WEBVTT - SEC Approves Bitcoin-Spot ETFs in Milestone for Digital Assets 0:00:01.360 --> 0:00:05.720 This is Bloomberg business Week Inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:19.000 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.120 --> 0:00:22.200 If you're just now joining us in breaking news, US 0:00:22.239 --> 0:00:26.040 regulators for the first time approving ETFs that invest directly 0:00:26.079 --> 0:00:29.200 in bitcoin. This is a move heralded as a landmark 0:00:29.240 --> 0:00:33.240 event for the roughly one point seven trillion dollar asset industry, 0:00:33.760 --> 0:00:36.280 the digital asset sector that will broaden access to the 0:00:36.360 --> 0:00:40.640 largest cryptocurrency on Wall Street and beyond. The SEC, whose 0:00:40.680 --> 0:00:45.000 three part mandate includes investor protection authorized eleven funds to 0:00:45.040 --> 0:00:48.720 begin trading on Thursday. Let's now go to Carol Masser, 0:00:48.720 --> 0:00:52.120 who's standing by with Kathy Wood, the CIO, CEO and 0:00:52.200 --> 0:00:53.880 co founder of ARC invest. 0:00:54.160 --> 0:00:56.040 All right, so, Kathy, what do you think about in 0:00:56.080 --> 0:00:58.120 this moment of time, As we said, this has been 0:00:58.560 --> 0:00:59.360 long in coming. 0:01:00.320 --> 0:01:06.600 Yes, well, you described two ways this could happen. It 0:01:06.640 --> 0:01:10.400 can happen very quickly or will it happen very slowly? 0:01:10.440 --> 0:01:14.640 When you're talking about institutions that that you know have 0:01:14.720 --> 0:01:18.040 been very fearful of this space because of Gary Gensler 0:01:18.200 --> 0:01:22.080 and you know, all of the drama. I think they're 0:01:22.080 --> 0:01:24.440 going to tread lightly. I don't know if you saw, 0:01:24.560 --> 0:01:28.240 but Gary Gensler put out a piece today right as 0:01:28.319 --> 0:01:31.759 we're about to go effective, and I'm sure we all 0:01:31.800 --> 0:01:36.840 went effective roughly around the same time, and he just 0:01:37.160 --> 0:01:39.720 denigrated the whole crypto space. 0:01:39.920 --> 0:01:41.840 It was just like I couldn't believe it. 0:01:42.800 --> 0:01:48.360 So anyway, it's with that kind of trepidation that institutions 0:01:48.400 --> 0:01:51.880 are going to have to, you know, work through and 0:01:51.920 --> 0:01:56.040 do all of their due diligence. However, I do think 0:01:56.120 --> 0:02:02.040 that a lot of investors have considered, you know, have 0:02:02.160 --> 0:02:07.240 been curious. And you'll see we've been from a marketing campaign. 0:02:07.320 --> 0:02:11.760 We've been using this tagline, aren't you a bit curious? 0:02:12.240 --> 0:02:15.800 There are so many people who are curious out there. 0:02:16.200 --> 0:02:20.040 Of course, a lot of our existing clients know all 0:02:20.040 --> 0:02:23.519 about bitcoin because we have owned it since twenty fifteen, 0:02:24.040 --> 0:02:27.240 but there are a lot of people who really have 0:02:27.320 --> 0:02:29.680 a hunger to know, and we can see that as 0:02:30.200 --> 0:02:33.639 more and more people read our research, tune into our 0:02:33.680 --> 0:02:38.520 Bitcoin brainstorm that we do with Rod and Bitcoin Park 0:02:38.680 --> 0:02:44.040 in Nashville, Tennessee. Read our Bitcoin monthlies and you know, 0:02:44.160 --> 0:02:47.720 read all we have to say about crypto and blogs 0:02:47.880 --> 0:02:52.560 and in our Brainstorm summary. So you know, we are 0:02:52.639 --> 0:02:55.919 getting all the curiosity. I think that's why we started. 0:02:56.280 --> 0:02:58.480 So we know a lot of people are waiting and 0:02:58.600 --> 0:03:03.680 believe it or not, Carol the curious extend to state 0:03:03.760 --> 0:03:09.639 pension funds and state treasurers we're talking to. So it's 0:03:09.680 --> 0:03:12.240 a really broad swap. 0:03:12.320 --> 0:03:13.079 Well catch people. 0:03:13.120 --> 0:03:15.400 And I do wonder what you think success will be 0:03:15.639 --> 0:03:17.600 out of the gate in terms of investment flows. 