WEBVTT - The Race for the Bitcoin ETF Heats Up 0:00:05.640 --> 0:00:06.360 What can a chillions. 0:00:06.400 --> 0:00:08.640 I'm Joe Webber and I'm Eric Belchunas. 0:00:11.039 --> 0:00:15.239 Eric, I thought the Bitcoin etf dream was dead and 0:00:15.280 --> 0:00:17.479 then all of a sudden it is like back, and 0:00:17.520 --> 0:00:18.680 it's back with a vengeance. 0:00:19.000 --> 0:00:22.520 You've seen Godfather three where al Pacino goes. I thought 0:00:22.520 --> 0:00:24.720 I was out and they pulled me back in. Yeah, 0:00:24.800 --> 0:00:27.240 that's how I feel. Every time this race gets reignited, 0:00:27.640 --> 0:00:31.640 it's exhausting. That said, it's exciting, and this time around 0:00:31.720 --> 0:00:35.640 it's got another level of fascination because you've got Blackrock 0:00:35.680 --> 0:00:38.880 who filed. BlackRock's the biggest asset manager on planet Earth. 0:00:39.479 --> 0:00:41.879 The SEC's you know, obviously a big part of the government. 0:00:42.920 --> 0:00:45.640 Bitcoin had FTX, and now it's sort of coming back 0:00:45.680 --> 0:00:47.880 as usual, you know, it's it never seems to go away, 0:00:47.960 --> 0:00:51.559 usually comes back after these sort of big issues that 0:00:51.640 --> 0:00:54.440 it has. So you've got a bunch of things sort 0:00:54.480 --> 0:00:58.320 of colliding here, and there's so many subplots. My team, 0:00:58.440 --> 0:01:01.000 James Sayford in particular, we've been all over this. A 0:01:01.000 --> 0:01:03.720 lot of it's playing out on Twitter, but we've been 0:01:03.720 --> 0:01:06.000 writing notes, We've been doing interviews with all the crypto 0:01:06.040 --> 0:01:09.760 trade publications. There's a whole crypto underworld that is starting 0:01:09.800 --> 0:01:13.120 to look to James in particular as the expert on this. 0:01:13.240 --> 0:01:16.120 We had had some experience with the pro schars futures 0:01:16.120 --> 0:01:18.800 ETF about two years ago. We called that, we said 0:01:18.800 --> 0:01:21.000 it would happen, and it did, And now it's come 0:01:21.040 --> 0:01:23.319 back around and people are like, say, what are the odds? 0:01:23.319 --> 0:01:25.440 And so we're trying to handicap this thing in real time, 0:01:25.480 --> 0:01:28.520 and like I said, it's equal parts exhausting and exciting. 0:01:29.720 --> 0:01:33.040 To walk us through what we think we know about 0:01:33.080 --> 0:01:35.759 the state of play. We're gonna have James Seifert ETF 0:01:35.760 --> 0:01:39.720 analyst with Bloomberg Intelligence, as well as Aphelia Snyder, co 0:01:39.800 --> 0:01:42.920 founder and president of twenty one Shares. She is in 0:01:42.959 --> 0:01:48.560 the ETF race, this time on Trean's The Bitcoin ETF 0:01:48.680 --> 0:01:54.480 race is back. Okay, Aphelia, James, Welcome to trillions. Thanks 0:01:54.520 --> 0:01:57.800 for having me, Thanks for having us, Aphelia. It feels 0:01:57.840 --> 0:02:01.040 like we did this in the pandemic. We talked about 0:02:01.160 --> 0:02:05.480 I think crypto and ETFs back then. I'm curious, like, 0:02:05.880 --> 0:02:10.160 what the hell changed? Why is this happening all over again? 0:02:11.720 --> 0:02:16.079 Oh? God, so much. It changed. Crypto moves very very 0:02:16.160 --> 0:02:21.720 very quickly, as market and the markets. The underlying market 0:02:21.760 --> 0:02:24.920 that is crypto evolves quite quickly. So the market itself 0:02:25.520 --> 0:02:28.240 is very different than it was two years ago when 0:02:28.240 --> 0:02:31.679 we talked about this at a like fundamental level in 0:02:31.720 --> 0:02:33.560 terms of the market participants are and what it looks like, 0:02:33.600 --> 0:02:35.360 and what volumes look like and what flows look like. 0:02:35.680 --> 0:02:38.560 It is a very different market from that perspective, and 0:02:38.800 --> 0:02:41.240 I think that's part of what's contributing to why this 0:02:41.280 --> 0:02:46.680 is coming back. I think this most recent crypto winter 0:02:46.919 --> 0:02:49.840 has actually flushed out a lot of bad actors in 0:02:49.840 --> 0:02:53.400 the space, fleshed out a lot of like the garbage 0:02:53.440 --> 0:02:56.760 that kind of gums up the works in crypto markets, 0:02:57.120 --> 0:03:00.320 and we're starting to see people come out of that 0:03:00.400 --> 0:03:02.720 and sort of the work that's been done during that 0:03:02.800 --> 0:03:05.919 crypto winter, and it's part of what's reigniting this conversation. 