WEBVTT - Bitcoin Enters Prime Time 0:00:13.480 --> 0:00:17.280 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.440 --> 0:00:19.720 My name is Mike Reagan. I'm a senior editor at 0:00:19.760 --> 0:00:23.639 Bloomberg Tumble Down the Park across asset reporter at Bloomberg. 0:00:24.560 --> 0:00:28.000 This week on the show, Well it finally happened. Bitcoin 0:00:28.080 --> 0:00:30.960 exchange traded fun hit the market this week, and the 0:00:31.040 --> 0:00:33.839 excitement was enough to push the biggest cryptocurrency to a 0:00:33.880 --> 0:00:37.240 new record high, also causing vill Donna to wear her 0:00:37.280 --> 0:00:39.800 fingertips off with all the writing shod to do about it. 0:00:40.280 --> 0:00:43.680 But anyway, what does this milestone mean for crypto and 0:00:44.200 --> 0:00:46.720 what should we expect next? We'll get into it with 0:00:46.760 --> 0:00:49.640 the head of business development at a major digital asset 0:00:49.720 --> 0:00:52.680 exchange who previously spent about two decades in the et 0:00:52.840 --> 0:00:56.160 F industry. But first, Bill Donna, I need to catch 0:00:56.240 --> 0:00:59.560 up on your vacation last week. Uh, listeners will be 0:00:59.640 --> 0:01:02.320 very interest didn't this because Dona spent the week in 0:01:02.400 --> 0:01:06.039 Boca Raton, Florida, and I believe visited our old pal 0:01:06.240 --> 0:01:10.800 Sarah Ponzac, the former co host of the show, Danna. 0:01:11.000 --> 0:01:15.000 I've heard a rumor that Sarah is cruising around Boca 0:01:15.280 --> 0:01:19.120 in like a white Lexus with cold seats. Now we 0:01:19.200 --> 0:01:21.560 in the Northeast. We have heated seats to keep our 0:01:21.600 --> 0:01:25.280 butts warm. Apparently Sarah needs cold seats in Florida. I've 0:01:25.319 --> 0:01:28.200 never heard of such a thing. Is that Is that true? Yeah, 0:01:28.240 --> 0:01:30.679 it's true. I have no idea where that you've got 0:01:30.760 --> 0:01:35.039 this rumor from. I mean, but it's true, and I 0:01:35.080 --> 0:01:38.039 had never heard of it before. Everybody in Florida basically, 0:01:38.080 --> 0:01:41.880 like of Floridians have white cars because of the heat. 0:01:42.400 --> 0:01:46.319 And I guess cooling seats are the next, you know, 0:01:46.440 --> 0:01:49.160 top feature, and Sarah has it. Did you get to 0:01:49.160 --> 0:01:52.640 try out the cooling seat that Sheila is samp I didn't. Actually, 0:01:52.680 --> 0:01:54.320 this is fun. I sat in her back seat with 0:01:54.360 --> 0:01:58.680 her doggie. So yeah, she has a cute little pup. 0:01:59.000 --> 0:02:03.720 She has an adorable Sarah. Anyway, Uh, how to tell 0:02:03.760 --> 0:02:05.600 us about this guest this week. I'm very excited for 0:02:05.640 --> 0:02:07.920 this guest. I think we got a lot to talk about. 0:02:08.480 --> 0:02:10.680 He's the most perfect guest for this week. I'm so 0:02:10.680 --> 0:02:13.120 happy he can join us. It's Dave Abner. He's the 0:02:13.160 --> 0:02:16.880 global head of business development at crypto Exchange Gemini and 0:02:16.960 --> 0:02:20.520 welcome to the podcast. Hi, thanks for having me filled 0:02:20.520 --> 0:02:23.119 out and might great to meet you, well, I want 0:02:23.120 --> 0:02:25.200 to start off with just a little bit about you 0:02:25.280 --> 0:02:27.720 and your career. I know you and I have chatted before, 0:02:27.760 --> 0:02:31.200 but just to give our audience a view of you know, 0:02:31.560 --> 0:02:33.720 your career and what you've done in your life, because 0:02:33.720 --> 0:02:37.120 you do straddle this et F and crypto world very 0:02:37.200 --> 0:02:38.520 very well, so if you can just give us a 0:02:38.560 --> 0:02:41.720 sense of some of the work you've done. I actually 0:02:41.800 --> 0:02:46.600 spent two decades in the e t F world before 0:02:46.600 --> 0:02:49.640 I came to the crypto world. And what's funny is 0:02:49.639 --> 0:02:51.679 that I actually got into e t f s from 0:02:51.720 --> 0:02:54.960 closed end funds. So I was a closed end fund 0:02:55.080 --> 0:02:58.040 trader and I ran the closed