna Celsius three

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Speaker 6: arrows FTX and when FTX blew up. I basically said,

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Speaker 6: and I think it's now clear that wait a minute,

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Speaker 6: this proves the value of bitcoin and other cryptocurrencies. Bitcoin

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Speaker 6: completely transparent, decentralized, no counterparty risk, whereas FTX completely opaque, centralized,

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Speaker 6: and fraudulent.

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Speaker 4: So that was the first step.

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Speaker 6: But even more provocative, I thought was during the regional

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Speaker 6: bank crisis in March. As you pointed out earlier, Joel,

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Speaker 6: bitcoin went up fifty percent as the KRE the regional

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Speaker 6: Bank index was imploding, an SVP and signature went under,

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Speaker 6: and we were able to say to our clients, wait

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Speaker 6: a minute, Bitcoin is not just a risk on asset.

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Speaker 6: It is now showing its stripes as a risk off

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Speaker 6: asset when there's a financial crisis and counterparty risk becomes

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Speaker 6: a question, because that was a question with the regional banks.

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Speaker 6: I think that has gotten a lot of people's attention,

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Speaker 6: as well as others in the industry who were negative.

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Speaker 6: And you're right, it's so interesting to see Jamie Diamond

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Speaker 6: and Elizabeth Warren on the same side of the agreeing

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Speaker 6: with each other. Kind of what But someone like Larry

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Speaker 6: Fink coming around after years of focusing on the environmental

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Speaker 6: issues that he thought were a part of the bitcoin ecosystem.

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Speaker 6: And you know, I think one of the most important

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Speaker 6: things that happened actually happened five years ago when Cambridge

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Speaker 6: Associates published its first report on crypto and focused on

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Speaker 6: bitcoin in particular and basically said to its foundations and endowments, Look,

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Speaker 6: you may not like this instrument, but you should get

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Speaker 6: to know as much as you possibly can about it,

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Speaker 6: because this seems like it's a new asset class with

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Speaker 6: very low correlation of returns to other assets. And so

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Speaker 6: I think, but one by one these points are I

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Speaker 6: think are a are hitting home, hitting a responsive cord.

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Speaker 6: And I do think the SEC coming around and blessing

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Speaker 6: a bitcoin spot e TF is going to check the

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Speaker 6: box for a lot of institutions.

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Speaker 1: When when the SEC does whatever it does, and let's

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Speaker 1: let's say that it approves, right, I'm curious what kind

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Speaker 1: of modeling you've done. What happens to the price of

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Speaker 1: bitcoin when that headline moves that SEC has approved a

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Speaker 1: spot bitcoin product.

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Speaker 4: Some of it's happening right now, right.

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Speaker 1: And there's this anticity the room building for that moment,

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Speaker 1: But what happens at that moment?

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Speaker 6: Yeah, very often, very often you will get a sell

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Speaker 6: on the news because and I don't know where it

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Speaker 6: will go between now and then. And you could have

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Speaker 6: a sell on the news and you know you'll get

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Speaker 6: maybe some week holders in kicking and screaming, and they

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Speaker 6: may sell. But when you think we're at roughly nineteen

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Speaker 6: and a half million bitcoint outstanding and we're only going

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Speaker 6: to twenty one million, and I really do believe that,

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Speaker 6: knowing the core some of the core developers the way

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Speaker 6: I do, then I think this institutional push in will

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Speaker 6: be the biggest reason that our target, which the base

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Speaker 6: case is six hundred and fifty thousand and the bowld

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Speaker 6: case is one point five million. One of the reasons

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Speaker 6: that we have a shot that those numbers are close

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Speaker 6: to the mark is the institutional interest in a new

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Speaker 6: asset class.

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Speaker 1: Can I ask just about how, just because those numbers

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Speaker 1: are what they are, when you do the research and

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Speaker 1: the modeling to get to those prices, how does that

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Speaker 1: math work, Kathy?

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Speaker 6: And you'll see this in our Big Ideas twenty twenty three,

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Speaker 6: we delineate what we are assuming for twenty thirty. Those

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Speaker 6: numbers are twenty thirty numbers. When it comes to digital gold,

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Speaker 6: that role the institutional push and the use of bitcoin

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Speaker 6: in emerging markets, which have from a use case point

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Speaker 6: of view, when economies are hyperflating their money and spending

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Speaker 6: egregiously and are corrupt, there's all the reason in the

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Speaker 6: world to look for an insurance policy like bitcoin. So

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Speaker 6: those are the three biggest reasons we think it will

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Speaker 6: go there. But just the institutional case alone, and we

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Speaker 6: did write a piece on institutional I think it was last.

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Speaker 4: Year or the year four.