0:03:06.320 --> 0:03:10.480 So to be clear, there are already bitcoin ETFs, but 0:03:10.560 --> 0:03:13.680 they're futures based. What we're actually talking about here is 0:03:13.720 --> 0:03:17.360 a spot based ETF. Why does that remain the holy grail? 0:03:18.160 --> 0:03:22.200 So twenty one chares as an issue runs about thirty 0:03:22.480 --> 0:03:25.880 seven of these products in Europe already, all spot based 0:03:26.960 --> 0:03:31.519 single assets indexes, shorts, all based on spot. The reason 0:03:31.560 --> 0:03:35.040 that remains the holy grail here is because futures products 0:03:35.120 --> 0:03:38.080 are great can be great things, but they're actually a 0:03:38.120 --> 0:03:40.440 little bit different than a spot product. They have a 0:03:40.440 --> 0:03:45.520 different exposure built into them, so you're dealing with different 0:03:45.560 --> 0:03:48.000 factors that impact that market. It can be a really 0:03:48.080 --> 0:03:50.280 good product if you understand what all of those things are, 0:03:50.280 --> 0:03:52.680 and that's what it is you're trying to buy it is. However, 0:03:52.840 --> 0:03:57.720 what it is not is pure play bitcoin exposure. It's like, 0:03:57.800 --> 0:04:01.080 for example, it's why you saw oil future ETFs go negative. 0:04:01.200 --> 0:04:03.600 It's because actually there's something else baked into there. From 0:04:03.640 --> 0:04:06.360 an investment thesis perspective, there's nothing wrong with that, but 0:04:06.440 --> 0:04:11.119 you need to actually want that additional thing. And for example, 0:04:11.280 --> 0:04:13.160 you saw this evolution in gold markets where we went 0:04:13.200 --> 0:04:15.280 through sort of the future is products and eventually ended 0:04:15.320 --> 0:04:18.440 up at spot spot. Really is that just pure exposure. 0:04:18.520 --> 0:04:22.000 There's nothing else in there other than long bitcoin. 0:04:22.880 --> 0:04:24.880 And I think at the end of the day, people 0:04:25.160 --> 0:04:27.680 just want it to track the price, whether it goes 0:04:27.720 --> 0:04:31.080 down or up sideways. That's all anybody wants, and that's 0:04:31.080 --> 0:04:32.600 the beauty of ETFs. 0:04:32.160 --> 0:04:34.800 And I want to do it with an ETF rather 0:04:34.880 --> 0:04:38.040 than bothering with whatever crypto while it is out there. 0:04:38.760 --> 0:04:43.520 Yeah, I mean ETFs generally speaking, bring convenience, and they're 0:04:43.520 --> 0:04:46.680 also in the plumbing of a lot of advisors in particular, 0:04:46.800 --> 0:04:49.440 So the ETF. I think, if you want crypto and 0:04:49.480 --> 0:04:51.720 you're younger and really into this, you don't really need 0:04:51.760 --> 0:04:55.320 the ETF, but it can be convenient. ETF can trade 0:04:55.360 --> 0:04:58.040 on exchange, you can buy any brokerage, and it's in 0:04:58.440 --> 0:05:01.960 it fits its trust by the advisors of the world. 0:05:02.000 --> 0:05:03.960 I think that's a big They have like thirty trillion 0:05:04.000 --> 0:05:07.200 dollars in assets. They trust the ETF, they're used to it, 0:05:07.240 --> 0:05:09.800 they're comfortable with it, and that's a format that they like, 0:05:09.839 --> 0:05:11.719 and I think that's also a big part of the story. 0:05:11.760 --> 0:05:14.480 And yet the SEC keeps saying no. How many times 0:05:14.480 --> 0:05:15.599 has the SEC said no. 0:05:16.279 --> 0:05:19.120 Let's go to James on that one? Yeah, yeah, thirty three. 