0:03:17.639 --> 0:03:21.080 What's your hope, what's your goal or estimate in terms 0:03:21.080 --> 0:03:22.799 of bringing investors into the fund. 0:03:23.960 --> 0:03:25.440 Well, it's very interesting. 0:03:25.560 --> 0:03:30.000 I was, we were I was speaking to Eric Beltunis, 0:03:30.639 --> 0:03:35.920 her colleague, and according to his estimates, there's there's four 0:03:35.960 --> 0:03:39.600 billion dollars waiting, you know, in the wings. And I 0:03:39.720 --> 0:03:43.120 said to him, well, from your lips to God's ears, 0:03:43.760 --> 0:03:45.240 that would be amazing. 0:03:45.480 --> 0:03:48.160 And you know, we hope we get our fair share 0:03:48.200 --> 0:03:48.440 of it. 0:03:48.480 --> 0:03:52.040 I mean, we've certainly, we've certainly done a lot to 0:03:52.240 --> 0:03:56.960 educate the community, and we experience a lot of gratitude 0:03:57.000 --> 0:04:01.560 for that too, from from from the innovation communities, including 0:04:01.600 --> 0:04:05.520 the bitcoin community. But also from the financial community, those 0:04:05.560 --> 0:04:09.360 who really are trying to find the next big idea. 0:04:09.480 --> 0:04:13.920 The old guard you know, basically throw out there all 0:04:14.040 --> 0:04:19.200 kinds of risks, and you know, some people call it fear, 0:04:19.400 --> 0:04:24.200 uncertainty and doubt. It happens every time, Carol, And I'm 0:04:24.200 --> 0:04:27.200 not saying it's a bad thing for people to really 0:04:27.200 --> 0:04:29.719 do their homework. They should do their homework, they should 0:04:29.839 --> 0:04:35.480 understand the risks. But this is par for the course 0:04:35.680 --> 0:04:40.479 in disruptive innovation, you know. And thank you, Carol. You 0:04:40.600 --> 0:04:44.360 gave us our first interview twenty fifteen when we were 0:04:44.400 --> 0:04:45.440 barely off the ground. 0:04:45.880 --> 0:04:47.440 You believed in us back then. 0:04:48.080 --> 0:04:52.279 And at the time, you remember, we were talking about Tesla. 0:04:52.520 --> 0:04:56.520 So fear uncertainty and doubt, not even about autonomous which 0:04:56.560 --> 0:04:57.560 is the next set. 0:04:57.360 --> 0:05:00.000 Of fears, but about evs. 0:05:00.120 --> 0:05:05.360 Wouldn't traditional auto manufacturers absolutely choke them to death? This 0:05:05.440 --> 0:05:09.080 is completely new DNA, and so it's the old DNA 0:05:09.600 --> 0:05:13.479 as the old car companies were the old DNA, you know, 0:05:14.200 --> 0:05:16.520 basically bashing the old new DNA. 0:05:16.680 --> 0:05:18.760 But truth wins out. 0:05:19.000 --> 0:05:22.880 Truth wins out, better, factor, cheaper, more productive. 0:05:24.240 --> 0:05:27.440 So yeah, you know, one thing I want to ask 0:05:27.480 --> 0:05:30.120 you is as like yourself all of us here in 0:05:30.160 --> 0:05:32.880 the newsroom, you know, watching just you know, new things 0:05:32.920 --> 0:05:37.080 come into the market over decades, and this is certainly interesting, 0:05:37.520 --> 0:05:40.120 but we are still wondering about the real case use. 0:05:40.240 --> 0:05:42.480 I mean that no one has really demonstrated a real 0:05:42.520 --> 0:05:45.360 life use case when it comes to bitcoin. 0:05:45.960 --> 0:05:47.440 We think about it all the time. 0:05:48.200 --> 0:05:52.320 Our first paper, white paper, was all about could bitcoin 0:05:52.640 --> 0:05:58.000 serve the three rolls of money means of exchange, store value, 0:05:58.120 --> 0:06:00.680 unit of account. Most people are thinking store of value 0:06:00.760 --> 0:06:04.440 right now. But I'm going to plug one of our 0:06:05.000 --> 0:06:09.360 bitcoin brainstorms if you want a mind blowing experience. And 0:06:09.880 --> 0:06:14.159 I am lucky to be able to ask questions on 0:06:14.200 --> 0:06:18.680 these brainstorms. But we had I think it was either 0:06:18.720 --> 0:06:22.960 our second or third brainstorm, which was about the convergence 0:06:23.000 --> 0:06:30.120 of bitcoin and artificial intelligence. And we had on people 0:06:30.560 --> 0:06:35.400 who are toiling to make all of this happen, one 0:06:35.440 --> 0:06:40.120 of them a roast beef from the Lightning Network or 0:06:40.200 --> 0:06:45.160 Lightning Labs. And I have to tell you what's going 0:06:45.200 --> 0:06:48.520 on in the emerging markets and the division of labor, 0:06:48.560 --> 0:06:53.280 the redefinition of labor a little bit like what happened 0:06:53.279 --> 0:06:56.320 to the gig economy here, but put that on steroids. 