Listed Products in the Crypto Space

Transcript

so we have coinchen here bitwise also very interesting company bitwise is like the s p 500 for crypto world first cryptocurrency index and um they start with these 2070 we know the hell is going on here i'm sorry it's always moving back to um well at least you don't you're not a cat you don't have the cat zoom filter exactly i'm sorry i i hope that it works now then yeah everyone knows that we have we have on etf with hector mcneil here which has also very interesting uh

projects where he can tell us about number one etb on the long frankfurt stock exchange more than one billion under management now we have shantanu super who is the co-host with me from inventor's law global tech law firm with a strong footprint in india we have 21 chairs from switzerland um which has also very interesting products we want to discuss and we have playoffs from frankfurt which is a a company whose shares are quoted on the frankfurt stock exchange and which have

decided to have a double listing which also token a tokenized some of their shares which are now you can buy them as a token or as a share and we are very happy to have you here and that crypto valley association is enabling this uh um this event um as you may know crypto valley in switzerland we try our goal is really to provide a platform worldwide um to share information about crypto blockchain developments and i am work i'm leading the working group

investors uh we we we defend the investors in the crypto space which is which are growing every day and we we try really to do clear and good analyzation and openly and discuss them honestly what what what what what what what's happening in this in this space so i'm very happy and i wanted like to introduce shantanu to move forward and yeah thank you very much martin and uh thank you to all our wonderful uh panelists uh when i when i thought about this panel um i thought about uh several things and how people are more

interested in crypto and one of the challenges around crypto is it's just this mystery thing for many people and what demystifies it is when things become listed and regulated and i think that was what drove me uh to get in involved and interested in this panel because i think the people on this panel are demystifying this and really playing a leading goal and really a frontier role i i called it i was joking with some friends it's an all-star panel but actually it's a rock star panel i mean literally everybody here is is on the forefront you decided who's eric clapton and who's bono but i think we're very fortunate to have um you know some really top people in this space you know i was just counting up the assets under management it must be over three or four billion dollars in all this group here together in the

us the uk germany switzerland so it's really very interesting we've had a very exciting week this week around the crypto space i'm sure all of you read that tesla announced they're putting 1.5 billion on their balance sheet in bitcoin so that's just the start i mean that was the square before but but as more and more companies do this there was there's going to be more and more interest in this space now that is that is clearly from the large corporations and they have the wherewithal and bandwidth to to to to deal with custody issues and compliance and all that your average individual doesn't necessarily have those issues there's so many anecdotal stories of people who have bought bitcoin and lost keys and there are millions or billions of dollars of lost keys out there and i think

that is one thing that people are just terrified about is that i've invested in this thing and i can't find it anymore and so that i think will also help drive this space the other thing i think that that is interesting is the different types of products that are listed depending on the jurisdiction and the actual product and so when we look at it we we talk about etfs etps etns these are some some acronyms in this sort of word salad or alphabet soup here but if i could just take a step back all etp is an exchange traded product etfs are exchanged exchange traded funds all etfs or etr are etps but not all etps are etfs and people use the the term etfs very loosely i think particularly the us we use it very loosely

but not everything is an etf we've been talking about in the us a bitcoin etf for a while i'm not convinced it's actually going to be a real etf because you're investing in one product unlike uh unlike an actual fund now the difference between a fund a mutual fund and an etf is that a mutual fund calculates their nab generally once a day and etf differs in the it's like a share it continually every every minute the share price change the etf price changes and i think that's kind of the innovation here um but i think um obviously these uh gentlemen are the experts so i think we can start with i'm just gonna go you know from who's on my screen really and we'll go around it and and if martin gave an introduction at a high level each person could talk about you know maybe anything in their

professional background that they that they would like to share uh relevant to this and also their company and their their product so if i could go with nils you're in germany uh you're actually a little bit different uh prio's probability is actually quite different from some of the other uh groups because it's a real estate uh related token so it's not actually uh a bitcoin or ethereum product per se in that in the same way directly with those so please go ahead matt nils and i'm delighted to say nils show him carol i'm the this is the first panel where i don't have the most complicated names so congratulations nils yeah thank you very much uh thank you for having me uh my name is just niels that's the easy way

director treasury and digital assets at publity publicty is a german investor and asset manager for office real estate and the issuer and platform operator of the preos token and poreos is an 86 subsidiary and the portfolio holder of um office real estate that we own with assets under management of around 1 billion euro and um yeah what we did over the last nine months is we are we created the world's first tokenization of a share of a listed company uh in the form of a digital twin