0:05:19.520 --> 0:05:21.680 Well, I mean, if you include the futures CTFs they've 0:05:21.720 --> 0:05:23.840 denied or forced issuers to withdraw, we're in like I 0:05:23.839 --> 0:05:26.720 think we're seventies, where we might be up there, we're 0:05:26.720 --> 0:05:28.520 in the fifties at the very least. That's a lot. 0:05:28.600 --> 0:05:30.839 So what's changed now, Well. 0:05:30.760 --> 0:05:33.320 What Ophelia said is one thing. The other saying is 0:05:33.640 --> 0:05:38.080 Blackrock which to be to be Frank Ark in twenty 0:05:38.120 --> 0:05:40.240 one shares were early. They filed back in April of 0:05:40.760 --> 0:05:44.760 twenty twenty three, and Blackrock just filed in June fifteenth. 0:05:44.760 --> 0:05:47.200 That's when we first saw their prospectus, and also when 0:05:47.200 --> 0:05:50.080 they filed their nineteen B four, which is the rule 0:05:50.160 --> 0:05:52.559 change proposal. That is what we're all here to talk about. 0:05:52.560 --> 0:05:54.800 But really what which like I had never heard of 0:05:54.920 --> 0:05:56.719 until suddenly like nineteen B four. 0:05:56.920 --> 0:06:00.880 It's objectively not interesting. It is objectively interesting because what 0:06:00.920 --> 0:06:03.800 it's supposed to be is a form document that's on 0:06:03.920 --> 0:06:06.760 the back end of some things that exchanges do. Most 0:06:06.800 --> 0:06:10.160 people with a normal ETF application, there's nothing in there 0:06:10.200 --> 0:06:12.200 that anyone would ever be interested in looking at. 0:06:12.240 --> 0:06:14.919 But even nineteen B fours get their moment. 0:06:15.360 --> 0:06:17.480 Yes, I mean they've had a lot of moments with 0:06:17.520 --> 0:06:20.320 all these Bitcoin ETF denials. Whenever you see people, if 0:06:20.360 --> 0:06:23.400 you see news stories or headlines with all the crypto publications, 0:06:23.440 --> 0:06:26.080 talk about them, and they'll say, oh, it's been delayed again, 0:06:26.200 --> 0:06:28.400 or it's denied or approved. Every time you see that 0:06:28.400 --> 0:06:31.160 that's a nineteen before application. I find that a lot 0:06:31.160 --> 0:06:33.920 of the crypto world over the last few years, didn't 0:06:33.920 --> 0:06:36.320 really understand what they were writing about. They've gotten a 0:06:36.360 --> 0:06:38.760 lot better over the last five years since we've seen 0:06:39.400 --> 0:06:42.599 a denial after denial after denial, so more of them 0:06:42.640 --> 0:06:45.000 know what's going on now. But yeah, it's the nineteen 0:06:45.080 --> 0:06:48.400 B four process, which is basically as Ophelia said, it's 0:06:48.400 --> 0:06:51.840 an exchange. Applying to get a rule change to make 0:06:51.920 --> 0:06:54.920 something be allowed to happen is essentially what it is, 0:06:55.600 --> 0:06:58.360 and that thing in this case is to launch a 0:06:58.400 --> 0:06:59.840 spot bitcoin etf. 0:07:00.320 --> 0:07:05.000 So you can't underestimate how shocking the Blackrock etf filing was. 0:07:05.040 --> 0:07:08.240 First of all, Coindesk deserves props. They recorded it, They 0:07:08.240 --> 0:07:11.040 said it was going to happen earlier one day. I 0:07:11.080 --> 0:07:11.800 did not believe it. 0:07:11.840 --> 0:07:12.239 At first. 0:07:12.280 --> 0:07:14.400 I thought, well, maybe, but this doesn't make any sense. 0:07:14.840 --> 0:07:17.960 And then it happened and it basically was shocking. It 0:07:17.960 --> 0:07:20.680 took me like a little while to process this. We 0:07:20.680 --> 0:07:22.280 were all trying to figure out why they would do it. 0:07:22.320 --> 0:07:25.200 Blackrock does not do things lightly. They like to bring 0:07:25.240 --> 0:07:27.680 a gun to a knife fight. This is a firm 0:07:27.720 --> 0:07:29.520 that is very close with the government. They don't want 0:07:29.520 --> 0:07:32.280 to upset the government, and they could afford to be 0:07:32.360 --> 0:07:33.960 late in this race, to be honest, So for them 0:07:33.960 --> 0:07:36.760 to file and be the innovator here and come out 0:07:36.760 --> 0:07:39.800 of the blue like this again, it was shocking. What 0:07:40.000 --> 0:07:42.040 was your thought when you saw that filing. 