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Speaker 6: But if you do the analysis, if you and you're

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Speaker 6: an institution saying this is a new asset class, if

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Speaker 6: you want to minimize volatility, you will probably take it

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Speaker 6: to two and a half percent in terms of an

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Speaker 6: allocation to a new asset class, if you want to

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Speaker 6: maximize your sharp ratio, so we're speaking their language, you'll

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Speaker 6: look at something closer to six or six and a

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Speaker 6: half percent. So those are the bull case is based

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Speaker 6: on that six and a half percent. Now why are

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Speaker 6: these numbers making sense to us? Well, if you look

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Speaker 6: at new asset classes. So in the seventies and eighties

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Speaker 6: it was real estate and pension funds. In the eighties

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Speaker 6: and nineties it was emerging markets as a new asset class,

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Speaker 6: institutions started tiptoed in with one percent than two percent,

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Speaker 6: then end up a five percent or roughly thereabouts. So

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Speaker 6: it's not crazy. These are not crazy numbers, and we

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Speaker 6: used a Monte Carlo analysis to get to them. So that,

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Speaker 6: I guess is the biggest the biggest source of the

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Speaker 6: upward move in bitcoin from our point of view.

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Speaker 5: And one of the things people don't realize. And I

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Speaker 5: think there's been a lot of statements made by people

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Speaker 5: about the sell then news concept and what that's going

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Speaker 5: to look like, and I you know, sure, yes you

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Speaker 5: may see that. I think what you're going to end

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Speaker 5: up seeing that is a little bit unexpected. Is there's

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Speaker 5: less of a question of what does it take to

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Speaker 5: get people off of zero? Most ras, most managers, most

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Speaker 5: advisors are currently at zero, and the reason for that

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Speaker 5: is there's not really a good way for them to

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Speaker 5: access them. And typically the counter example is well they

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Speaker 5: can buy Spot. In order to do that, you need

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Speaker 5: to set up a new custodian, a new set of

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Speaker 5: trading relationships, all new reporting. It's unclear how that tax

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Speaker 5: reporting is going to work. Does this integrate with any

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Speaker 5: of your systems? How are you displaying that to your clients,

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Speaker 5: Like the operational burden and overhead associated with this is unbelievable.

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Speaker 5: So even if you wanted to today, how much of

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Speaker 5: an allocation are you been able to make and would

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Speaker 5: you be able to access that in the first place?

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Speaker 5: The answer is probably no. And so aside from this

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Speaker 5: sort of regulatory clarity that comes from this kind of structure,

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Speaker 5: as well as some clarity around like tax and efficient

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Speaker 5: trading and all these other things, there's this idea that

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Speaker 5: I don't think the market currently realizes what getting off

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Speaker 5: of zero looks like for the big players, right because

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Speaker 5: a couple basis point allocation is a lot of money.

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Speaker 5: It's way more money than crypto sees or understands conceptually.

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Speaker 5: Like there's a reason this podcast is called trillion and

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Speaker 5: not billions or millions, right, Like, there's a difference in

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Speaker 5: what these numbers look like, and it's very difficult for

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Speaker 5: people to actually conceive of. So whether or not you

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Speaker 5: have managers like appropriately timing the market, a lot of

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Speaker 5: them may just throw something to get off of zero.

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Speaker 5: If you have enough of that dynamic of like I'm

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Speaker 5: just going to dip my toe, I'm going to put

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Speaker 5: one bip of a portfolio in there, because like, why

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Speaker 5: not that is going to proportionally look very different than

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Speaker 5: the kinds of flows that you've seen historically in this space.

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Speaker 5: And I think that's something that is not fully That's

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Speaker 5: sort of what when when I hear this concept of

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Speaker 5: institutional adoption, I think that's oftentimes misconstrued. There's a very

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Speaker 5: real barrier to entry here, and I think to some

435
00:26:45,000 --> 00:26:48,200
Speaker 5: extent that feeds into the narrative that that Kathy is discussing.

436
00:26:48,600 --> 00:26:51,879
Speaker 5: When we look at it, we sort of we understand

437
00:26:52,000 --> 00:26:53,800
Speaker 5: this client base. We've been serving this client base and

438
00:26:53,840 --> 00:26:57,280
Speaker 5: other geographies for years. Their issues are very real, but

439
00:26:57,359 --> 00:26:59,520
Speaker 5: that market is significantly large in the United States.

440
00:27:00,200 --> 00:27:03,520
Speaker 6: I'll just add one thing, one for the institutional side,

441
00:27:03,560 --> 00:27:08,320
Speaker 6: one for more retail. Mas Mutual put one hundred million

442
00:27:08,600 --> 00:27:12,200
Speaker 6: dollars in. I'm going to say maybe Aphelia was three

443
00:27:12,280 --> 00:27:15,919
Speaker 6: years ago to two three years ago and it meant nothing.