end fund trading business 0:02:58.040 --> 0:03:01.320 at bear Stearns in the nineties. And when e t 0:03:01.520 --> 0:03:03.880 f s came onto the scene in the late nineties, 0:03:04.360 --> 0:03:07.480 they were funds, they traded on exchange. People didn't really 0:03:07.480 --> 0:03:09.480 know what else to do with them, so they naturally 0:03:09.520 --> 0:03:12.240 called the close down fund trader. First. That was me, 0:03:12.680 --> 0:03:17.560 and that instantly became pretty you know, maybe not instantly, 0:03:17.600 --> 0:03:21.680 but slowly became my next venture. Right. I realized the 0:03:21.680 --> 0:03:26.200 difference early between trying to arbitrage closed down funds and 0:03:26.400 --> 0:03:29.959 saw how readily available that was in the e t 0:03:30.120 --> 0:03:32.839 F world. ETF world was growing, although it was very 0:03:32.880 --> 0:03:37.280 small back then, and I progressed into that and I 0:03:37.280 --> 0:03:39.840 I was a trader and I ran bear Stearns Global 0:03:40.080 --> 0:03:44.240 e t F business for about eight years. Then I 0:03:44.280 --> 0:03:47.120 went to BMP Paraba to build an et F trading business, 0:03:47.720 --> 0:03:51.720 and then I had an opportunity to switch sides and 0:03:51.760 --> 0:03:54.840 I did. I switched. I joined wizdarm Triasset Management in 0:03:54.880 --> 0:03:58.240 two thousand eight April first, two thousand eight and auspicious 0:03:58.280 --> 0:04:00.880 state to join any firm because it was like the 0:04:00.880 --> 0:04:04.560 beginning of the end really um and I spent ten 0:04:04.640 --> 0:04:08.520 years or eleven years building up Wisdom Trees et F 0:04:08.720 --> 0:04:12.800 business and then at the end of that the last 0:04:12.840 --> 0:04:17.640 two years we were getting into crypto as a firm 0:04:17.680 --> 0:04:19.839 and I was getting deeper into it. We ended up 0:04:19.920 --> 0:04:22.840 launching the first bitcoin e E t P in Sweden 0:04:23.360 --> 0:04:28.320 in and then that was my my entry into the space. 0:04:28.920 --> 0:04:32.080 And then when I wanted to go really full full bore, 0:04:32.240 --> 0:04:35.320 I joined Gemini about a year ago. So I see 0:04:35.360 --> 0:04:36.839 a lot and we'll talk about this. I see a 0:04:36.839 --> 0:04:39.760 lot of parallels between the growth of the ETF industry 0:04:39.960 --> 0:04:42.080 and where we are with crypto today. So I'm excited 0:04:42.160 --> 0:04:45.240 to talk about it. That's when you went full laser eye. 0:04:45.320 --> 0:04:49.080 I guess right, yeah, I haven't. I haven't adjusted my 0:04:49.160 --> 0:04:52.040 Twitter feed to be laser eyed. I'm still on my 0:04:52.040 --> 0:04:55.360 my My pandemic puppy is my is my picture there. 0:04:55.880 --> 0:04:59.240 I haven't modified it yet. But you know what that 0:04:59.360 --> 0:05:03.159 I'm curious about, giving all your experience in the business 0:05:03.200 --> 0:05:07.520 and wisdom Tree obviously specializing in some sort of innovative 0:05:07.960 --> 0:05:10.320 e t f s, you know, the hedged European equities, 0:05:10.320 --> 0:05:12.120 that sort of thing, you know, kind of pushing the 0:05:12.200 --> 0:05:14.960 envelope there in some of the strategies. To me, the 0:05:15.000 --> 0:05:17.920 big question is, all right, when the I guess it 0:05:18.000 --> 0:05:20.680 was the Winklevoss twins who originally sort of floated the 0:05:20.720 --> 0:05:23.400 idea of a bitcoin e t F. However many years ago, 0:05:23.920 --> 0:05:26.960 you know, and back then, um, it made a lot 0:05:26.960 --> 0:05:28.720 of sense to want to put it into an et 0:05:28.800 --> 0:05:33.640 F because buying and sort of providing the custody of 0:05:33.760 --> 0:05:36.159 bitcoin was a lot trickier back then. You know, the 0:05:36.200 --> 0:05:39.960 famous amount Cox hack, you know, and and bitcoin while 0:05:40.000 --> 0:05:43.240 it's we're being compromised left and right. Now we've gotten 0:05:43.240 --> 0:05:46.000 to the phase where you know, your firm, Gemini, coin Base, 0:05:46.440 --> 0:05:51.240 all the other exchanges are available to purchase bitcoin. You 0:05:51.440 --> 0:05:54.480 can even buy it on Venmo and PayPal. You can 0:05:54.480 --> 0:05:57.040 buy it at the coin star machines at the supermar market. 