0:07:42.640 --> 0:07:45.400 There are a few moving pieces in the market right now, 0:07:45.960 --> 0:07:48.520 Blackrock is one of them. But when you ask like 0:07:48.600 --> 0:07:51.800 why now, one of the big things that doesn't come 0:07:51.880 --> 0:07:54.000 up as frequently as it should in these conversations is 0:07:54.040 --> 0:07:57.600 the Gray Skill lawsuit, because ultimately, if Gray Scale wins 0:07:57.640 --> 0:08:01.000 their lawsuit, what do they actually win. What they win 0:08:01.200 --> 0:08:03.520 is requiring the SEC to go back with a higher 0:08:03.560 --> 0:08:06.960 burden approof That's it. They can't win an approval through 0:08:06.960 --> 0:08:10.040 that process, right, Like a positive decision is not here's 0:08:10.280 --> 0:08:12.880 let me hand you a you now get to go live. 0:08:12.960 --> 0:08:16.760 It forces the SEC to basically re explain their decision 0:08:16.800 --> 0:08:18.840 making process and do it with a higher standard, with 0:08:18.880 --> 0:08:23.840 a lot more scrutiny. That's really interesting because that's going 0:08:23.920 --> 0:08:26.560 to come through in the fall no matter. There's a 0:08:26.720 --> 0:08:29.680 standard judicial process that's going to happen around those filings. 0:08:29.960 --> 0:08:32.880 That's really exciting and that changes things in this market. 0:08:33.240 --> 0:08:36.280 And so if there is and if you read sort 0:08:36.320 --> 0:08:40.000 of the early statements coming out from that lawsuit, it 0:08:40.000 --> 0:08:42.840 appears really promising. And so the question is, if you 0:08:42.920 --> 0:08:45.720 think that that moves the needle, then this timeline actually 0:08:45.760 --> 0:08:46.600 makes a lot of sense. 0:08:46.800 --> 0:08:49.360 This is the timeline so that that inspires you to 0:08:49.440 --> 0:08:54.120 file back in was the grey Scale lawsuit, which, for 0:08:54.160 --> 0:08:56.360 just enybody listening who doesn't know what that is, gray 0:08:56.400 --> 0:08:59.560 Scale has a trust that isn't an ETF and they're 0:08:59.559 --> 0:09:03.200 basically assuming that the SEC and saying that by approving 0:09:03.240 --> 0:09:06.000 the futures ETF and not the spot, they were inconsistent. 0:09:06.480 --> 0:09:09.600 And when the arguments were heard, which anybody could stream, 0:09:09.800 --> 0:09:12.880 people were shocked at how more on the side of 0:09:12.880 --> 0:09:16.160 Greyscale the judges sounded and how on the heels the 0:09:16.200 --> 0:09:19.800 SEC lawyer was, and our legal analysts went from forty 0:09:19.840 --> 0:09:22.800 percent possibility Grayscale could win to seventy just on that. 0:09:23.240 --> 0:09:25.559 And I think that's sort of again a huge variable 0:09:25.559 --> 0:09:28.800 because if the SEC loses, that's like some egg on 0:09:28.800 --> 0:09:30.840 the face there at least if not, you know, they're 0:09:30.840 --> 0:09:32.400 not going to turn to an ETF, but that certainly 0:09:32.400 --> 0:09:34.200 would change things. 0:09:33.480 --> 0:09:37.160 It raises the standard of proof for what they're saying, right, 0:09:37.120 --> 0:09:39.280 They're going to have to substantiate things more, which is 0:09:39.400 --> 0:09:42.120 not a bad thing. I think one of the from 0:09:42.160 --> 0:09:45.440 our perspective, Look, we never actually exited this race. We 0:09:45.440 --> 0:09:48.440 refiled last year, refiled the year before, We submit new 0:09:48.480 --> 0:09:51.360 analysis every time we do. We have an amazing research 0:09:51.360 --> 0:09:53.160 and quant team, so we actually do a lot of 0:09:53.480 --> 0:09:57.120 primary research ourselves. We're not just referencing other things around. 0:09:57.320 --> 0:10:00.840 You know, how you think about like covariance between different markets, 0:10:00.880 --> 0:10:03.400 and you know, we've gone back and forth with regulators 0:10:03.440 --> 0:10:05.120 all over the world around how we sort of manage 0:10:05.120 --> 0:10:08.240 those statistics and helping them get comfortable with them. So 0:10:08.320 --> 0:10:10.760 we've sort of been engaged in this all along. But 0:10:10.840 --> 0:10:13.320 I think when you look at the Blackrock piece of this, 0:10:13.640 --> 0:10:16.880 why now that timeline actually does make a lot of sense. 