444
00:27:16,040 --> 00:27:20,720
Speaker 6: It was a zero point zero something percent of their book, right,

445
00:27:21,480 --> 00:27:27,760
Speaker 6: So that one hundred million is against where are we

446
00:27:27,880 --> 00:27:31,880
Speaker 6: right now a one point five trillion dollar total market

447
00:27:31,960 --> 00:27:35,960
Speaker 6: cap for all crypto assets, right, So that one hundred

448
00:27:36,000 --> 00:27:39,399
Speaker 6: million was point zero zero something, you know, So that

449
00:27:39,400 --> 00:27:42,240
Speaker 6: gives you a sense. And then on the this is

450
00:27:42,240 --> 00:27:44,920
Speaker 6: more on the corporate side. I should have said, remember

451
00:27:45,240 --> 00:27:51,600
Speaker 6: when Tesla and block and micro Strategy they put bitcoin

452
00:27:51,640 --> 00:27:54,159
Speaker 6: on their books. There's been a very important ruling in

453
00:27:54,200 --> 00:27:57,960
Speaker 6: the last few months from Fasby saying this is no

454
00:27:58,720 --> 00:28:01,800
Speaker 6: longer needs to be accounted for as an intangible asset

455
00:28:02,080 --> 00:28:06,320
Speaker 6: which you can only mark down, and instead they're now

456
00:28:06,440 --> 00:28:09,639
Speaker 6: going to allow mark to market I think officially in

457
00:28:09,680 --> 00:28:12,000
Speaker 6: twenty five, but you can start doing it in twenty four,

458
00:28:12,080 --> 00:28:14,520
Speaker 6: so we may see corporate treasuries move in here too.

459
00:28:14,960 --> 00:28:18,480
Speaker 3: So just my two cents on that, I largely agree

460
00:28:18,520 --> 00:28:21,720
Speaker 3: with you. I think advisors in particular love the ETF.

461
00:28:21,760 --> 00:28:24,280
Speaker 3: That is their preferred vehicle. I have to I got

462
00:28:24,320 --> 00:28:27,280
Speaker 3: to tell these crypto people on Twitter all the time,

463
00:28:27,359 --> 00:28:29,320
Speaker 3: like He's like, why would you even need the ETF.

464
00:28:29,320 --> 00:28:31,560
Speaker 3: I'm like, you understand a lot of people just like

465
00:28:31,600 --> 00:28:33,840
Speaker 3: to click a button own it with the you know,

466
00:28:33,880 --> 00:28:37,480
Speaker 3: the SEC stamp of approval. It's liquid, it'll be one

467
00:28:37,480 --> 00:28:41,360
Speaker 3: basis point to trade. It's just something they're comfortable with.

468
00:28:41,560 --> 00:28:45,320
Speaker 3: It's their familiar place. And I was like, well, maybe

469
00:28:45,400 --> 00:28:48,160
Speaker 3: I zero point five percent of the advisor assets that's

470
00:28:48,200 --> 00:28:50,320
Speaker 3: thirty trillion go in there. You're looking at one hundred

471
00:28:50,320 --> 00:28:53,880
Speaker 3: and fifty billion. That's about what gold has a little less.

472
00:28:54,520 --> 00:28:56,480
Speaker 3: So I see it somewhere in that ballpark. Now, the

473
00:28:56,560 --> 00:28:59,800
Speaker 3: institutional money, a lot of times they wait to something's

474
00:28:59,800 --> 00:29:02,360
Speaker 3: really liquid, Like they tend to love the liquid ETFs.

475
00:29:02,880 --> 00:29:04,760
Speaker 3: It's harder to get them into something that doesn't trade

476
00:29:04,760 --> 00:29:07,120
Speaker 3: a lot. So I want to fast forward to the race.

477
00:29:07,600 --> 00:29:09,520
Speaker 3: And this is where I think the race is so

478
00:29:09,680 --> 00:29:12,719
Speaker 3: fascinating and why I'm so obsessed with this. Even though

479
00:29:12,760 --> 00:29:15,000
Speaker 3: it's probably gonna make up one percent of ETF assets,

480
00:29:15,000 --> 00:29:17,960
Speaker 3: I spend like forty percent of my brain power on this.

481
00:29:19,080 --> 00:29:21,360
Speaker 3: I'm even getting pushed back from some people on Twitter

482
00:29:21,400 --> 00:29:24,040
Speaker 3: who are like, hey, easy, easy, you know, take it easy.

483
00:29:24,120 --> 00:29:26,600
Speaker 3: And my Ethan on my team makes fun of James

484
00:29:26,640 --> 00:29:29,920
Speaker 3: and I constantly anyway, but this is just so high drama.

485
00:29:30,280 --> 00:29:32,680
Speaker 3: The race is going to start, as Ophelia said, some

486
00:29:32,720 --> 00:29:34,400
Speaker 3: people may not make it to the starting line. Let's

487
00:29:34,400 --> 00:29:37,160
Speaker 3: say there's six people who launch six issuers. Let's say

488
00:29:37,160 --> 00:29:40,800
Speaker 3: you're one of them. It's usually a winner take most,

489
00:29:41,560 --> 00:29:43,600
Speaker 3: and the one that gets really liquid probably going.

490
00:29:43,600 --> 00:29:44,200
Speaker 2: To have better luck.

491
00:29:44,200 --> 00:29:46,800
Speaker 3: In the institutional crowd because they just love that big liquidity.