um why do we need a digital twin and not the real share that's quite easy in germany because somewhere in a cellar in a bank or a clear stream there's a piece of paper which you still need under german law so that's why we had to build a digital twin the issuance of the token based on a securities prospectus approved by baffin um took place uh in november 2020 as well as international private placement and in the first step um 25 million prior shares have already been tokenized and another 25 million more shares can be tokenized in the future

and uh yeah we talked about a token on the ethereum blockchain based on a modified erc 1400 protocol so classical digital asset and the token gives the holder the essential the most of the essential rights of a share so in addition to dividends or to a right to receive dividends uh the holder is also given a voting rights um by a trustee so um the token uh a tokenized trustee position to the token holder which means um the transfer of the trustee position and the claiming of the rights

through this trustee position basically depends on the possession of the token so when you own the token you got the rights and thus means that the token has yeah to speak securities like functions uh in the sense of a bearer instrument so um [Music] another nice uh another a nice idea regarding this token is you just said we want to bring the token to a to a to a to a broad um to the whole society and not only to experts and that's why you can swap our token at any time into prayer shares the shares are held in custody by a

security trustee or depository so cassis bank is doing that for us and you can claim 25 hours seven days um the share you can swap it then you get the share on your bank account and the token uh will be burned there okay superb that's very innovative structure and very unique that you guys are doing uh and you said i think it's 250 million euros how much is the value of these tokens um when you when you it depends on the share price uh right now it's 250 million to tokenize but we have the improvement by baffin for 500 million euros and um yeah we we we strongly believe that with the use of this future technology

um yeah we want to help the digitalization of the financial market achieve a breakthrough in the long term this will benefit startups and technology companies all over the world and for sure we want to see a more diversified investment base with different investors from all over the world in our share okay superb uh townsend from coin shares oh yeah councilman had a product um coin shares we are europe's largest provider of listed products referencing digital ass sets so the famed etp etns um with around four billion dollars under management give or take the price of bitcoin and eath dependent um we also have a number of interest

across the digital asset infrastructure including a very extensive and large otc brokerage desk for digital currencies direct we have a small active business run out of the united states we have interests in indices combining gold for example with a basket of uh cryptocurrencies and um we have uh we've launched a in partnership with some others a gold token um as well so we have quite a large and diverse interest across digital asset space but our main focus i think is the passive business with listed products and then the otc brokerage business um i personally i'm a trained lawyer for my sins but have been

uh both alumni the same school yeah um been listed products for about 15 years started in structured products and then was actually hired into etps by hector and his partner nick so i worked for them for quite a few years um in the early days um and um yeah i also spent some time in a tokenization company as well your your listed products are which exchange london we have two issuers um the largest and the incumbent is xpt is the one that martin mentioned that was founded um very early days 2015-16 that uh we bought in 2017. i think laurent was at the company at the time

um that is listed out of sweden and then we just recently launched a new issue or um which is a jersey entity similar to the products that you might find in gold space which is currently listed in in switzerland on six we have a product um in bitcoin ethereum litecoin and ripple out of sweden and a bitcoin product listed on six now okay great uh laurent please laurent uh [Music] from 21 shares zurich thanks to so um my journey started um this bitcoin journey started quite quite early on even though i'm not a pioneer i started uh really looking at cryptocurrencies in 2013 when

when i told the the market making business in the etf world that i was leaving for this very new asset class everyone at that time laughed at me and saying you mad quite frankly i don't regret any of it i mean the last seven years has been nothing but uh an amazing adventure and and when you look at what's happened you know there's been so many things that uh we had the doors closed and now look how many new issues are available today on in this market so it's you know it's quite a an interesting and um soothing um environment to be in when so many of the issues today

are coming in when um you know a thousand just mentioned i used to be an expert provider in in sweden and uh i spent quite a lot of time with the business to to get these people interested because originally what was going on is people had worries and i'm sure you're going to ask questions about that how to get involved in the crypto space and no there's nothing better than having a listed product on the market that literally democratize access to this underlying asset and that's what we've been doing uh at 21 shares this is exactly uh our our mandate we we are uh an issuer of uh crypto assets