0:10:17.120 --> 0:10:20.160 And if you couple that with Larry Fink's letter for 0:10:20.200 --> 0:10:22.679 the year in terms of key themes, crypto being one 0:10:22.720 --> 0:10:25.760 of them that seems quite internally consistent. 0:10:31.520 --> 0:10:34.040 And the other thing that we obviously haven't even touched on, 0:10:34.080 --> 0:10:36.079 which is the key thread in all of these recent 0:10:36.080 --> 0:10:39.400 wave of applications, is the fact that when Blackrock filed, 0:10:39.440 --> 0:10:42.800 they said they were planning to enter or were entering 0:10:42.880 --> 0:10:46.360 into a surveillance sharing agreement with Coinbase, which all the 0:10:46.360 --> 0:10:49.199 denials prior all I talked about those nineteen before denials, 0:10:49.480 --> 0:10:52.679 the one thing the SEC always said was we want surveillance. 0:10:52.800 --> 0:10:55.120 We want to have surveillance over a market of sin 0:10:55.160 --> 0:10:58.520 gifting de size, specifically a regulated market. So this isn't 0:10:58.559 --> 0:11:01.120 the first time we saw a surveillance share agreement with 0:11:01.320 --> 0:11:05.559 coin with within a crypto exchange. The Winklevoss Twins applied 0:11:05.600 --> 0:11:07.280 with this. They said they were going to have a 0:11:07.320 --> 0:11:11.520 surveillance sharing agreement with their own Gemini, among many other things, 0:11:11.559 --> 0:11:14.440 and the SEC denied it, saying it was neither a 0:11:14.480 --> 0:11:18.240 market of significant size nor a regulated market. So now 0:11:18.280 --> 0:11:20.600 we have these filings, everyone's saying they're going to have 0:11:20.600 --> 0:11:23.679 a surveillance sharing agreement Coinbase, which I have written this 0:11:23.920 --> 0:11:26.679 and I will argue this that coinbase is a market 0:11:26.679 --> 0:11:29.000 of significant size, especially if you just look at US 0:11:29.080 --> 0:11:32.000 dollar trading. If you look at the global markets, they're 0:11:32.040 --> 0:11:34.559 like less than ten percent, but almost all of that 0:11:34.800 --> 0:11:39.120 is in stable coin pairs, which are just for those 0:11:39.160 --> 0:11:42.520 that don't know, it's essentially these coins that say they're 0:11:42.520 --> 0:11:45.040 peg to the US dollar. There's a lot of manipulation 0:11:45.080 --> 0:11:47.160 that's potentially happening on some of these other exchanges. The 0:11:47.160 --> 0:11:50.720 big player in the room is Finance, which SEC is suing. 0:11:50.760 --> 0:11:53.640 But if you look at just US dollar pairs, Coinbase 0:11:53.679 --> 0:11:55.640 is the number one trading pair with bitcoin. If you 0:11:55.679 --> 0:11:58.800 just look at exchanges that accept US dollars, Coinbase is 0:11:58.880 --> 0:12:01.760 forty percent of that market. So Coinbase is the market 0:12:01.800 --> 0:12:04.880 when you're talking about bitcoin priced in US dollars, So 0:12:05.080 --> 0:12:07.680 I think they are marketed. It's a significant size, which 0:12:07.720 --> 0:12:10.520 should satisfy some of the SEC's concerns. Combined with the 0:12:10.520 --> 0:12:12.760 fact that we have those CME futures, which we have 0:12:12.840 --> 0:12:16.080 the future CTFs that were approved, all of that points 0:12:16.080 --> 0:12:18.080 to the fact that the SEC might get comfortable saying 0:12:18.080 --> 0:12:20.920 they have enough surveillance. The only caveat that I'm looking 0:12:20.920 --> 0:12:24.319 at right now is basically Gary Gensler and the SEC 0:12:24.679 --> 0:12:28.680 need to kind of accept that bitcoin trading on coinbase 0:12:28.880 --> 0:12:31.320 is not a regulated market. That's the one hang up. 0:12:31.360 --> 0:12:33.800 But honestly, I don't know what would entail a regulated 0:12:33.840 --> 0:12:36.280 market in bitcoin, because bitcoin, even Gary Gensler in the 0:12:36.320 --> 0:12:39.440 SEC would say, is a commodity and not a security. 0:12:39.520 --> 0:12:41.559 So I guess I would push it back to Aphelia 0:12:41.600 --> 0:12:43.480 and say ask if she has any comments on or 0:12:43.559 --> 0:12:44.600 disagreements with anything. 