492
00:29:46,840 --> 00:29:48,840
Speaker 3: They don't want to like be like one hundred percent

493
00:29:48,880 --> 00:29:51,200
Speaker 3: of the assets or anything, and they want to have

494
00:29:51,280 --> 00:29:54,400
Speaker 3: less impact costs. So how do you position yourself in

495
00:29:54,440 --> 00:29:58,200
Speaker 3: the race to get liquid and get some mojo going

496
00:29:58,600 --> 00:30:00,520
Speaker 3: early on? If you got a blame Brock in a

497
00:30:00,560 --> 00:30:03,200
Speaker 3: fidelity next to you. One of my theories is that

498
00:30:03,240 --> 00:30:06,040
Speaker 3: you're going to sell GBTC and put one hundred and

499
00:30:06,080 --> 00:30:09,200
Speaker 3: thirty million rate into RCB, which is going to show

500
00:30:09,240 --> 00:30:11,120
Speaker 3: up as flows and volume, which I think is an

501
00:30:11,120 --> 00:30:13,040
Speaker 3: ace up to sleeve. So that's what I would do

502
00:30:13,080 --> 00:30:15,840
Speaker 3: if I were you, But I'll get your take on it.

503
00:30:16,560 --> 00:30:19,120
Speaker 6: Well, we have to be very careful about what we

504
00:30:19,160 --> 00:30:23,120
Speaker 6: say right now there. You know, GBTC right now is

505
00:30:23,120 --> 00:30:28,040
Speaker 6: at two percent and we're at least in print at

506
00:30:28,520 --> 00:30:35,600
Speaker 6: eighty basis points if we're approved, So there's a certain

507
00:30:35,640 --> 00:30:41,200
Speaker 6: logic to what you're saying. Of course, there are also

508
00:30:42,320 --> 00:30:46,120
Speaker 6: you know, as there are also some tax issues that

509
00:30:46,200 --> 00:30:49,600
Speaker 6: we do have to focus on as all this is happening,

510
00:30:49,600 --> 00:30:52,080
Speaker 6: and some of that depends some of that will depend

511
00:30:52,200 --> 00:30:55,440
Speaker 6: on what happens to the price between here and there.

512
00:30:55,560 --> 00:30:57,720
Speaker 4: So I really.

513
00:30:57,480 --> 00:31:00,720
Speaker 6: Shouldn't be talking about it very talktful.

514
00:31:01,600 --> 00:31:04,680
Speaker 5: Well, here, how about this one. I can talk about

515
00:31:05,520 --> 00:31:08,120
Speaker 5: how we're thinking about this. Look, a big piece of

516
00:31:08,120 --> 00:31:12,120
Speaker 5: this is capital markets infrastructure. Everyone right now loves talking

517
00:31:12,120 --> 00:31:15,160
Speaker 5: about like the create redeemed structure because it's like the

518
00:31:15,240 --> 00:31:17,040
Speaker 5: topic du jour from the SEC.

519
00:31:17,120 --> 00:31:18,560
Speaker 1: That's how Eric puts his kids to sleep.

520
00:31:18,760 --> 00:31:23,720
Speaker 3: Well, I'm sorry, I'm sorry create redemption real quick though,

521
00:31:24,320 --> 00:31:27,240
Speaker 3: I heard back channel. The SEC will only allow cash

522
00:31:27,240 --> 00:31:29,440
Speaker 3: creates in the first trench to go out. So if

523
00:31:29,480 --> 00:31:31,880
Speaker 3: you want to do in kind, which is better with

524
00:31:31,920 --> 00:31:34,880
Speaker 3: the investor, I agree with you know, black Rocks definitely

525
00:31:34,960 --> 00:31:36,800
Speaker 3: digging in on this. I think you are to an extent.

526
00:31:37,440 --> 00:31:39,760
Speaker 3: I guess would you if you couldn't get out within

527
00:31:39,880 --> 00:31:41,640
Speaker 3: kind in the first trench? Would you do cash for

528
00:31:41,680 --> 00:31:44,360
Speaker 3: the time being until you could figure out in kind?

529
00:31:45,280 --> 00:31:47,640
Speaker 5: So I actually think the answer to both of these

530
00:31:47,680 --> 00:31:53,360
Speaker 5: last two questions is the same thing. Having a being

531
00:31:53,400 --> 00:31:56,280
Speaker 5: first is going to be critical. Obviously, first move for advantages.

532
00:31:56,320 --> 00:31:58,640
Speaker 5: We get all of that, not arguing it. I think

533
00:31:58,680 --> 00:32:00,400
Speaker 5: the next thing that's going to be critic goal that

534
00:32:00,600 --> 00:32:06,800
Speaker 5: is currently undervalued is the way the primary market operates

535
00:32:06,840 --> 00:32:09,680
Speaker 5: here in primary market efficiency is going to drive an

536
00:32:09,840 --> 00:32:13,840
Speaker 5: enormous portion of how these volumes actually play out because

537
00:32:14,680 --> 00:32:18,880
Speaker 5: there is no standard, right, no one has done this

538
00:32:19,080 --> 00:32:21,720
Speaker 5: with these providers in America before. Now we obviously we've