0:06:56.320 --> 0:07:00.960 Put that on steroids. It's already starting to happen. So 0:07:01.040 --> 0:07:06.839 I would highly, highly highly advise anyone interested in trying 0:07:06.839 --> 0:07:09.679 to figure out how the world is going to work 0:07:10.120 --> 0:07:13.800 listen to that Bitcoin brainstorm, because it's already starting to 0:07:13.840 --> 0:07:16.640 work in the emerging markets where they need it so desperately. 0:07:17.200 --> 0:07:21.120 Kathy, what's the advantage of the arc spot Bitcoin etf 0:07:21.160 --> 0:07:23.480 over the others who also got to prove today? You know, 0:07:23.520 --> 0:07:26.320 we've been, as you know, reporting a lot about this 0:07:26.400 --> 0:07:29.400 kind of war on fees. Again today you guys cutting 0:07:29.440 --> 0:07:33.120 your fee. So what's the advantage of going with you 0:07:33.320 --> 0:07:35.880 versus a black Rock or a Fidelity or some of 0:07:35.920 --> 0:07:37.320 the other players who are out there. 0:07:37.960 --> 0:07:44.240 So at least three advantages, Carol. First, we selected our 0:07:44.320 --> 0:07:50.760 partner very carefully. Twenty one Shares is the largest peer 0:07:50.800 --> 0:07:55.040 play crypto ETP provider in the world with two and 0:07:55.040 --> 0:07:57.280 a half billion dollars in assets. 0:07:58.160 --> 0:07:59.920 So what does that mean. 0:08:00.200 --> 0:08:05.000 That means with their forty funds before we launched with them, 0:08:05.040 --> 0:08:08.960 with their forty funds launched over five years, they have 0:08:09.320 --> 0:08:16.640 battle tested their infrastructure over booms and busts, over crises, over. 0:08:17.840 --> 0:08:19.720 Havings, over four kings. 0:08:20.040 --> 0:08:22.720 This is not normal for the ETF world, and we 0:08:22.800 --> 0:08:27.000 think the other ETF providers have a lot to learn, 0:08:27.760 --> 0:08:31.200 and I'm sure they are and they will as we 0:08:31.280 --> 0:08:36.360 go through these different kinds of experiences and the end 0:08:36.640 --> 0:08:40.080 they have economies of scale, believe it or not that 0:08:40.160 --> 0:08:43.720 have enabled us to drive down our fees. 0:08:43.800 --> 0:08:44.319 This way. 0:08:45.080 --> 0:08:48.559 We have more economies of scale because of the infrastructure 0:08:48.880 --> 0:08:50.559 that twenty one shares have built out. 0:08:50.600 --> 0:08:53.880 So that's the first. The second is research. 0:08:54.480 --> 0:08:58.640 Both of us give our research away for free. Our 0:08:58.679 --> 0:09:01.600 research started in two twenty fourteen. We were trying to 0:09:01.679 --> 0:09:07.360 understand the technology, and then when Chris Berniski took over, 0:09:08.720 --> 0:09:12.719 we fast forwarded into understanding bitcoin is money and then 0:09:12.920 --> 0:09:20.120 a new asset class. So we have been taking our clients' perspective. Clients, 0:09:20.120 --> 0:09:23.560 anyone who wants to read our research, this journey with 0:09:23.679 --> 0:09:28.040 us through deep, deep research, and it's getting deeper under 0:09:28.720 --> 0:09:30.480 Yassin's leadership. 0:09:30.559 --> 0:09:33.800 So that's the second. And then the third, and this 0:09:33.840 --> 0:09:34.920 one is not to. 0:09:34.800 --> 0:09:39.720 Be underestimated us, especially when it comes to the wirehouses 0:09:40.400 --> 0:09:47.400 like the Morgan Stanley's, the merri Lynch, the ubs Wells Fargo. 