0:12:44.600 --> 0:12:47.000 I said, no, I agree with you. I think the 0:12:47.240 --> 0:12:49.560 question is going to come down to how they define 0:12:49.559 --> 0:12:52.800 significant size, because it's not actually there's no standard for that. 0:12:52.840 --> 0:12:54.560 This isn't like a reference to a law where it 0:12:54.559 --> 0:12:59.800 says it needs to be x right. It's an undefined term, 0:13:00.040 --> 0:13:02.480 as is the sort of regulated piece of that. Neither 0:13:02.480 --> 0:13:04.480 one of these are things that actually you're standardized, and 0:13:04.520 --> 0:13:06.760 so I think it's going to come down to a 0:13:06.800 --> 0:13:08.360 few of those points. And I also think if you 0:13:08.400 --> 0:13:10.520 look at I mean not Torp on this, if you 0:13:10.520 --> 0:13:12.559 go back to gold markets, which is the closest corollary 0:13:12.600 --> 0:13:15.800 we have, and you look at sort of the level 0:13:15.800 --> 0:13:18.440 of surveillance that's expected there, there is an understanding that 0:13:18.480 --> 0:13:21.040 you can really only surveil a portion of that market 0:13:21.080 --> 0:13:24.400 because of the inherent construction of it. Gold markets involve 0:13:24.440 --> 0:13:28.080 everybody from like your pawnbroker to you know, JP Morgan 0:13:28.120 --> 0:13:31.120 trading gold bars in both London and Zurich with different prices, Like, 0:13:31.160 --> 0:13:34.040 how do you deal with that? The answer is you 0:13:34.440 --> 0:13:37.040 make do with some level of surveillance, understanding it's not 0:13:37.080 --> 0:13:40.160 going to be complete. And I think that's actually a 0:13:40.360 --> 0:13:41.240 likely model here. 0:13:41.480 --> 0:13:45.280 Okay, So all of a sudden, we have Coinbase as 0:13:45.360 --> 0:13:48.560 this sort of third party that everybody agrees is going 0:13:48.640 --> 0:13:51.800 to have ability to have this surveillance agreement with. So 0:13:52.040 --> 0:13:56.360 why is coinbase so significant to all these resubmission applications 0:13:56.400 --> 0:13:58.559 all of a sudden, Well, part. 0:13:58.360 --> 0:13:59.800 Of it is all the things I just said, right, 0:13:59.800 --> 0:14:03.160 They are that surveillan sharing agreement, which basically means that 0:14:03.360 --> 0:14:07.520 like NASDAK, who definitely has when CBOE is trying to 0:14:07.600 --> 0:14:09.320 enter one nice he's trying to enter one, they basically 0:14:09.400 --> 0:14:12.480 have contracts where they're trying to enter these agreements officially. 0:14:12.480 --> 0:14:14.439 And all it means is like if the regulars come 0:14:14.440 --> 0:14:17.439 back and say they suspect some sort of manipulation in 0:14:17.480 --> 0:14:19.880 the market, wash trading whatever, they want to be able 0:14:19.880 --> 0:14:21.640 to go to a spot market and say, tell us 0:14:21.680 --> 0:14:23.440 what was happening with the trading on this time so 0:14:23.480 --> 0:14:27.400 they can back into with exchanges that have KYC Know 0:14:27.440 --> 0:14:30.440 your Customer and anti money laundering rules. They want to 0:14:30.480 --> 0:14:33.120 be able to be able to basically like figure out 0:14:33.160 --> 0:14:35.120 who was doing this and if it was actually happening. 0:14:35.280 --> 0:14:37.240 So that's all this is. This is an agreement that 0:14:37.280 --> 0:14:40.680 the exchanges can go to coinbase and get that information affiliate. 0:14:40.720 --> 0:14:43.080 Do you have those in any other jurisdictions. 0:14:44.120 --> 0:14:47.720 No, but it's a different market construction. And one of 0:14:47.720 --> 0:14:49.760 the things that's come up a lot in the context 0:14:49.760 --> 0:14:56.280 of these sessays is sessays are not really commercial in 0:14:56.320 --> 0:14:59.320 that way, So there's no incentive to work with one 0:14:59.360 --> 0:15:02.280 exchange not another. That's not the design. In fact, like 0:15:02.360 --> 0:15:07.560 realize you would have an agreement like this between equities 0:15:07.600 --> 0:15:09.800 exchanges that compete with each other, right, This is not 0:15:10.240 --> 0:15:12.040 that kind of thing. This is a piece of very 0:15:12.080 --> 0:15:16.320 wonky back end