we're very swiss for that matter we focus predominantly on the so-called region uh deutschland austria and and switzerland of course and we really focus on on one thing which is uh helping institutional investors that's all we've been doing uh since we started this wonderful journey in uh 2018 when we launched the first uh crypto basket it was quite a revolution and no one had ever done that before first of all because it was a basket of crypto assets and secondly it was uh the first proper etp that was um in in the market throughout europe throughout the world obviously xbt was was available for um the retail market but we literally

just wanted to focus on institutional because many institutional had been coming to myself and also to the company both our founders have had so many demands would they wanted to have exposure to a basket of crypto assets and that's what came out now today you know we have 12 products on the market and all we've been doing is innovating in this space so i'm delighted to have you know so many people uh that are now joining this space and competing in this market because that's what we wanted we really wanted to see the acceptance of uh of crypto into a listed product

and uh certainly 21 shares has done this we've shown the market last year that we can list quite a lot of products we've done a brand new product last week called polter dots uh we had to do this because we actually our index provider removed uh an underlying asset and was replaced with this new crypto asset and uh on on the back of it we decided to list a single asset just to give you an id an idea chantanu it took us five weeks to list it on on the on the market so we were really pleased about this uh because it shows that now there is an acceptance the market is responding positively and they're accepting uh this new asset class with certainly new issues we consider ourselves a fintech

company but we're listing uh financial products what we do also very well is we've got a white living solution so we help also asset manager who have an index or maybe a sit with us in in an atp so today we have just close of 650 million dollars in asset and we've done this in just around two years so i'll stop there and uh and bring it back to you okay now that's superb and i think you hit on something i mentioned earlier that you know well there are three lawyers on this panel but so i think for all of the lawyers on the panel we like to see something that's regulated and i think there's a lot of mystery around the crypto space people still think it's something underhanded and there's

something sneaky about it i think that's a response all of us have received on a regular basis when we tell people who are not in this space who are involved in crypto they they uh you know the responses is sometimes that and i think the more that this moves into the regulated environment uh the more that this becomes mainstream and the more it's just i don't want to use the word legitimate legitimate ties but that's kind of what what happens when there's just comfort and confidence that there's it's regulated now and there's a regulatory environment around that uh and and i think that's great and congratulations on the polka dot uh listing which we saw last week so you know this is a very timely panel thank you there are things happening every week on this panel so that's great we'll come back to some of the

regulatory issues uh as well when we delve into this because you mentioned five weeks it took to get listed i don't know in the us we can never do anything that quickly and we'll talk to matt about how long they've been trying uh with their with their bitcoin etf uh hector please yeah so hi everybody i'm hex mcneil uh co-ceo co-founder of an etf uh it's actually my fourth etf brand now that i brought to market and grown products from scratch to billions of dollars of assets so i think at last count myself and my partner nick issued over 530 etfs and etps across 23 different listings globally uh and actually just for context

that equates to just over five percent of the world's total of uh number of uh etfs and etps not in assets under management but in terms of number of products we've always been at the forefront of new markets you know doing new things bringing uh bringing new asset classes to market for instance we were part of the team that brought the first gold etf uh to the market and i see a lot of parallels in the gold uh development is as in this markets i mean everybody takes goldy etfs and etcs very much for granted uh in the world as a mainstream product but there was a time long ago where uh you know we had to jump through massive hoops with the fca and various other regulators just to

even get use its funds able to buy the buy the bloody thing so uh you know it's uh it's now multi hundreds of billions of dollars of assets business now so and i think this is going to go exactly the same uh direction but hands are a little bit different for us we're uh europe's first white label etf firm so we've got uh both etn etps and uses etf issuance vehicles where we can uh issue products uh into multiple spaces and uh we've had some nice pioneering products we did a we did a gold etf with the raw mint which i think is at the opposite end of scale to this markets uh because the rom it's britain's oldest company it's been around for 1100 years set up by offered the greats in 886.