0:09:47.480 --> 0:09:56.760 Our salesforce, our distributor, Resolute, has had our ETF specials 0:09:57.160 --> 0:10:02.200 specialists have had to understand bitcoin since we struck our 0:10:02.200 --> 0:10:03.920 partnership in twenty sixteen. 0:10:04.280 --> 0:10:05.400 I had a funny story. 0:10:05.440 --> 0:10:11.080 Rebecca Burke, who's our most senior ETF specialist, joked with 0:10:11.120 --> 0:10:11.800 me the other day. 0:10:11.840 --> 0:10:14.400 She said, do you know when I was coming to 0:10:14.520 --> 0:10:19.760 interview to I looked up what is bitcoin? 0:10:20.200 --> 0:10:23.760 And we all laughed about it because now she not 0:10:23.920 --> 0:10:28.360 only understands it, she believes in it. Her conviction is 0:10:28.400 --> 0:10:31.680 how she's able to share that message and hold client's 0:10:31.800 --> 0:10:37.400 hands when bitcoin goes through some of the volatility that 0:10:37.440 --> 0:10:41.080 we see it go through regularly. So I think those three. 0:10:41.160 --> 0:10:46.000 We have the infrastructure and operations. We have the research, 0:10:46.160 --> 0:10:49.120 deep research, and we've been doing it longer than anyone else. 0:10:49.679 --> 0:10:54.240 And three we have a support team a sales team 0:10:54.760 --> 0:10:57.160 that I don't think anyone else out there can beat 0:10:57.280 --> 0:11:01.280 because we've been doing it together for seven years already, 0:11:01.520 --> 0:11:04.960 and the same for twenty one shares. More on the 0:11:05.000 --> 0:11:09.240 institutional side, they have been working with their clients for 0:11:09.360 --> 0:11:10.240 five years. 0:11:10.440 --> 0:11:12.560 I want to remind everybody we are, of course on 0:11:12.720 --> 0:11:14.840 X basis. I'm Carol Master of Bloomberg TV and Radio. 0:11:14.880 --> 0:11:18.319 I'm talking with Kathy Wood ourc invest founder CEO CIO 0:11:18.440 --> 0:11:22.319 on a day when the SEC approves bitcoin spot. 0:11:23.320 --> 0:11:26.880 You're hearing a conversation that Carol Masser is having with 0:11:27.160 --> 0:11:31.600 Kathy Wood, the CEO, CIO and founder of ARC Invest, 0:11:31.640 --> 0:11:35.079 talking all about the news today that the US regulators 0:11:35.120 --> 0:11:37.719 have approved an ETF that invests directly in bitcoin. Let's 0:11:37.760 --> 0:11:39.120 go back to that conversation. 0:11:38.760 --> 0:11:40.720 Listing some of the concerns that could happen. 0:11:41.559 --> 0:11:44.400 One of the things we wondered about Kathy, and I'm curious, 0:11:44.480 --> 0:11:46.080 you know, I'm thinking people who are listening to this, 0:11:46.400 --> 0:11:49.040 what is the recourse if a custodian who holds the 0:11:49.120 --> 0:11:51.680 keys to bitcoin loses them, you know, are they're hacked? 0:11:51.920 --> 0:11:53.439 What's the investor recourse? 0:11:56.240 --> 0:11:59.920 You know what we have with us on those calls 0:12:00.920 --> 0:12:03.840 of Felia and Haney, who are the founders of twenty 0:12:03.880 --> 0:12:08.400 one shares this you're talking about infrastructure operations. 0:12:08.600 --> 0:12:11.400 This is what I'm talking about. May I open up 0:12:11.480 --> 0:12:12.280 the floor to them? 0:12:12.400 --> 0:12:15.120 Aphelia, you want to come in on that. You are partnership. 0:12:15.320 --> 0:12:17.600 You know, it's a partnership with you at our absolutely 0:12:17.640 --> 0:12:19.400 what's your thought on that in terms of concerns that 0:12:19.520 --> 0:12:24.440 if something happens, if it is hacked, what's the investor recourse? 0:12:25.920 --> 0:12:28.839 So people are completely right to be concerned. This is 0:12:28.880 --> 0:12:32.000 the whole point. This is not like stocks and bonds. 