infrastructure for exchanges, and so I think 0:15:16.320 --> 0:15:18.120 what you're going to see is coin is coming in 0:15:18.240 --> 0:15:20.240 is great. I think you're going to see more of them. 0:15:20.400 --> 0:15:23.160 I actually think you will see more exchanges sign up 0:15:23.200 --> 0:15:26.760 to this because it actually helps normalize crypto markets to 0:15:27.040 --> 0:15:29.920 standard market practice. And I think a lot of the 0:15:29.960 --> 0:15:32.440 centralized exchanges, especially the ones operating in Europe and the 0:15:32.560 --> 0:15:34.400 United States, have a vested interest in moving in that 0:15:34.440 --> 0:15:37.960 direction and they are so I think that's going to 0:15:38.040 --> 0:15:40.760 be something to look at. I think in the coming 0:15:40.800 --> 0:15:42.440 months is that I don't think this will end up 0:15:42.440 --> 0:15:44.720 being a one off I think you will end up 0:15:44.760 --> 0:15:49.480 seeing a movement in this direction ultimately long term and 0:15:49.640 --> 0:15:51.040 awesome thing for crypto markets. 0:15:51.400 --> 0:15:54.560 And if you're the SEC and Coinbase is going to 0:15:54.800 --> 0:15:57.880 give all this data enter into these agreements with these 0:15:57.880 --> 0:16:02.840 different exchanges, and I mean if Coinbase is working with Blackrock, NASDAC, CBOE, 0:16:03.120 --> 0:16:05.840 we'll call those like sort of the traditional finance companies. 0:16:06.840 --> 0:16:09.160 To me, it just seems like possible they would be 0:16:09.200 --> 0:16:11.880 able to maybe overlook the regulated given all of that, 0:16:12.160 --> 0:16:15.440 in other words, that's that's a regulated in quotes if 0:16:15.480 --> 0:16:18.200 you will, because it's it's with all these traditional finance 0:16:18.200 --> 0:16:22.240 companies and there's no actual bills coming through Congress that 0:16:22.280 --> 0:16:24.600 are going to regulate it anyway, So can you really 0:16:24.680 --> 0:16:26.920 regulate it? So this would be the closest thing and 0:16:26.960 --> 0:16:30.440 it's good enough. And if you're Gary Gensler and you 0:16:30.560 --> 0:16:34.240 have you know Biden's going to let you have another 0:16:34.320 --> 0:16:37.320 presidential election coming up, and you want to basically say 0:16:37.360 --> 0:16:40.840 you move crypto forward, this would be a way to say, well, 0:16:40.880 --> 0:16:44.000 I left it with a lot of the traditional finance companies. 0:16:44.480 --> 0:16:48.200 It's doing well, it's safer than when I started. I 0:16:48.320 --> 0:16:49.400 checked that box. 0:16:50.680 --> 0:16:52.800 And one of the questions, is regulated as what? And 0:16:52.880 --> 0:16:57.200 this is something James was alluding to, because you commodities 0:16:57.560 --> 0:17:01.320 regulated as what, and the issue is a regulated market 0:17:01.320 --> 0:17:04.640 of significant size. If the market is a securities market 0:17:04.720 --> 0:17:07.600 that has a defined meaning. If the market is a 0:17:07.640 --> 0:17:09.960 commodities market, now you're getting into a completely different set 0:17:10.000 --> 0:17:11.720 of things. There isn't necessarily a way to have a 0:17:11.720 --> 0:17:14.080 regulated market there. So I think it's going to come 0:17:14.080 --> 0:17:16.280 down to some of those definitional questions. And it seems 0:17:16.320 --> 0:17:18.680 like if you look at a lot of the enforcement 0:17:18.720 --> 0:17:20.399 actions that have come out of the SEC recently, it 0:17:20.440 --> 0:17:23.040 seems like there is at least an internal consensus within 0:17:23.080 --> 0:17:27.000 the SEC around how to categorize some things as they 0:17:27.040 --> 0:17:29.720 definitely their opinion is that this is definitely a security. 0:17:30.240 --> 0:17:31.639 Whether or not that ends up being the case is 0:17:31.920 --> 0:17:34.120 neither here nor there. But they are stating an opinion 0:17:34.160 --> 0:17:37.680 in these lawsuits, right, so you kind of start to 0:17:37.680 --> 0:17:41.760 see where their opinion's at. That also introduces some wiggle 0:17:41.800 --> 0:17:45.199 room here, because fundamentally, if it's not a security, then 0:17:45.280 --> 0:17:48.239 what is a regulated market? And I think that's one 0:17:48.280 --> 0:17:50.600 of the things that's going to shake out over the 0:17:50.640 --> 0:17:52.400 next few weeks, and we'll be quite interesting. 