isaac newton was the ceo there for 25 years and he invented the first non-counterfeited coin that you could make you know so huge history there to obviously the bitcoin end of the market market which is uh which is totally the different end of the scale in terms of in terms of history uh we're also quite well known for thematic uh etfs we have just under 700 million dollars of assets in uh thematic etfs uh you know and uh in total we uh we started uh january 2020 at 50 million of assets we ended 2020 at 1.1 billion and we've added about another 550 million in january so we're about seven 1.7 billion of assets with just uh just over two years

of operation we have about nine clients who sponsored uh sponsors funds on the platform and our biggest uh etp etf whatever you want to call it is uh bitcoin uh and i think even though we've come relatively late to the party vis-a-vis the panel i think why that uh that vehicle has exploded is because it's uh it's i believe the first sort of institutional class product that was available on a global stock exchange uh you know and it's really to do with the fact that germany opened its markets last march uh you know and allowed products to be done and uh you know i think the uh the uh coin shares efforts in sweden was

fantastic you know obviously the 21 in in switzerland were fantastic but obviously they were constrained by the uh by the regulations at the time but i think germany opening up meant that you actually had a you know a very sizable etf market that uh was embracing these products and actually the game changer for me was this is the first time that crypto could be centrally central counterparty cleared anywhere on the planet so with institutional size trades you know instead of being a bilateral settlement arrangement you know you were suddenly going up against urex as your as your counterparty and i think that really institutionalized the product all in one go and this was the first time any any party had allowed that so i think that's allowed us to garner

650 million of assets in uh in about five months uh and as you mentioned before you know uh it's uh btce is pretty much in the top three most traded etfs on the deutsche boss every day and some days it's the more traded than the dax the euro stocks 50 gold you know which which is just incredible i saw one day uh two weeks ago it traded about 130 million dollars on the deutsche boss and it traded 36 000 times there was 36 000 trades behind that which suggests it's a huge amount of retail you know same-day trading uh activity uh and when you add all the regional uh german exchanges it's probably double that

and that really says to me that that's the power of etps that they allow that market access that really is very difficult in other uh in other in other shapes or forms you get an institutional uh wrapper which you know my mother can use equally well as uh fidelity can use you know so you get that sort of most democratized investment vehicle that's out there whether it's an etf etp etn doesn't really matter it's the et part that's the uh the crucial point you know you can buy one share for 20 you know and that's incredibly powerful and uh you know i don't as i said before going back to the original argument what happened in the gold market is going to happen here yeah no you're absolutely right i was uh

researching for this panel and we don't even have an etf structure in the u.s yet for for crypto but gbtc grayscale bitcoin trust is in the top one percent of volume flow already and and it's using this truss structure um so hector what what countries do you have products in the uk germany yeah so we're currently in uh in germany italy uh lsa and uh and switzerland uh for the bca it's only listed in uh in germany and switzerland for obvious reasons uh italian stock machines doesn't allow it yet the uh london stock exchange doesn't allow it yet so uh you know those are those aspects i mean the product is is passporting for sale into those countries but it's not available uh

on the extreme uh in those markets yeah we'll get to the regulatory uh environment next because i think that that's crucial and critical in in pushing this market forward certainly i think um the next uh guess is my fellow american matt uh hoogan um and you know i think we're looking at this from this side of the pond thinking wow you know they have all these things going on there and uh you know are we missing the boat here in the u.s we're a little bit behind the curve here uh but people like you're obviously pushing this forward so matt you know please uh describe what what bitwise is doing in this space yeah sure people have been working on etfs in the crypto space for eight years in the us so uh it has been a slow slog but i do think we'll get there

bitwise is a specialist crypto asset manager backed by some of the leading vcs in the world folks like coastal ventures and general catalyst today we manage about 900 million dollars in assets it's growing very quickly uh as as you and martin mentioned we're best known for having the world's first and largest crypto index fund in the space the bitwise 10 uh crypto index fund which holds the 10 largest crypto assets in a market cap weighted basis a lot of people refer to it as the s p 500 to crypto uh we also have single standalone bitcoin funds single standalone ethereum funds we have a product that we co-developed with uh with laurent and 21 shares in switzerland that provides index-based exposure which we're very proud of uh our real place in the ecosystem which

is a lot of what this panel is about is about making crypto available not to the largest institutions in the world who can work directly with custodians not to retail investors who can access it through their app but to the uh financial advisors professional investors hedge funds that control about half of all the wealth in the world and which crypto generally overlooks as if they're not there it's sort of a donut hole of crypto coverage so we spend most of our time developing very simple beta products and then educating people about why they matter and why they're important so we've done things like in january i published the cfa institute's first ever guide to crypto assets which you can download from their website um that's what we do my background's in

the etf space i've known folks like like townsend hector and laurent for many years uh i was the ceo of etf.com uh and the ceo of inside etfs the largest etf conference in both u.s europe and asia uh and ran that business uh with some some colleagues for about 12 years before selling it um in 2015 and moving over into the crypto space in part and laurent may not know this in part because of a conversation laurent and i had uh at an etf awards dinner uh holding a flute of champagne where he told me that eth was gonna trade to a thousand and i should read up about it at the time it was trading about 100 bucks uh today it's obviously 1800 or so so we all we all need someone early in