0:05:57.480 --> 0:05:59.840 So at my point, bit it's just very easy and 0:06:00.760 --> 0:06:04.120 presumably a lot more secure to buy and hold bitcoin 0:06:04.160 --> 0:06:07.000 than it was years ago. And so I wonder how 0:06:07.160 --> 0:06:14.000 much demand is uncorked by uh bitcoin et s. I mean, 0:06:14.040 --> 0:06:16.159 obviously this one is just the futures et F, but 0:06:16.440 --> 0:06:19.160 presumably if we get a spot you know et F 0:06:19.279 --> 0:06:23.440 as well. Um, how much demand uh sort of uncorked 0:06:23.600 --> 0:06:26.279 by being able to buy it as an ETF now? 0:06:26.800 --> 0:06:30.239 Or is it you know, going to cannibalize the demand 0:06:30.279 --> 0:06:33.359 that's already in place in the traditional places to buy it. 0:06:33.440 --> 0:06:35.600 And the reason I ask is, I'm wondering, No, we've 0:06:35.640 --> 0:06:38.200 obviously seen this, this pop in the price of bitcoin 0:06:38.720 --> 0:06:41.680 coinciding with with the launch of the CTF, and I'm wondering, 0:06:41.680 --> 0:06:45.080 how you know sustainable that is to sort of be 0:06:45.160 --> 0:06:49.760 this this new spiggot of demand for bitcoin or whether 0:06:49.800 --> 0:06:52.640 we sort of cannibalize demand that's already there. That's a 0:06:52.800 --> 0:06:59.960 that's a new record for you for length of question Mike, Yeah, 0:06:59.520 --> 0:07:03.680 that's my thing. Okay, so I'll just talk for the 0:07:03.720 --> 0:07:06.720 rest of the podcast. Right, try to pull that all 0:07:06.720 --> 0:07:12.640 apart and answer. Let's go back to the beginning from me, right, 0:07:13.000 --> 0:07:17.440 the um. We really have to give the Wigglebox Twins 0:07:17.440 --> 0:07:19.440 a lot of credit here. They were so far ahead 0:07:19.440 --> 0:07:23.120 of the curve with their filing in and I think 0:07:23.120 --> 0:07:27.640 it was when their first filed for bitcoin e t 0:07:27.800 --> 0:07:33.440 F that like nobody even really thought that would Like 0:07:33.560 --> 0:07:35.360 they were like, what what you know? Most of the 0:07:35.360 --> 0:07:38.880 e t F industry, all of the investment community was like, 0:07:38.920 --> 0:07:41.640 what what's the bitcoin e tf Nobody knew anything that 0:07:41.640 --> 0:07:44.000 they what they were even talking about? Right, they were 0:07:44.080 --> 0:07:50.840 denied time and time again, uh from the SEC, right, 0:07:50.920 --> 0:07:54.320 like four or five times they were denied. Now, let's 0:07:54.320 --> 0:07:56.480 think about that. What were they trying to do, right, 0:07:56.560 --> 0:08:01.680 They were trying to make bitcoin investable for people. They 0:08:01.800 --> 0:08:04.760 kept getting denied with their e t F and so 0:08:04.800 --> 0:08:06.800 they actually what they do. They turned around and they 0:08:06.800 --> 0:08:09.640 went out and built Gemini. Gemini didn't exist when they 0:08:09.640 --> 0:08:13.640 first filed. So they said, Okay, we think this is 0:08:13.640 --> 0:08:17.280 going to be a valuable thing for the American public, 0:08:17.320 --> 0:08:20.000 for the global public. We think this is the future 0:08:20.000 --> 0:08:25.080 of financial products, and we think this should be accessible. 0:08:25.320 --> 0:08:28.000 So they went out and they built Gemini, which is like, 0:08:28.160 --> 0:08:31.320 you know, the most highly regulated, probably the most secure 0:08:31.440 --> 0:08:36.080 storage facility for bitcoin and other cryptocurrencies on the planet today. 