539
00:32:21,760 --> 00:32:27,880
Speaker 5: been operating a primary market in cryptots for five years,

540
00:32:27,920 --> 00:32:30,080
Speaker 5: so we have a pretty standard playbook that we know

541
00:32:30,280 --> 00:32:34,600
Speaker 5: leads to an efficient market. There are some obvious differences

542
00:32:34,640 --> 00:32:38,920
Speaker 5: as you move between geographies, but that piece, the operational

543
00:32:39,080 --> 00:32:42,360
Speaker 5: know how of how to make this primary market go correctly,

544
00:32:42,680 --> 00:32:44,280
Speaker 5: is going to end up playing a huge role here

545
00:32:44,280 --> 00:32:48,080
Speaker 5: on both sides. Right, it is about it's about how

546
00:32:48,120 --> 00:32:52,320
Speaker 5: do you make that market work as effectively as possible

547
00:32:52,320 --> 00:32:55,239
Speaker 5: because it's going to show up linearly in spreads. So

548
00:32:55,560 --> 00:32:57,360
Speaker 5: the better you can do, the more cost you can

549
00:32:57,400 --> 00:32:59,160
Speaker 5: take out of it, the more efficient you can make it,

550
00:32:59,200 --> 00:33:01,400
Speaker 5: the easier and clean, or you can make it free

551
00:33:01,640 --> 00:33:04,840
Speaker 5: market makers to hedge. The better this is going to be,

552
00:33:05,440 --> 00:33:08,600
Speaker 5: and that's going to end up driving a big chunk

553
00:33:08,760 --> 00:33:12,440
Speaker 5: of how volume plays out. You need those markets to

554
00:33:12,480 --> 00:33:17,560
Speaker 5: be tight and providing a really stable, very well structured

555
00:33:17,560 --> 00:33:20,400
Speaker 5: primary market is going to end up playing a really

556
00:33:20,400 --> 00:33:23,120
Speaker 5: big role here. And so to answer your original question

557
00:33:23,200 --> 00:33:24,960
Speaker 5: on like how do you do this, I think you

558
00:33:25,120 --> 00:33:29,400
Speaker 5: lean into that operational experience. There isn't another There isn't

559
00:33:29,440 --> 00:33:32,960
Speaker 5: anybody else in this race that has actually done this before.

560
00:33:33,920 --> 00:33:36,880
Speaker 5: Lots of people and they're good firms. They probably can

561
00:33:37,120 --> 00:33:39,960
Speaker 5: do this, but they don't know how to do this.

562
00:33:40,040 --> 00:33:40,920
Speaker 5: They haven't done well.

563
00:33:41,440 --> 00:33:43,880
Speaker 3: Let's let me let me let me push back a little.

564
00:33:45,280 --> 00:33:49,680
Speaker 3: You know, using operations as you're marketing again, you're going

565
00:33:49,760 --> 00:33:51,760
Speaker 3: to put some people to sleep. I think people are

566
00:33:51,800 --> 00:33:55,080
Speaker 3: going to just I think there's maybe some you know,

567
00:33:55,120 --> 00:33:58,240
Speaker 3: if if the spreads are different, surely that definitely speaks

568
00:33:58,280 --> 00:33:59,760
Speaker 3: to that. Like no one wants to pay ten BIPs

569
00:33:59,760 --> 00:34:02,640
Speaker 3: for one for sure, be talking about Blackrock in fidelity.

570
00:34:02,680 --> 00:34:06,200
Speaker 3: I mean, people look at Blackrock as the ETF king.

571
00:34:06,640 --> 00:34:10,480
Speaker 3: They've got four hundred and fifty funds, so I think, yeah,

572
00:34:10,480 --> 00:34:12,840
Speaker 3: I got to assume they'll be somewhat good on that front.

573
00:34:13,400 --> 00:34:15,640
Speaker 3: But you know, we'll see. I know you have this,

574
00:34:16,400 --> 00:34:19,359
Speaker 3: you know you have the experience in Europe. But like

575
00:34:19,400 --> 00:34:21,880
Speaker 3: I said, I think it's gonna be tough for everybody.

576
00:34:22,400 --> 00:34:27,600
Speaker 6: Eric Can, I, as a student of disruptive innovation, I'd

577
00:34:27,719 --> 00:34:30,600
Speaker 6: like to make an observation, a couple of observations here.

578
00:34:31,120 --> 00:34:34,520
Speaker 6: One and maybe I didn't emphasize this enough in the

579
00:34:34,560 --> 00:34:40,440
Speaker 6: beginning or concretely in the beginning. Twenty one shares is

580
00:34:40,960 --> 00:34:47,359
Speaker 6: the largest pure play crypto ETP player in the world.

581
00:34:47,719 --> 00:34:51,920
Speaker 6: And as a student of disruptive innovation, we're maybe not

582
00:34:52,120 --> 00:34:56,000
Speaker 6: thinking about this. You know, ETFs when it comes to

583
00:34:56,040 --> 00:35:00,360
Speaker 6: equities and fixed income, you know well worn paths.