our crypto journey who tells us to pause for a minute and actually study this thing and take it seriously and if you take just a few hours of serious reflection to get over the reflexive rejection that we see from so many in traditional finance uh you under you you begin to understand this is phenomenally interesting phenomenally exciting there are few people in my past that played that role but laurent is one of them so uh so thanks laurent well that's like dustin hoffman in the graduate where i think that the father-in-law told him to buy plastic right if anyone remembers the movie invest in plastic that's the future so uh lauren's playing it but i find it very interesting that uh you know hector you mentioned that

you had a huge institutional falling and matt contrasted this by by saying that there was this kind of in the middle where it was not necessarily institutions but but rias uh who who were managing uh private wealth and that was an interesting entree point for them so some some different strategies here um that we can talk about in terms of who who your market is and who um the audience is for this uh and what their differentiators are in terms of these different products everybody here has different products so i think there's a i guess two or two or three more questions we can kind of go through one is the regulatory environment which i think that's very interesting and in terms of the structure of your product also

i think is also something that i would like to understand a little more we talked about etp ztns etfs and we have trust structures in the u.s which matt is using because we don't yet have an etf structure and and matt i don't know it's actually etf is the right word we're using that word very liberally here is it really an etp it's not anything because it doesn't trade on an exchange it trades on an over-the-counter market bulletin board so uh i hate to pollute the alphabet soup right all right it's already stewing here uh but it's an over-the-counter trade to delaware trust uh the difference between that and the traditional etp is that these otc trust of which gbtc is the best known of bitw is the largest index fund

is that they can and have and will trade at large and volatile premiums and potentially discounts to the net asset value and we're all longing for the day when we have an etf uh i'm working on it day and night in the in the us i had you know more than a dozen meeting with the sec in the past year about it i think we'll get there uh until we do we have these these uh these these imperfect vehicles but they're still providing people access right gbtc was trading at a premium in 2015 and people talked about like oh you can't go near it uh i think the people who bought at that point did just fine so as long as investors understand the risks and understand how the structure works um you know then they can make the

appropriate decisions so that's okay and would people using a trust structure be able to convert to an etf structure is that the plan or the idea the other there are people who are focused on that we're not focused on that because in the us the the sec is is only you know within shooting range of approving a bitcoin etp like we don't know if they will approve a bitcoin etp they're a long way from approving an index etp or an etp asset so we haven't focused on that but i imagine that grayscale has some very high paid lawyers uh who have done extensive work on that and for what it's worth grayscale great company uh full respect to them um but but they're probably looking into that

i still think it'll be a native etf that wins that's my that's my view something that starts an etf from scratch what starts an etf from scratch and the last thing i'll say and then i'll shut up uh people in crypto get very upset that it's taken eight years cc to approve a bitcoin etf but as the etf people on this panel knows it has taken them many years to approve many different kinds of etfs non-transparent active etfs took 11 years bond etfs took multiple years gold etfs i think the world gold council spent about 14 million dollars on lawyers before they got a gold etf approved like the mother's milk of simple products gold etfs took many years and years of meetings with the sec so it's

not a typical for the sec to take a while uh in fact i think they were appropriate in rejecting etfs in 2013. i don't think the market was prepared for that and it doesn't mean that we won't eventually get there um i i think we will i could be wrong i think we will but uh but that's important context that many people that are crypto native don't understand yeah certainly the regulatory uh you know bodies are going to take their time and study these thoroughly um and make sure that it's uh it's appropriate for investors so and if you go back to nils uh you're in germany you don't have an etf per se or dtp but it's this token so you kind of describe more about the regulatory environment around that and

then also what was your strategy in creating this and what's the differentiator it's so unique that uh i is there anybody even competing with you on this this space um first of all regarding the the regulatory part um what we have seen in this project so this was from what we did is completely new also also for the for the regulatory um department like barfin and uh we work together with uh baffin on that and um they are really really deep into detail and they have really professionals sitting there who are absolutely up to date and they were a really good challenge partner and