0:17:52.720 --> 0:17:56.000 So there's some big names here, the black rocks of 0:17:56.000 --> 0:17:59.680 the world. You're basically going head to head with them. 0:17:59.840 --> 0:18:01.520 And I'm curious, what do you think is going to 0:18:01.520 --> 0:18:05.280 distinguish the filing and that plication that you have, Like say, 0:18:05.320 --> 0:18:11.520 everybody say SEC stamps everybody, I don't know when within 0:18:11.560 --> 0:18:14.800 the next year, and everybody's on the in the market, 0:18:15.000 --> 0:18:18.040 what's your product going to look like versus everybody else's. 0:18:18.080 --> 0:18:24.880 So crypto ETFs are not copy paste products of other markets, 0:18:25.320 --> 0:18:28.960 they're not The types of things that happen inside of 0:18:28.960 --> 0:18:32.119 crypto are actually different, and there are corollaries, right, So 0:18:32.160 --> 0:18:34.200 like a fork is kind of like a corporate action, 0:18:34.240 --> 0:18:36.600 and air drop is also kind of like a corporate action. 0:18:38.040 --> 0:18:39.280 But there are a bunch of things that happen that 0:18:39.320 --> 0:18:45.320 are unique, and they're unique to how blockchains operate. And 0:18:45.400 --> 0:18:49.520 then that's true of settlement, that's true of dust that 0:18:49.600 --> 0:18:52.159 accumulates on networks. There's a bunch of like things that 0:18:52.160 --> 0:18:55.240 can happen here. And ultimately, when we look at our 0:18:55.280 --> 0:18:57.600 positioning in the market, we've been doing this for five years. 0:18:58.040 --> 0:19:02.160 Our oldest product is celebrating its five your anniversary in November, which, 0:19:02.160 --> 0:19:04.320 by the way, was not a single asset tracker on 0:19:04.359 --> 0:19:08.000 bitcoin was actually an index product. And we've done this, 0:19:08.080 --> 0:19:10.639 We've seen all of that, and there's something to be 0:19:10.720 --> 0:19:13.880 said for an actual experienced set of hands here, which 0:19:13.920 --> 0:19:18.200 is not true of most of the existing asset managers 0:19:18.200 --> 0:19:19.760 in the space. And if you look at, for example, 0:19:19.760 --> 0:19:25.240 the European market, you know, we've certainly outperformed a lot 0:19:25.280 --> 0:19:27.240 of the traditional, if not all, of the traditional shops 0:19:27.280 --> 0:19:29.800 that have entered the space simply on the basis of 0:19:30.560 --> 0:19:33.320 you do need niche knowledge here working with investors to 0:19:33.320 --> 0:19:36.199 get them comfortable on where bitcoin fits in their portfolio. 0:19:36.320 --> 0:19:40.320 A lot of this is quite specialized information. And the 0:19:40.359 --> 0:19:42.639 way that sales process work is actually very different. 0:19:43.520 --> 0:19:45.239 Yeah, I mean there's a lot of ways they can 0:19:45.240 --> 0:19:47.840 differentiate if we do get one approved, and I just 0:19:47.880 --> 0:19:50.959 think like, based on everything we've seen from the SEC 0:19:51.000 --> 0:19:54.760 and Gensler, the SEC will kind of back into legally 0:19:55.000 --> 0:19:58.439 like whatever they want to basically what Gary Gensler decides, 0:19:58.520 --> 0:20:01.000 right Like, we keep talking about what is a market 0:20:01.000 --> 0:20:04.119 of significant size, what is regulated market? I mean you 0:20:04.160 --> 0:20:06.840 can look at what we had two Cream Future CTFs approved. 0:20:06.880 --> 0:20:10.320 We had Bitcoin Future CTFs approved under two Cream and 0:20:10.440 --> 0:20:14.960 Basically what the SEC said was the CME futures market 0:20:15.040 --> 0:20:17.560 is a market of significant size with respect to the 0:20:17.560 --> 0:20:20.920 CME futures market, which to any normal person would read 0:20:20.960 --> 0:20:22.720 that and be like, am I actually reading this from 0:20:22.720 --> 0:20:25.560