0:08:36.640 --> 0:08:39.720 And it's actually easy to use via the exchange and 0:08:39.840 --> 0:08:43.319 via the app, and it's it's expanding as a global 0:08:43.320 --> 0:08:49.120 crypto platform. Right. Um, you're you're so the if I 0:08:49.160 --> 0:08:51.600 take all of your sort of questions and I boil 0:08:51.720 --> 0:08:55.000 them down to do we really need an e t 0:08:55.240 --> 0:09:01.440 F today, the answer is, in general, for most investors, no, 0:09:01.679 --> 0:09:05.040 it's really easy to open a Gemini account and get 0:09:05.080 --> 0:09:08.080 access to cryptocurrencies or to open it, you know, like 0:09:08.120 --> 0:09:10.880 you said, use other any of these other venues to 0:09:10.960 --> 0:09:13.960 get through. But there are and what I've learned in 0:09:14.000 --> 0:09:19.199 the industry, there are two things. Um, money moves really 0:09:19.320 --> 0:09:25.240 slowly in this industry. People don't change investment products, you know, readily. Right, 0:09:25.320 --> 0:09:27.719 So if you think about like we talked about the 0:09:27.800 --> 0:09:31.040 growth of the TF industry, it's it's twenty years later 0:09:31.120 --> 0:09:35.320 and they're at ten trillion dollars. The last sort of 0:09:35.400 --> 0:09:38.640 fur to six trillion, or you know, the real money 0:09:38.679 --> 0:09:41.840 moved in the last five to seven years. It took 0:09:41.920 --> 0:09:46.240 fifteen years for people to even think about putting ETFs 0:09:46.240 --> 0:09:52.240 in their portfolios right and using new products, launching going 0:09:52.240 --> 0:09:56.280 into new platforms to access cryptocurrencies is hard for a 0:09:56.280 --> 0:10:01.360 lot of people. So accessing bitcoin via and e t 0:10:01.559 --> 0:10:05.800 F is a great sort of gateway for people to 0:10:05.800 --> 0:10:09.440 get their feet wet and start investing in the cryptocurrency arena. 0:10:10.000 --> 0:10:13.320 Now there's a big problem with that actually, because it 0:10:13.480 --> 0:10:17.440 took you know, we're talking about eight years for the 0:10:17.559 --> 0:10:21.600 SEC to approve a Bitcoin futures et F. And that's 0:10:21.679 --> 0:10:27.040 basically like you've got this castle full of cryptocurrencies. They 0:10:27.080 --> 0:10:29.360 just open the gate, but they actually won't even let 0:10:29.400 --> 0:10:31.800 you into the rest. You can you can stand at 0:10:31.800 --> 0:10:34.640 the gate, which is what bitcoin is. It's the gateway, 0:10:34.840 --> 0:10:37.400 and but you can't go anywhere else. And and it's 0:10:37.520 --> 0:10:40.640 unclear how long it's going to take to see other products. 0:10:40.960 --> 0:10:43.040 So what I really think is when you talk about 0:10:43.600 --> 0:10:46.199 is there going to be a news figat of demand, yes, 0:10:46.480 --> 0:10:49.000 I think, uh, the doors open for a whole new 0:10:49.040 --> 0:10:51.240 swath of investors who might not want to go directly 0:10:51.280 --> 0:10:54.199 to a platform, who want to use bitcoin in a 0:10:54.480 --> 0:10:59.600 specific account or alongside of portfolio et F s UM. 0:10:59.679 --> 0:11:02.719 So there is new demand coming, but it's going to 0:11:02.760 --> 0:11:05.600 be limited because what they're gonna do, what they're gonna 0:11:05.600 --> 0:11:09.400 want is broader exposure. So they're gonna probably use the 0:11:09.440 --> 0:11:11.440 e t F and then say oh I want more, 0:11:12.080 --> 0:11:15.280 and then pursue other ways to get access to the 0:11:15.320 --> 0:11:18.000 wider cook the landscape. That's where I think about it. 0:11:19.040 --> 0:11:20.920 I'm going to pull a mic and ask a two 0:11:20.920 --> 0:11:24.120 part question, and I get the right to do that 0:11:24.160 --> 0:11:27.600 because I never do that, Mike, But to two parts 0:11:27.640 --> 0:11:35.440 that is amateurs your part, Yeah, all right, Yeah, that 0:11:35.520 --> 0:11:38.600 was great, But I wanted to ask you. A lot 0:11:38.600 --> 0:11:43.520 of people have called the launch of the Futures Back 0:11:43.600 --> 0:11:46.200 TTF fund a watershed moment, and then I also have 0:11:46.280 --> 0:11:49.240 people who call me and say it's not a watershed moment, 0:11:49.440 --> 0:11:52.000 don't call it that. So I'm wondering where you would 0:11:52.000 --> 0:11:55.200 fall in in that description. And then the second part 0:11:55.280 --> 0:11:58.040 is you you were talking about you know, this opens 0:11:58.360 --> 0:12:01.200 it up to a whole new base of investors, So 0:12:01.240 --> 0:12:04.560 I'm wondering who who that basis? Is it for the 0:12:04.760 --> 0:12:07.960 retail crowd? Our retail investors do anticipate will they be 0:12:08.000 --> 0:12:13.160 buying the e t F. Okay, Uh, great questions, two 0:12:13.200 --> 0:12:15.800 parts I can manage. I'll actually probably remember both. So 0:12:15.880 --> 0:12:23.240 let's start with watershed moment um. It is a watershed moment. Uh, 0:12:23.400 --> 0:12:29.840 this is unique, right, This is US regulators acknowledging bitcoin 0:12:30.080 --> 0:12:34.960 and saying this is an investable asset. We will approve 0:12:35.000 --> 0:12:37.040 a product to make it available for you. Right, Like 0:12:37.120 --> 0:12:39.880 you know, there have been funds available, they've been they've 0:12:39.920 --> 0:12:43.400 been unregulated, they haven't worked like an e t F. 0:12:43.520 --> 0:12:46.200 This is a fund that looks like a lot of 0:12:46.240 --> 0:12:50.360 what investors are using in their portfolios today, and that's 0:12:50.400 --> 0:12:54.080 helpful for them. So I think it's a watershed moment 0:12:54.080 --> 0:12:56.959 in that sense. Right. I think this is that that 0:12:57.080 --> 0:13:00.520 acceptance is important because I think it will lead to 0:13:01.400 --> 0:13:05.319 greater regulation on the industry going forward. It is, and 0:13:05.480 --> 0:13:07.600 like I said before, it's sort of this is the 0:13:07.640 --> 0:13:12.560 beginning of an entirely new segment of investable assets and 0:13:12.840 --> 0:13:17.800 the new investors. There is absolutely a crop of investors. 0:13:18.280 --> 0:13:20.599 I don't call them retail I actually don't like the 0:13:20.679 --> 0:13:23.719 name retail right. Direct investors are one thing, it's we 0:13:23.720 --> 0:13:26.400 should get away from using the term retail. Right. Direct 0:13:26.440 --> 0:13:30.800 investors are already buying bitcoin in the robin Hood accounts, 0:13:30.840 --> 0:13:34.040 They're buying it in PayPal, they're buying it on Gemini 0:13:34.120 --> 0:13:37.360 in coin based direct investors are not going to be 0:13:37.400 --> 0:13:40.920 the new investors to bitcoin because they actually realize they 0:13:40.920 --> 0:13:44.840 don't need to pay basis points or two hundred basis 0:13:44.840 --> 0:13:48.320 points to on bitcoin directly. They can do it um. 0:13:48.360 --> 0:13:52.240 The new set of investors, though, is the huge swath 0:13:52.360 --> 0:13:58.520 of money in advised accounts in the US. Advisors control 0:13:59.200 --> 0:14:02.520 really most of the money in this country, and they 0:14:02.640 --> 0:14:06.880 run generally now that ten jillion dollars is et F 0:14:07.040 --> 0:14:12.360 portfolios that they are building for investors, and those investors 0:14:12.400 --> 0:14:14.720 are not going out and selecting their own ets. They're 0:14:14.760 --> 0:14:20.080 generally advisor lead and advisors who were building those portfolios 0:14:20.320 --> 0:14:24.560 are now going to incorporate bitcoin. Many of them are 0:14:24.640 --> 0:14:27.920 using s m A s and have built procedures already 0:14:28.000 --> 0:14:30.760 to get to bitcoint But for a huge swath of 0:14:30.800 --> 0:14:34.040 them who really couldn't be bothered or didn't have the time, 0:14:34.640 --> 0:14:38.560 or we're waiting for the regulatory approval, this will be 0:14:39.080 --> 0:14:42.040 a new path for them to say five percent of 0:14:42.080 --> 0:14:44.800 our portfolio should be in crypto assets. It's the best 0:14:44.800 --> 0:14:47.720 performing asset over the last you know, one, three, five, 0:14:47.960 --> 0:14:51.080 and ten year periods, we need to incorporate a piece 0:14:51.080 --> 0:14:53.400 of them. So I think there is this new swap 0:14:53.440 --> 0:15:06.800 of investors that will commit you know, Dave with UH 0:15:07.040 --> 0:15:10.760 ETFs that hold futures. There's always this issue of the 0:15:10.920 --> 0:15:13.160 role you know, and the cost of rolling in the 0:15:14.000 --> 0:15:17.440 futures further out the curve um. Especially when you look 0:15:17.480 --> 0:15:22.040 at the bitcoin futures curve, it's in contango upper least sloping, 0:15:22.120 --> 0:15:25.360 meaning the prices in the further out months or or 0:15:25.440 --> 0:15:29.680 higher than the much higher than the UH near months um. 0:15:29.920 --> 0:15:33.520 And it even looks like the CTF is gonna sort 0:15:33.520 --> 0:15:36.360 of bump up against its limits on how many futures 0:15:36.360 --> 0:15:39.480 that can hold at the you know, the CFTC rules. 