584
00:35:01,560 --> 00:35:02,200
Speaker 4: ETFs.

585
00:35:02,239 --> 00:35:07,560
Speaker 6: When it comes to crypto bitcoin, we think very different.

586
00:35:07,640 --> 00:35:13,680
Speaker 6: And I have been incredibly impressed Tom Stout as well.

587
00:35:13,680 --> 00:35:18,160
Speaker 6: Of course our president and COO, working very closely with

588
00:35:18,320 --> 00:35:22,520
Speaker 6: Ophelia at how much does go into this? So it

589
00:35:22,560 --> 00:35:25,480
Speaker 6: would be very interesting when we get off the mark

590
00:35:25,560 --> 00:35:30,759
Speaker 6: here off the block to see what happens. Let's test

591
00:35:30,800 --> 00:35:31,239
Speaker 6: this out.

592
00:35:39,160 --> 00:35:41,560
Speaker 1: We talked about the operations. What else I mean, this

593
00:35:41,760 --> 00:35:44,880
Speaker 1: crowded race that we've been talking about, like how I

594
00:35:44,920 --> 00:35:47,279
Speaker 1: mean and to have somebody like a black Rock be

595
00:35:47,360 --> 00:35:50,160
Speaker 1: out there, how else do you distinguish yourself in such

596
00:35:50,200 --> 00:35:53,320
Speaker 1: a crowded marketplace if there's multiple people off the blocks

597
00:35:53,400 --> 00:35:55,480
Speaker 1: at once, like the race is going to start all

598
00:35:55,520 --> 00:35:55,959
Speaker 1: over again.

599
00:35:56,000 --> 00:35:58,080
Speaker 3: And let me just jump in here for the listener.

600
00:35:58,520 --> 00:36:02,839
Speaker 3: As an ETF nerd for almost fifteen twenty years, this

601
00:36:02,920 --> 00:36:06,160
Speaker 3: is fascinating. You've never had a situation in the history

602
00:36:06,160 --> 00:36:09,239
Speaker 3: of ETFs where they've let everybody out at the same

603
00:36:09,280 --> 00:36:12,759
Speaker 3: time and all the funds do something the same thing.

604
00:36:12,840 --> 00:36:14,520
Speaker 2: They offer bitcoin exposure.

605
00:36:15,000 --> 00:36:17,160
Speaker 3: So it's the first time I've had like a I'm

606
00:36:17,160 --> 00:36:18,920
Speaker 3: calling it, I'm trying, by the way, I'm trying to

607
00:36:19,160 --> 00:36:19,640
Speaker 3: get coin.

608
00:36:19,719 --> 00:36:23,319
Speaker 2: This phrase the bitucky Derby. What do you think about that?

609
00:36:23,920 --> 00:36:25,600
Speaker 2: You like that? Or no, Joel, what do you think

610
00:36:26,000 --> 00:36:26,880
Speaker 2: Bentucky Derby?

611
00:36:27,120 --> 00:36:29,680
Speaker 1: Because it's like it's like we'll talk about it offline.

612
00:36:29,760 --> 00:36:32,200
Speaker 3: It's like a horse race and you know, some domake

613
00:36:32,239 --> 00:36:34,319
Speaker 3: it's the starting gage, Joel, they have to got it.

614
00:36:34,400 --> 00:36:35,480
Speaker 2: I got it anyway.

615
00:36:35,960 --> 00:36:37,480
Speaker 3: So this is the first time you have a natural

616
00:36:37,520 --> 00:36:40,160
Speaker 3: horse race. So this is a case study from heaven.

617
00:36:40,200 --> 00:36:41,120
Speaker 3: If you're an analyst.

618
00:36:41,920 --> 00:36:45,120
Speaker 5: Look, I think the other piece of our marketing positioning

619
00:36:45,160 --> 00:36:47,680
Speaker 5: here and like how we think we differentiate in this market.

620
00:36:48,160 --> 00:36:50,000
Speaker 5: Experience is part of it. Ops is a part of it.

621
00:36:50,040 --> 00:36:52,120
Speaker 5: That's my background. So it tends you to overemphasize that,

622
00:36:52,200 --> 00:36:54,160
Speaker 5: and that's on me. The other half of what it

623
00:36:54,239 --> 00:36:58,960
Speaker 5: is we do, which is extremely unique, is it's research.

624
00:36:59,400 --> 00:37:02,040
Speaker 5: At the end of it away, we give it away.

625
00:37:02,200 --> 00:37:05,120
Speaker 5: It's free, it's best in class. We're the only two

626
00:37:05,120 --> 00:37:07,400
Speaker 5: firms on the street who do that, who can actually

627
00:37:07,440 --> 00:37:11,839
Speaker 5: sit there and provide the client support. Right, you want

628
00:37:11,840 --> 00:37:14,000
Speaker 5: to sit down with an advisor and like help them

629
00:37:14,160 --> 00:37:16,839
Speaker 5: understand how this can fit into their client's portfolio, how

630
00:37:16,840 --> 00:37:19,800
Speaker 5: they can support their clients through that. When there's a problem,

631
00:37:19,800 --> 00:37:21,400
Speaker 5: they can pick up the phone and call somebody who'll

632
00:37:21,400 --> 00:37:24,000
Speaker 5: explain to them what's happening in crypto. That's actually a

633
00:37:24,120 --> 00:37:29,840
Speaker 5: huge piece of missing component in how you actually place

634
00:37:29,920 --> 00:37:34,560
Speaker 5: these assets. And bluntly, that is not something people get

635
00:37:35,040 --> 00:37:39,600
Speaker 5: from the king of ETFs because that's not actually their specialty.