0:12:32.040 --> 0:12:36.280 This requires a very different level of infrastructure, and so 0:12:36.440 --> 0:12:40.560 I think the first step in this discussion is very 0:12:40.679 --> 0:12:44.760 clearly prevention. You need to build as robust of a 0:12:44.880 --> 0:12:47.520 setup as possible, and you need to battle test it. 0:12:47.600 --> 0:12:51.800 So we've been battle testing our implementations with custodians, our 0:12:51.880 --> 0:12:54.600 technical infrastructure and the way in which we safeguard assets 0:12:55.960 --> 0:13:00.240 for five years. That's the entire point. You can't treat 0:13:00.280 --> 0:13:03.360 this like any other asset in the world. It's a 0:13:03.480 --> 0:13:05.400 it's a bearer asset, and it's held in a very 0:13:05.400 --> 0:13:07.720 technical way. So one of the things that we do 0:13:07.800 --> 0:13:11.840 is we obviously we use a concept called cold storage. 0:13:12.120 --> 0:13:15.360 That means is that these assets are held offline in 0:13:15.400 --> 0:13:19.400 wallets that have never been brought into the Internet, so 0:13:19.440 --> 0:13:22.400 you've never used them before, which means that they are 0:13:23.040 --> 0:13:25.559 the information related to the private key doesn't exist on 0:13:25.600 --> 0:13:28.240 the Internet. It's sort of the you can think of 0:13:28.240 --> 0:13:33.160 it as the diametric opposite of cloud storage. You essentially 0:13:33.280 --> 0:13:37.200 end up with a private key that's been charted, so 0:13:37.240 --> 0:13:39.320 it's been split into multiple pieces, and you need to 0:13:39.320 --> 0:13:42.800 bring multiple pieces online at the same time. Those pieces 0:13:42.800 --> 0:13:47.080 are held in vaults that are geographically distributed in order 0:13:47.120 --> 0:13:51.560 to control access to these products, and then we obviously 0:13:51.640 --> 0:13:54.440 have a really robust set of controls around that in 0:13:54.520 --> 0:13:58.959 terms of how you initiate transfers and how you actually 0:13:59.000 --> 0:14:03.040 move assets, because the most dangerous part of custody is 0:14:03.080 --> 0:14:07.480 actually very much the point at which you access it right. 0:14:07.720 --> 0:14:09.920 Very frequently, you know, when people say, oh, somebody took 0:14:09.960 --> 0:14:13.640 over my exchange account, the underlying wallet's not being hacked. 0:14:14.520 --> 0:14:17.959 What's actually happening is that their security and access protocols 0:14:18.000 --> 0:14:24.040 are being compromised in some way not dissimilar from certain 0:14:24.040 --> 0:14:26.920 social media issues which might have happened yesterday. And so 0:14:26.960 --> 0:14:30.640 it's really important how you actually secure these assets and 0:14:30.680 --> 0:14:32.720 why you need to go with a provider that's actually 0:14:32.760 --> 0:14:35.520 going has a track record of doing this and knows 0:14:35.560 --> 0:14:38.880 what they're doing through a variety of market conditions, because 0:14:38.880 --> 0:14:41.520 this is actually a very very technical space. 0:14:42.400 --> 0:14:45.440 I appreciate that Ophilias Knightder co founder president of twenty one. 0:14:45.360 --> 0:14:48.960 Years and of course offering up the Bitcoin ETF with 0:14:49.240 --> 0:14:52.240 our investments. Kathy One thing I also think is concerns 0:14:52.280 --> 0:14:56.160 about the price of bitcoin, the volatility. The last three 0:14:56.200 --> 0:14:58.320 full year returns were gains of three hundred and five 0:14:58.320 --> 0:15:01.800 percent twenty twenty up another sixty twenty one, followed by 0:15:01.800 --> 0:15:05.800 a loss of sixty four twenty twenty two. It's it's 0:15:05.800 --> 0:15:07.560 a market that can move around. We saw a little 0:15:07.560 --> 0:15:10.760 bit of a pop a bitcoin. Will volatility continue to 0:15:10.760 --> 0:15:13.280 be a risk or something that investors have to be 0:15:13.560 --> 0:15:15.920 very much aware of? And I'm curious, what is your 0:15:15.960 --> 0:15:18.120 price forecast at this point now that you've got the 0:15:18.160 --> 0:15:19.800 SEC approval for bitcoin? 0:15:20.320 --> 0:15:22.760 Sure, a couple of things. 0:15:22.840 --> 0:15:31.320 So the volatility, this again is natural for disruptive innovation 0:15:31.760 --> 0:15:36.680 that is really going taking market share in any market. 