um it took us like i think the whole process the whole prospectus process took us like eight eight to nine months and um yeah i think it took only nine months because we talked about the plain vanilla underlying because what we wanted to do is we just want to create a digital twin of a share and the baffin knows uh perfectly what a share is because this is their daily business so i think um that was the key for um succeeding uh on on this project and um what you just mentioned yeah there are um i think there are a lot of uh other ideas um from companies uh who want to who want

to tokenize their shares or or or other stuff and i think and there are like two major factors are very very important regarding this because we talked about tokenization in 2017 2018 but we never we've never seen the demand side so there was all the al always a supply side but not a huge demand side and now i think in this year 2021 we see two main factors first of all the regulatory framework so which we right now get um in germany with the electronic securities law which includes debts and also funds not equity right now but maybe it will come so lichtenstein and swiss are far away

in comparison to germany but what i want to say is we need a stable framework framework for institutional investors and for significant investment amounts and this is what's happening right now in germany and the second very important point is that what we see is that there are secondary markets uh with real mtfs um so multilateral exchanges so we see that in europe four players one from uk uh one from switzerland and two from germany are almost ready and ready to start their business uh between june and october and that means when we have um yeah real market makers and this will bring a lot of real liquidity and people

can trade token was token and token was crypto and crypto was talking about the sphere and this will be a huge game changer because of the liquidity and both will happen in 2021 and that's why i'm i'm totally bullish for this and next year regarding um tokenizing yeah almost everything you can imagine but the idea behind tokenizing was what because you need a physical share certificate in germany and that's that's so therefore you needed to create a digital twin i'm just curious about what was the transition and or did you want to tokenize the underlying real estate assets was that the driver yeah we we were thinking about do we want to tokenize a real estate

asset first or do we want to tokenize the share and the share was on the one hand the bigger story with the bigger volume and on the other hand it was a plain vanilla product that everyone understands when i um when i will bring a token on an asset that we own that's worth 400 million and how how should a retail guy should know if the token is worth three euro or for europe so they are there's not the ecosystem right now for a fair valuation for for for these kind of investors and uh to bring this idea of tokenization to the people the idea of a share of a digital share of a tokenized share which you can

if you are afraid to have a token in the end swap again against the share was uh i think the key to to to to bring this topic into mainstream and this is what we have seen so frankfurter algebra my site home hundreds all the huge newspapers um were were reporting and talking about uh this digital share on the blockchain because everyone understood the the underlying and and what we do there and this was the opener um to tell to tell our story what we why we believe in tokenization so um and we are focusing not only on institutionals on that

in this time we also look at the retail because the retail has at least no real investment opportunities right now they can invest in shares in etfs or funds maybe in gold some of them can invest in crypto and the other thing what they can do is they can buy a flat or house yeah with a huge cluster risk or even worse they live in it so with this new technology um when everything is flexible tradable and uh yeah divisible people can invest in parts of picassos in specific right correct in future cash flows in specific assets and everything and yeah almost without intermediaries and this is the story we could tell the people because they

understood the initial underlying okay no that that makes a lot of sense and i don't think we have anything that's listed i've seen in other jurisdictions maybe anyway that's similar at listed token uh in the same way certainly the u.s i have not heard of this but yeah there is some there is some tokenized release and there's also some tokenized uh paintings but it's not the equity it's uh it's like a physical aspect that is tokenized then but we so this is real equity and uh with a share of a listed company no one did that before fantastic i think that i mean this is if i'm if i'm a jumping here for one question i think it's very interesting to see

that we have basically like opposite or opposition concepts here on the one hand side we have crypto assets or coins tokens without an underlying which are brought into the traditional market through these etps and on the other hand with uh with deus we have traditional underlyings which are tokenized so it's basically going just the other direction and it's quite interesting what we saw now the last few months that basically i mean i remember this discussion it's already taking years now to tokenize real assets

and to bring them on the blockchain and until now there was not a huge market success until now i think what we saw now the last few months it was more like that you know bitcoin without an underlying ether with the utility but also without an underlying other old coins etcetera had a huge um increase in their value and they were brought into these traditional instruments which we just have discussed before what's your maybe from each of you what what is your your opinion on this topic i mean what will happen will will will there be further coins with underlyings or not

is it necessary or not maybe it's interesting also to see this from mad tector or low end on thousand what what do you think about this in terms of like neil's business of tokenization or our business of wrapping um digital currencies and ddp i think in both it'll expand i spent i spent uh about half a year maybe more at a company called token market here in the uk where we were looking to tokenize securities i think the the primary challenge you have there is distribution so the technology exists i mean you've got companies like what niels is doing you have securitized in the u.s providing tokenization capabilities um the challenge is the