636
00:37:39,880 --> 00:37:42,399
Speaker 5: That's not their approach to the market never has been.

637
00:37:42,680 --> 00:37:45,360
Speaker 6: Another thing is and I'll go back, of course, to

638
00:37:46,000 --> 00:37:50,279
Speaker 6: the research side of it. We have been researching and

639
00:37:50,400 --> 00:37:55,040
Speaker 6: writing about educating our client based, prospective clients, anyone who

640
00:37:55,520 --> 00:38:01,040
Speaker 6: wants to read our research since twenty fifteen when bitcoin

641
00:38:01,400 --> 00:38:04,680
Speaker 6: was six billion dollars five six billion dollars.

642
00:38:04,680 --> 00:38:05,640
Speaker 4: In market cap.

643
00:38:06,719 --> 00:38:11,520
Speaker 6: Today it is roughly seven hundred billion dollars in market cap.

644
00:38:11,560 --> 00:38:15,479
Speaker 6: And again we think we've just begun, but I think

645
00:38:15,520 --> 00:38:20,040
Speaker 6: we've earned some stripes because all we do three analysts

646
00:38:20,080 --> 00:38:25,719
Speaker 6: focusing on crypto, and we have partnered our partner distribution

647
00:38:25,800 --> 00:38:30,759
Speaker 6: partner here in the US, Resolute, the entire firm. It

648
00:38:30,800 --> 00:38:34,319
Speaker 6: may be much smaller than Blackrock, but they have been

649
00:38:34,600 --> 00:38:40,120
Speaker 6: working with us on disruptive innovation, exclusively disruptive innovation, and

650
00:38:41,840 --> 00:38:46,880
Speaker 6: are incredibly excited and confident that you know that we

651
00:38:46,880 --> 00:38:49,480
Speaker 6: could make a big splash.

652
00:38:49,520 --> 00:38:51,880
Speaker 3: Well, first of all, good luck to you. I think

653
00:38:51,920 --> 00:38:53,839
Speaker 3: this is again, this is going to be fascinating to watch.

654
00:38:54,040 --> 00:38:58,279
Speaker 3: One just last question about ARC in general, and obviously

655
00:38:58,400 --> 00:39:00,080
Speaker 3: this has been quite a journey for you.

656
00:39:00,080 --> 00:39:02,200
Speaker 2: You you came and.

657
00:39:02,160 --> 00:39:06,719
Speaker 3: I remember meeting Kathy at the ETF's boot camp. I

658
00:39:06,760 --> 00:39:09,279
Speaker 3: think you were like two months before launching, and I

659
00:39:09,320 --> 00:39:11,439
Speaker 3: swear you told me the idea. I was like, yeah,

660
00:39:11,480 --> 00:39:14,000
Speaker 3: I don't know, I might not see her next year

661
00:39:14,800 --> 00:39:17,319
Speaker 3: because at the time nobody wanted active. But you proved

662
00:39:17,360 --> 00:39:20,520
Speaker 3: me wrong and you went from like zero, and as

663
00:39:20,520 --> 00:39:22,960
Speaker 3: an indie especially, it's hard to make it. I think

664
00:39:23,000 --> 00:39:25,440
Speaker 3: you might have peaked at thirty forty billion. It's now

665
00:39:25,480 --> 00:39:28,560
Speaker 3: your fund's are fourteen billion. You've had that huge run up,

666
00:39:28,640 --> 00:39:30,040
Speaker 3: huge rundown, now you're up.

667
00:39:29,920 --> 00:39:33,640
Speaker 2: Again this year. It is a bit rollercoaster ish.

668
00:39:33,920 --> 00:39:37,240
Speaker 3: Your journey kind of reminds me of Steve Martin's quote

669
00:39:37,239 --> 00:39:40,200
Speaker 3: in his great biography called Born, Standing Up, where he goes,

670
00:39:40,360 --> 00:39:43,360
Speaker 3: at first I wasn't famous enough. Then I was too famous,

671
00:39:43,400 --> 00:39:45,600
Speaker 3: like when the jerk came out and he goes, now

672
00:39:45,640 --> 00:39:48,960
Speaker 3: I'm just right famous. And it sort of feels like that.

673
00:39:49,040 --> 00:39:51,960
Speaker 3: Do you think fourteen to fifteen billion for your equity ETFs,

674
00:39:52,040 --> 00:39:54,759
Speaker 3: let's move crypto aside? Is that the right spot for you?