0:15:37.680 --> 0:15:41.760 So it's it's normal, Carol. You've seen from our funs 0:15:42.480 --> 0:15:50.320 how how disruptive innovation can be affected by exogitiveness factors 0:15:50.400 --> 0:15:54.440 that don't have anything to do with the share they're 0:15:54.520 --> 0:15:59.840 actually gaining. In fact, we know that during tough time, 0:16:00.200 --> 0:16:04.520 innovation gains more traction because it's better, cheaper, faster, more productive, 0:16:04.560 --> 0:16:08.080 and so forth. And this and you saw this during 0:16:08.120 --> 0:16:13.120 the regional bank crisis. The regional banks imploded, the KRRY 0:16:13.160 --> 0:16:18.360 index imploded, we saw bankruptcies and bitcoin shot up forty percent. 0:16:18.960 --> 0:16:21.240 Why it's a flight to safety. 0:16:21.720 --> 0:16:25.120 It is not it will not be a victim of 0:16:25.320 --> 0:16:29.120 counter of counterparty risk the way the banks will. So 0:16:29.960 --> 0:16:32.760 it's it's actually as time goes on and we go 0:16:33.040 --> 0:16:36.160 through more and more crises, and it seems the way 0:16:36.520 --> 0:16:40.880 government spending and monetary policies go, you know that that 0:16:41.000 --> 0:16:44.400 is not going to change. I think bitcoin is going 0:16:44.480 --> 0:16:48.600 to prove it's worth you know, one in terms of price, 0:16:48.720 --> 0:16:51.400 and then I'd like to just talk about fees because 0:16:51.400 --> 0:16:56.080 that's so context. Yes, so our price target are our 0:16:56.240 --> 0:17:01.520 bull price target, and I would say institution tuitional money 0:17:01.560 --> 0:17:07.639 moving in makes our bull price target more likely. Now 0:17:08.560 --> 0:17:12.600 is one point five million dollars in twenty thirty And 0:17:12.640 --> 0:17:16.160 you can see in Big Ideas, our big ideas from 0:17:16.400 --> 0:17:22.160 last year ar at ark dash Invest ourdash invest dot 0:17:22.200 --> 0:17:26.960 com how we the building blocks for that number, right, 0:17:27.040 --> 0:17:31.240 and institutional is one of the biggest reasons. In terms 0:17:31.280 --> 0:17:36.919 of fees, you'll notice twenty one that's a very special number. 0:17:36.960 --> 0:17:39.320 First of all, those are our partners twenty one year, 0:17:39.920 --> 0:17:45.120 but also twenty one million units, our twenty one million 0:17:45.280 --> 0:17:51.640 bitcoin will that is the total number that will be 0:17:51.800 --> 0:17:55.280 printed or minted right there. It will not go past 0:17:55.320 --> 0:17:58.680 twenty one million. This is called this is called a 0:17:58.920 --> 0:18:05.600 rules based monetary system. And so that fee we thought 0:18:05.680 --> 0:18:09.600 that was clever and we were going to start out 0:18:09.600 --> 0:18:11.600 with that one, but we knew what was going to happen, 0:18:11.680 --> 0:18:15.440 so we ended up there. But I want to bring 0:18:15.480 --> 0:18:19.320 back something I mentioned other before. We already have the 0:18:19.520 --> 0:18:24.359 economies of scale that others do not because of our 0:18:24.440 --> 0:18:28.199 partner twenty one shares, and so we've been able to 0:18:28.280 --> 0:18:31.479 negotiate down service provider fees in a way that we 0:18:31.520 --> 0:18:33.960 would not have been able to if we had done 0:18:34.040 --> 0:18:36.800 this by ourselves. And the other thing I want to 0:18:36.840 --> 0:18:43.280 emphasize we are not looking to maximize profits with this. 0:18:43.840 --> 0:18:47.520 We are looking at bitcoin as a public good. It 0:18:47.680 --> 0:18:53.840 is a financial super highway and we want to increase 0:18:54.640 --> 0:18:57.480 the access to bitcoin, and one of the ways to 0:18:57.560 --> 0:19:00.680 do that is this low fee product. We have other 0:19:00.880 --> 0:19:05.280 actively managed strategies where we can do more on the 0:19:05.320 --> 0:19:09.159 profitability side, right, It's not our objective here, Kathy. 