i think for that business it's fantastic and i agree fractionalization of assets will be amazing right now the challenge is kind of who distributes that because the traditional investment banks that underwrite those types of offerings aren't really involved in distributing tokens or tokenized assets yet so once that marries with the technology which is really moving along i think you will see an explosion i think we're still in 2019 was meant to be the year of the token i think it's probably been postponed but i do think it will it will eventually catch on and as just as you're seeing more institutional adoption of of the underlying digital currencies i think you'll see institutions starting to look to distribute

tokenized assets to their clients i mean i think the other interesting regulatory angle is this tokens used to be very niche sort of thing and there was an entire issue around whether the token was a security and that that you know that that whole debate had gone on for for a while and now if you have them listed that may take away some of those issues because if it's listed it's registered uh and then even if security doesn't matter because it's registered that's a security that might also help that debate wasn't as large in europe mainly because we don't have definitely the us yeah the us with the howie the decision and and and the test um i mean europe got ahead of that i think started with switzerland very clearly and now with the german proposals and eventually

micah yeah the uk being some of an outlier i mean they've gone quite clearly and created a taxonomy it doesn't rely on kind of four principal points decided in the court case that was more or less looking at whiskey and in the like 1940s but you're right i mean fundamentally that transparency i think that niels was talking about which you'll get with micah in particular that comprehensive transparent regime where everyone knows like this is this is going to be under this regime this would be under this this this set of rules we'll do we'll do a lot in europe to move both tokenization and then the etps that we launch um forward yeah i would just add i think the tokenization of other securities is a

really interesting exciting difficult market to think about from a big picture perspective it seems inevitable it will happen right but that's true of many technological advances like the current settlement regimes and settlement processes are just insane it's hard to imagine that they'll be the status quo in 30 years and it won't all move on tokenized securities over blockchain but how you get from there to that that inevitability is always a challenge and the two primary ways uh uh that it can happen quickly are either regulatory things which i think townsend is pointing towards or difficult edge markets so in the us an example of a difficult edge market there there's a class of private funds that are only available to a certain class

of accredited investors and there it's a it's a very inefficient scheme for qualifying investors is accredited every fund company does it individually with their own lawyers and a tokenized solution in a market like that would be beautiful because your accreditation could travel along with your tokenized purchase and that would solve like a 10x pain point and i think those niche cases at least in the us i'm not as familiar with the european market is where you'll start to see this this flip occur of of tokenized securities there's a niche cases where the current system is not just annoying and occasionally has flare-ups like the general t plus segment space but is acutely painful and can be solved very efficiently in

this new structure so i think it's inevitable but i think it'll at least in the us it'll take these sort of niche difficult pathways before it goes deeply mainstream i agree i mean in my six months at token market doing this the only interesting use case that i really found was was actually an education between europe and and the us not to geek out too much but when u.s companies try to issue shares into europe under regulation s which is an exemption they're essentially category three which means they have to be demarcated and have an accreditation that follows them because if they flow back into the united states they violate the 33 act and if you can create a separate blockchain that tracks that you can actually open up the european

markets to a lot of domestic u.s companies they can offer their securities in quasi-public offerings into the here's generally less onerous and probably easier than being a 33 act registered company following the 34 act and they can also eliminate that risk that those securities flow back in the u.s and the sec calls them up and says by the way you violated the 33x so i agree with matt there there are in in traditional securities markets some really interesting use cases for tokenization that i think again once the big institutions start to think about them they eventually will help push forward that that industry i love that that's where i think it's going to take hold or before it takes hold in the broader public market

yeah definitely i mean okay uh fantastic lauren and hector any thoughts on tokenization well if i may uh just jump in uh i think what what niels is doing is is admiring i mean he's they've they've been able to speak with the regulators in uh you know in a very um environment that has probably been very against it to you know to get to get some of these regulations particularly here buffing so you've got to admire what they've done uh getting buffing on boards to be able to tokenize uh some of these real

assets and i think this is uncharted territories we're just in the beginning if if niels and his firm can do this uh and and and of course you know what we're talking about here is probably a bit of uh regulatory arbitrage they've been able to speak with the regulators here buffy is probably more open than than any other european regulators for that um and and again i i i agree you guys in the us of a much easier way i deal with one regulators with one counterparty with one language here we're talking you know multi countries multi languages multiculturals uh even the lower doesn't even uh abide throughout in europe people have uh