675
00:39:54,800 --> 00:39:57,319
Speaker 3: Because you know you're less visible in the markets now,

676
00:39:57,400 --> 00:39:59,640
Speaker 3: you're not like pushing stocks around or do.

677
00:39:59,640 --> 00:40:01,520
Speaker 2: You want to be bigger or smaller?

678
00:40:02,480 --> 00:40:06,240
Speaker 6: If we are right, and this is not just about crypto,

679
00:40:06,320 --> 00:40:10,360
Speaker 6: it's about all of the innovation platforms around which we

680
00:40:10,480 --> 00:40:17,800
Speaker 6: have centered our research and investing, then disruptive innovation broadly defined,

681
00:40:18,000 --> 00:40:23,919
Speaker 6: will go from roughly fifteen trillion dollars in market cap

682
00:40:23,960 --> 00:40:28,080
Speaker 6: globally equities both public and private, so a little more

683
00:40:28,120 --> 00:40:32,480
Speaker 6: than ten percent of the market to more than two

684
00:40:32,600 --> 00:40:37,440
Speaker 6: hundred trillion by twenty thirty. And we think we should

685
00:40:37,440 --> 00:40:40,720
Speaker 6: gain share in that market because this is all we do.

686
00:40:41,440 --> 00:40:48,080
Speaker 6: And so that's Steve Martin quote is very interesting. In

687
00:40:48,400 --> 00:40:52,239
Speaker 6: late twenty and early twenty one, I was very uncomfortable.

688
00:40:52,360 --> 00:40:54,640
Speaker 6: I was I'm on record saying keep some of your

689
00:40:54,680 --> 00:40:58,480
Speaker 6: powder dry. We can't do anything wrong. And I sent

690
00:40:58,560 --> 00:41:00,960
Speaker 6: this to my team too. We can't do anything wrong.

691
00:41:01,200 --> 00:41:04,200
Speaker 6: This is not reality that we're going to have. There's

692
00:41:04,200 --> 00:41:06,720
Speaker 6: gonna be another side to this. Did I believe Michael

693
00:41:06,760 --> 00:41:10,680
Speaker 6: Berry when he said this is just the Nasdaq circa

694
00:41:10,719 --> 00:41:14,000
Speaker 6: two thousand? Absolutely not. And I told him, you don't

695
00:41:14,080 --> 00:41:17,839
Speaker 6: understand innovation. Well, what I didn't understand was the FED

696
00:41:18,040 --> 00:41:21,840
Speaker 6: was going to take interest rates up twenty fourfold within

697
00:41:21,960 --> 00:41:25,279
Speaker 6: roughly a year's time. Never happened in history. Vulgar took

698
00:41:25,320 --> 00:41:29,160
Speaker 6: it up twofold ten to twenty percent, but only twofold

699
00:41:29,360 --> 00:41:33,560
Speaker 6: twenty fourfold, shocked the system. I think we've paid our

700
00:41:33,680 --> 00:41:36,200
Speaker 6: dues and I think we're on the other side of it.

701
00:41:36,239 --> 00:41:39,680
Speaker 6: I'm much more comfortable today that many people don't think

702
00:41:39,719 --> 00:41:43,040
Speaker 6: we can do anything right, although that's changing with this

703
00:41:43,120 --> 00:41:49,080
Speaker 6: year's performance. But innovation gains traction during tough times, and

704
00:41:49,360 --> 00:41:53,720
Speaker 6: that's what's happening. Our companies are now earning their place

705
00:41:54,040 --> 00:41:59,040
Speaker 6: in our portfolios. Their earnings are surprising to the high side,

706
00:41:59,120 --> 00:42:01,560
Speaker 6: and they're moving to the top of the heap. So no,

707
00:42:01,719 --> 00:42:04,520
Speaker 6: we're really excited about the next five to ten years.

708
00:42:04,560 --> 00:42:05,640
Speaker 6: This is why I started ARC.

709
00:42:06,360 --> 00:42:09,400
Speaker 1: Okay, we'll leave it at that. Kathy Aphelia, thank you

710
00:42:09,440 --> 00:42:10,840
Speaker 1: so much for joining us on Trillians.

711
00:42:11,920 --> 00:42:13,799
Speaker 4: Thank you, Thank you, Joel and Eric.

712
00:42:14,200 --> 00:42:17,920
Speaker 5: Thank you guys.

713
00:42:19,400 --> 00:42:22,359
Speaker 1: Thanks for listening to Trillions. Until next time. You can

714
00:42:22,360 --> 00:42:27,239
Speaker 1: find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify,

715
00:42:27,880 --> 00:42:30,319
Speaker 1: or wherever else you'd like to listen. We'd love to

716
00:42:30,320 --> 00:42:33,640
Speaker 1: hear from you. We're on Twitter. I'm at Joel Webber Show.

717
00:42:34,080 --> 00:42:38,720
Speaker 1: He's at Eric Balchnas. This episode of Trillions was produced

718
00:42:38,719 --> 00:43:53,279
Speaker 1: by Magnus Hendrickson. Bye