0:19:09.280 --> 0:19:11.000 Just one last question and that I'm glad we got 0:19:11.000 --> 0:19:13.320 that thirty seconds is to wrap up. I mean, what 0:19:13.359 --> 0:19:16.080 does success look for you guys in a year from 0:19:16.080 --> 0:19:17.920 now with this particular product. 0:19:19.160 --> 0:19:22.680 Well, I think I think we will be a part 0:19:22.680 --> 0:19:26.119 of the success of bitcoin broadly. I think this opens 0:19:26.119 --> 0:19:29.960 a new chapter for bitcoin, and I would like to 0:19:29.960 --> 0:19:34.240 believe we would we will be within the top top 0:19:34.320 --> 0:19:40.880 three or two top providers of bitcoin through this Bitcoin ETF. 0:19:41.280 --> 0:19:43.320 All right, Just lastly, as you know, I like to 0:19:43.320 --> 0:19:48.360 squeeze and stuff fifteen seconds. Is there new cryptocurrent products 0:19:48.400 --> 0:19:50.960 ETFs that might come out from you guys as well 0:19:51.200 --> 0:19:52.000 in the near future. 0:19:52.200 --> 0:19:55.879 Well, we already put with twenty one shares out five 0:19:56.119 --> 0:19:59.880 futures products. Those are right strategy. One last thing I'd 0:19:59.880 --> 0:20:01.600 like like to I'd like to. 0:20:01.520 --> 0:20:04.760 Honor all of those who have toiled to make bitcoin 0:20:04.880 --> 0:20:07.159 happen through this ETF. 0:20:07.200 --> 0:20:10.800 I want to reassure the community, the bitcoin community. 0:20:10.840 --> 0:20:11.159 That. 0:20:12.520 --> 0:20:18.320 Self custody, self custody and an ETF are not mutually exclusive. 0:20:18.480 --> 0:20:23.679 We want to see this ecosystem continue to decentralize, but 0:20:23.800 --> 0:20:28.840 we want to bring billions of people into the ecosystem. 0:20:29.040 --> 0:20:33.480 And this is why twenty one basis points ARKB. 0:20:33.680 --> 0:20:37.000 Kathy, I so appreciate you including me on this platform. Kathy, 0:20:37.040 --> 0:20:40.119 would arcinvest founder CEO CIO. 0:20:40.400 --> 0:20:43.959 You're listening to the Bloomberg Business Week podcast. Catch us 0:20:44.000 --> 0:20:47.359 Live weekday afternoons from three to six Eastern Listen on 0:20:47.400 --> 0:20:51.440 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, 0:20:51.720 --> 0:21:03.280 or wants us Live on YouTube. 0:21:03.960 --> 0:21:06.399 All right, everybody, So a recent story from our pre 0:21:06.520 --> 0:21:08.800 and on here at Bloomberg on how the demise of 0:21:08.840 --> 0:21:13.000 San Francisco's has been greatly exaggerated. She talked about kind 0:21:13.000 --> 0:21:15.680 of walking around and things weren't as bad as everybody's 0:21:15.680 --> 0:21:17.760 been talking about. She also noted that in the twelve 0:21:17.800 --> 0:21:20.359 months ending July twenty twenty three, the city actually gained 0:21:20.359 --> 0:21:23.240 forty nine hundred residents after also seeing some slight growth 0:21:23.320 --> 0:21:25.359 in the prior year, according to some new data that 0:21:25.400 --> 0:21:25.680 was out. 0:21:25.880 --> 0:21:28.640 Yeah, some actually good data though, was you know, it's 0:21:28.680 --> 0:21:32.040 not just anecdotal, based on her experience there, believing in 0:21:32.040 --> 0:21:35.160 this city. Our next guest, who acquired the Transamerica Pyramid 0:21:35.200 --> 0:21:37.760 Center in San Francisco for six hundred and fifty million 0:21:37.800 --> 0:21:39.959 dollars at the height of the pandemic. Back with us. 0:21:39.960 --> 0:21:42.679 We got Michael Schave, chairman and CEO of Cheveaux, a 0:21:42.800 --> 0:21:46.480 real estate owner, investor, and developer of unique and innovative 0:21:46.600 --> 0:21:49.400 luxury and landmark properties. Michael, good to have you back 0:21:49.440 --> 0:21:51.359 with us. How are you, thank you? Happy New Year, 0:21:51.600 --> 0:21:54.600 Happy New Year. So let's take a step back and 0:21:54.680 --> 0:21:57.800 just talk about your history in San Francisco and how 0:21:57.840 --> 0:22:00.399 it came about that you found yourself at