0:15:40.600 --> 0:15:42.800 All this is kind of leading people to worry that 0:15:42.800 --> 0:15:45.520 that this thing is not going to track UH at 0:15:45.600 --> 0:15:48.560 least spot the price of spot bitcoin as closely as 0:15:48.680 --> 0:15:52.040 as maybe uh, you know, it would be hoped what 0:15:52.200 --> 0:15:54.960 what you're thinking on that as far as the sort 0:15:54.960 --> 0:15:58.080 of the perils of a futures based et FU when 0:15:58.080 --> 0:16:03.960 it comes to tracking the spot asset price closely. You 0:16:03.960 --> 0:16:08.440 you you you you lead the question with the answer 0:16:08.480 --> 0:16:12.160 I think really right, like those are you know, future 0:16:12.200 --> 0:16:14.400 space ttfs are not new. There are a lot of 0:16:14.400 --> 0:16:16.720 them trading in the market. We know exactly how they trade. 0:16:16.760 --> 0:16:19.480 We know how futures work. They do trade at contango, 0:16:19.520 --> 0:16:24.480 they trade in sometimes intergradation. There are limits to how many, 0:16:24.600 --> 0:16:28.320 so quick growth can be can be detrimental potentially to 0:16:28.360 --> 0:16:33.080 the funds. These are all things that UM come into 0:16:33.080 --> 0:16:37.360 play when you are trading a future spaceed TTF. So 0:16:38.000 --> 0:16:39.720 if I go, if I put my e t F 0:16:40.200 --> 0:16:42.200 had on. When we were at the et F Fisher room, 0:16:42.240 --> 0:16:44.400 we were explaining to people, you know what you should 0:16:44.400 --> 0:16:46.160 be thinking about when you're buying e t F s. 0:16:46.480 --> 0:16:50.160 Structure mattered right. For years, Black Rock and all the 0:16:50.200 --> 0:16:54.280 other issuers were spent, you know, millions of dollars in 0:16:54.360 --> 0:16:58.280 marketing explaining to investors how structure matters a lot. This 0:16:58.360 --> 0:17:00.440 is what you need to be aware of, aware of 0:17:00.560 --> 0:17:03.120 if it's a future space TTF, if it's a physical 0:17:03.120 --> 0:17:08.720 et F. These things are incredibly important in understanding what 0:17:08.880 --> 0:17:13.080 your future potential returns will be. And this is all 0:17:13.119 --> 0:17:17.399 about UM. You know, it's funny right the SEC is 0:17:17.440 --> 0:17:22.000 talking about they went this path focused on investor protections, 0:17:22.359 --> 0:17:25.520 but what do investors really want. They really want an 0:17:25.520 --> 0:17:29.119 experience where they can read the label of an e 0:17:29.200 --> 0:17:31.879 t F and and I don't mean the small print 0:17:31.920 --> 0:17:33.639 on the label because they're never going to read that. 0:17:33.680 --> 0:17:36.879 They want to read the title and understand what they're buying. 0:17:37.600 --> 0:17:40.919 And they want to get returns that look like the 0:17:41.000 --> 0:17:43.840 underlying asset that they're trying to get. So when you 0:17:43.880 --> 0:17:46.480 buy bitcoin, if you look at your e t F 0:17:46.560 --> 0:17:49.480 returns on a Bitcoin futures et F, they could be 0:17:49.840 --> 0:17:52.240 potentially very different. And I look at the gray scale 0:17:52.240 --> 0:17:54.200 funds is a good example of this. Right, the only 0:17:54.240 --> 0:17:59.320 way to access bitcoin in a fund before the futures 0:17:59.440 --> 0:18:01.960 et F and US has been the gray scale fund. 0:18:02.280 --> 0:18:05.040 The returns of bitcoin and the gray scale bitcoint fund 0:18:05.280 --> 0:18:11.439 are extremely different, like hundreds of percent different, right, you know, 0:18:11.600 --> 0:18:15.879 hundreds of basis points different. Excuse me, Right, So I 0:18:15.920 --> 0:18:19.479 don't think the returns between a future space ETF and 0:18:19.480 --> 0:18:23.720 bitcoin will be as dramatically different, but there is the 0:18:23.760 --> 0:18:28.000 potential for those two things to diverge. And that means 0:18:28.320 --> 0:18:30.920 there is the potential one day for an investor to 0:18:32.000 --> 0:18:34.760 look at think they bought a bitcoin at et F, 0:18:34.840 --> 0:18:37.760 look at the price of bitcoining and it's change and performance, 0:18:38.119 --> 0:18:40.159 and look at their e t F and see two 0:18:40.200 --> 0:18:43.760 different numbers in the performance. That's the problem, right, that's 0:18:43.760 --> 0:18:46.000 the whole risk with this, and that's what we try 0:18:46.040 --> 0:18:49.960 and avoid in building good investment products. And look, sometimes 0:18:50.000 --> 0:18:52.560 you're just subject to the regulatory environment. And this is 0:18:52.800 --> 0:18:55.320 the best that an investor can get today based on 0:18:55.359 --> 0:18:58.119 the regulations. But you know, they could have gone a 0:18:58.160 --> 0:19:02.000 lot further. In my month, argument for a physically backed 0:19:02.040 --> 0:19:04.720 bitcoin e t F and if we were to see one, 0:19:04.880 --> 0:19:08.480 what are the propects when potentially might we see one 0:19:08.720 --> 0:19:14.360 approved by the SEC? The best argument is um that 0:19:15.720 --> 0:19:21.440 the like all of the all of the underlining mechanics, 0:19:21.560 --> 0:19:30.600 underlying mechanics of custodying bitcoin safely, providing you know, security 0:19:30.800 --> 0:19:37.480 and um execution and clearing those trades, everything already works 0:19:37.880 --> 0:19:40.479 and has been proven to work for a bitcoin e TF. 0:19:40.840 --> 0:19:44.480 Gemini is actually the largest provider of infrastructure to bitcoin 0:19:44.600 --> 0:19:47.840 e t F providers on a global basis. If you 0:19:47.880 --> 0:19:52.320 look at our nearest neighbor, Canada, we are the infrastructure 0:19:52.400 --> 0:19:55.440 of all of the Canadian bitcoin and the theory ets. 0:19:55.920 --> 0:19:58.440 So there are you know, there's a bunch of products 0:19:58.480 --> 0:20:02.120 up there. They're doing really well, and they've already proven 0:20:02.160 --> 0:20:05.960 the model that a physical bitcoin et F works. So 0:20:06.440 --> 0:20:09.879 it's very clear to me that I think that's the 0:20:09.920 --> 0:20:12.280 next step. And you asked about like when might we 0:20:12.400 --> 0:20:16.040 see that. I saw that gray scale file to convert 0:20:16.119 --> 0:20:19.639 to an e t F. I mean, no brainer, that 0:20:19.680 --> 0:20:23.680 should happen immediately. There's no reason why the SEC shouldn't 0:20:23.720 --> 0:20:27.480 follow up disapproval with a physical bitcoin e t F 0:20:27.560 --> 0:20:31.199 approval in the very near future. UM. So you know, 0:20:31.520 --> 0:20:33.800 I would hope you might see something by the end 0:20:33.840 --> 0:20:37.000 of this year, even we have two months left. UM. 0:20:37.040 --> 0:20:39.639 But if I were being more conservative, I would say 0:20:39.840 --> 0:20:44.400 the first quarter, excuse me, next year, we would see 0:20:44.400 --> 0:20:47.520 some approval. Beyond that, I mean, it's just getting ridiculous. 0:20:47.520 --> 0:20:50.080 There's no reason to not approve this at this point. 0:20:50.800 --> 0:20:55.160 I think one of the more fascinating innovations of crypto 0:20:55.720 --> 0:20:58.399 in recent years has been the notion of earning some 0:20:58.480 --> 0:21:00.960 kind of yield on your holding, you know, whether through 0:21:02.000 --> 0:21:06.960 lending products or staking that sort of thing. Obviously, quin 0:21:07.040 --> 0:21:10.080 Base made a lot of headlines with the Wells notice 0:21:10.119 --> 0:21:13.480 they got from the SEC basically warning that they're they're 0:21:13.560 --> 0:21:18.560 lending product. Um. Essentially could violate securities laws. Um. Also, 0:21:18.760 --> 0:21:20.679 I did a piece looking at just the notion of 0:21:20.760 --> 0:21:24.840 