you know, 0:22:00.440 --> 0:22:04.000 the height of the pandemic acquiring such an iconic building 0:22:04.040 --> 0:22:04.520 in the city. 0:22:04.960 --> 0:22:08.240 You know, since my business is really focused on owning, 0:22:08.280 --> 0:22:11.960 operating super prime real estate, when the opportunity came about 0:22:11.960 --> 0:22:15.240 to acquire the Pyramid, it was not really a matter 0:22:15.280 --> 0:22:18.320 of time having these type of opportunities at once in 0:22:18.320 --> 0:22:21.000 a lifetime. I'm the second owner of the property, after 0:22:21.760 --> 0:22:24.159 the original owner of trans America, which built the building 0:22:24.160 --> 0:22:28.199 as their headquarters. But when you buy building for you know, 0:22:28.320 --> 0:22:30.720 fifty years or not for five years, you're not really 0:22:30.800 --> 0:22:32.720 concerned about the little bumps in the market. You know. 0:22:32.760 --> 0:22:35.440 Everybody sees black when when it's dark, and they see 0:22:35.520 --> 0:22:37.640 light when it's light, and that's really not the time 0:22:37.720 --> 0:22:41.440 to buy real estate. I took a quite a large bed, 0:22:41.560 --> 0:22:44.800 not only on San Francisco, San Francisco, Chicago, Miami, LA. 0:22:44.920 --> 0:22:47.080 All through COVID. We bought around five billion dollars of 0:22:47.119 --> 0:22:50.080 real estate through COVID and a lot of office buildings went. 0:22:50.560 --> 0:22:52.960 There was a notion that people are never going to 0:22:52.960 --> 0:22:55.359 come back to work. Obviously, that was another demise that 0:22:55.480 --> 0:22:56.320 was well, it was so. 0:22:56.440 --> 0:22:58.520 Confident that you thought, well, you know what, that's not 0:22:58.640 --> 0:23:00.800 exactly going to happen. Or is the case that you 0:23:00.880 --> 0:23:03.679 just bought top tier properties that you know that for 0:23:03.720 --> 0:23:06.000 the folks who were coming back to work, that's where 0:23:06.000 --> 0:23:07.000 they were going to want to be. 0:23:07.160 --> 0:23:09.480 I think you hit you hit both nails on the head. 0:23:09.480 --> 0:23:12.359 But the first notion is that that people are not 0:23:12.520 --> 0:23:15.760 meant to be alone. When you walk here to the 0:23:15.800 --> 0:23:18.920 Bloomberg's offices, I mean pretty cool stuff, right, cool stuff, 0:23:18.920 --> 0:23:21.240 and everybody's together, and everybody's sitting together and want to 0:23:21.240 --> 0:23:23.840 be together. The idea of working from home in your 0:23:23.840 --> 0:23:27.639 pajamas on zoom is not sustainable, and that was that 0:23:27.720 --> 0:23:32.000 was my initial bet. The San Francisco idea was again 0:23:32.320 --> 0:23:35.119 a city that took a big hit through COVID because 0:23:35.119 --> 0:23:38.360 of you know, tech issues that these are the first 0:23:38.440 --> 0:23:41.040 companies that work from home. But in San Francisco is 0:23:41.119 --> 0:23:45.520 a resilient city. It's a city that constantly reinvents itself 0:23:45.520 --> 0:23:47.760 and the Boom and AI right now is unbelievable. 0:23:47.800 --> 0:23:49.240 It's one you know, one thing I was gonna think about, 0:23:49.280 --> 0:23:50.720 tim because I know we've had a lot of conversations 0:23:50.760 --> 0:23:53.160 about work from home. If you talk to a lot 0:23:53.200 --> 0:23:56.800 of the West Coast tech companies, they're like, we were 0:23:56.800 --> 0:23:59.600 already working from home. We were already flexible with how 0:23:59.640 --> 0:24:03.000 we were. So I almost wonder that maybe the impact 0:24:03.040 --> 0:24:05.639 wasn't going to be as strong. I don't know. 0:24:06.440 --> 0:24:09.320 Again, there was there was a mental impact because it 0:24:09.359 --> 0:24:11.159 was it became not just a tech thing. It was 0:24:11.840 --> 0:24:14.520 there was a there was a conversation that offices is 0:24:14.560 --> 0:24:18.200 absolute right, and and that obviously is was and ended 0:24:18.240 --> 0:24:20.960