staking and even in the risk factors that at coin base. Um. 0:21:24.880 --> 0:21:27.960 You know, there's not a lot of clarity according to 0:21:28.040 --> 0:21:32.320 them about um how staking fits into the securities laws 0:21:32.359 --> 0:21:35.879 as well. I know, you know, Gemini offers chances to 0:21:35.920 --> 0:21:40.480 earn on your holdings through lending and staking. You know, 0:21:40.840 --> 0:21:43.080 is this a risk to Gemini doing that too? You 0:21:43.080 --> 0:21:46.600 know is obviously coin bases a public company, so they're 0:21:46.760 --> 0:21:49.640 bound to get more scrutiny from the sec But has 0:21:50.040 --> 0:21:52.960 the thinking that Gemini changed it all about these products 0:21:52.960 --> 0:21:57.879 given the coin based wells. Notice, so the think he 0:21:58.000 --> 0:22:00.359 hasn't changed because we have a different approach to the 0:22:00.400 --> 0:22:04.440 business in general. Right, Gemini takes a very very conservative 0:22:04.480 --> 0:22:08.320 stance with regards to regulation and everything we do. We 0:22:08.400 --> 0:22:13.680 do from a ask first before we move forward, right, 0:22:13.760 --> 0:22:16.760 we don't. We don't do first and then ask for forgiveness, 0:22:16.920 --> 0:22:20.720 and we don't sort of you know, come off with 0:22:21.080 --> 0:22:23.439 you know, we we are trying to be and we 0:22:23.480 --> 0:22:27.359 already are this sort of you know, collaborators with the 0:22:27.400 --> 0:22:30.520 regulators to bring something to market that works within their eyes. Right, 0:22:30.560 --> 0:22:32.920 So we are you know, we're a New York trust 0:22:32.920 --> 0:22:36.720 company regulated by the New York Apartment Financial Services, qualified custodian. 0:22:37.040 --> 0:22:40.720 All of these things are We are already incredibly highly 0:22:40.720 --> 0:22:45.160 regulated and we're very confident that our product has been 0:22:45.640 --> 0:22:51.200 vetted deeply by our regulators. We um and on that note, right, 0:22:51.240 --> 0:22:52.520 like if you if you get back to it, we're 0:22:52.680 --> 0:22:55.520 we've got more than four billion dollars in our earned product. 0:22:55.880 --> 0:22:59.879 People are coming to us every day looking for higher return, 0:23:00.040 --> 0:23:04.040 not just on their bitcoin, but also on their stable coins. Right. 0:23:04.080 --> 0:23:07.000 So Gemini dollar is a stable coin that tracks, that 0:23:07.080 --> 0:23:12.159 replicates the US dollar basically. And what's important is you 0:23:12.200 --> 0:23:14.720 asked if you mentioned the risk right, the risk factors, 0:23:14.760 --> 0:23:19.320 and there's not a lot of clarity. It gets back 0:23:19.359 --> 0:23:22.840 to just understanding in general what's happening in the financial markets. 0:23:22.920 --> 0:23:27.280 Right in the crypto asset arena and the cryptocurrency world, 0:23:28.119 --> 0:23:32.560 it's hard to actually get banking partners right, So there's 0:23:32.560 --> 0:23:36.760 a there's a limited funnel on access to dollars and 0:23:36.840 --> 0:23:42.600 back again to facilitate lending and borrowing. So there's demand. 0:23:42.359 --> 0:23:46.360 And on top of that, we have what's called pre 0:23:46.480 --> 0:23:50.720 funded trading across all of the exchanges. So if you 0:23:50.760 --> 0:23:52.720 want to trade on Gemini, you need to pre fund, 0:23:52.760 --> 0:23:54.720 You need to have money on the exchange to trade. 0:23:55.160 --> 0:23:57.199 Same thing for every other exchange out there. So if 0:23:57.200 --> 0:24:00.199 you're a trading firm and you're pursuing trading on a 0:24:00.200 --> 0:24:05.479 bunch of different exchanges, you need to borrow assets and 0:24:05.560 --> 0:24:08.359 set them on the exchanges so that you can have them. 0:24:08.359 --> 0:24:12.359 This has created incredible yields for both dollars and for 0:24:12.440 --> 0:24:16.600 cryptocurrencies because there's demand to borrow, because the trading firms 0:24:16.800 --> 0:24:19.359 will use those assets and generate even more money for 0:24:19.400 --> 0:24:22.720