they've got different rules so tokenizing assets is is potentially the next big thing and we've even looked at this ourselves i mean one of the things you could even be doing is tokenizing uh equities even uh etfs uh because uh thousand i think mentioned it as well and and matt confirmed it is the fractionalization of of these assets will make life a lot more easier then of course what you have is these settlements on the back of it but the fact that they've been able to do this today with a regulator in europe is is very admirable definitely um so hector just any thoughts and also regulatory given that the now brexit is real

and uh i guess congratulations i don't know what to say you're on your own now i think i think to be fair we're probably only 10 in to be honest and uh obviously the world wearing hasn't even been uh been talked about yet so i think a long way to go yet with uh with brexit um i mean i mean to be honest you know i uh i defer to most of people on the panel really i mean my my job as i see it uh in in the markets is to give you know efficient uh market access with uh with products we produce so i you know i i'm i'm less inclined to uh to try and guess you know what's going to happen in the future the only the only thing i do you know i i spent

sorry five six seven years of my career working for stock exchanges and and uh you know specialized a little bit in clearing actually um you know from years ago and this does glacial uh and it bores me silly to be honest uh so you know i think it's um it's something that will be driven uh even though we like to think we're decentralizing but i think it will be driven from the center uh because ultimately uh those guys will control both the regulations and the scale and the and the and the finance the funding to do it uh so uh and and i've just you know i continually trying to tell my guys look we're not out to educate anybody we're

not out to change the world blackrock will do all those things for us you know we just need to come in with better products at the margins and uh take what we can when it's there so uh so i don't really have a huge opinion on it but when things get the critical like things like uh uh bitcoin and uh and ether etc we'll be there and we'll provide a great way for people to access it it's like when we used to do the gold product back in the day and people used to always ask me which way the gold price is going is it going up and down i said i don't care i'm gonna it's gonna go up and down i'm gonna track it you've got to make that decision yeah now that that's absolutely right um i do have a few more

uh you know i have questions the right word but you know what are what are some of the challenges to uh to increasing this market i mean some of the things i thought about were um you know perception that we talked about earlier that this entire crypto industry is sort of suffers from a perception issue and there's an education aspect of that there's a security issue um and i don't mean is it a security but but are these underlying these underlying crypto assets how what's the security around that i mean certainly we talked about how if any any individual buys uh crypto on their own exchange you know they're potentially worried about self custody and so how do how do how do you all handle the custody angle and and the other thing i think that that you know

makes a retail investor happy is that okay um the the keys are not my problem anymore it's it's it's the uh the institutions problem and if they were ever and there's cold storage there's vaults underneath some salt mines in switzerland that i'm sure martin's familiar with holding these keys uh and there's also insurance to back this up uh even if something were to happen and so i think all of that together is very for me at least a very compelling case as to people say why would you pay a premium for any of these things it's like on your own can you do any of those things can you get insurance can you get this high level of custody and can you actively trade it and so i think those for me are the reasons why this is this this listing makes a lot of sense and

and it just brings it to sort of a much much wider audience but you know all of you uh here are dealing with this issue so maybe knows to a lesser extent uh because it's a token but maybe you could talk about some of these issues of perception security insurance custody all these things around the underlying assets and how does that work yeah i mean i think that's exactly right uh to be honest i think the you know there are certain standards which if you're going to provide a uh a mass uh access product that you need to have and you know that's as you as you rightly pointed to it's it's institutionalized custody it's uh it's insurance around the assets and it's uh it's things like um you know having a

trustee as part of the process right so you've got a trustee that wraps the product and acts as a fiduciary uh as part of that that process but just simple things i mean you know uh townsend will know very well you know the the goal structure was a great one because you know you took a physical asset you allocated it in the name of the vehicle so therefore the vehicle you know had the assets and then you issued the etps off the back of it you know and that's a structure you use under btc here you you get it doesn't call storage and then the etfs get all the ecb is getting you know what's the help they're in shoot in the custody they're insured now interestingly uh one thing i've been really amazed about with the insurance

in the uh in the in the crypto market is people the the custodians are a lot happier to talk about insurance than they are in the gold market i mean times i'll tell you if you try and get the gold custodians to talk about uh insurance they won't talk about it and the reality is the reason they won't is because actually it's a calculation based on how much they think somebody can steal so it's not how much is in the vault it's actually how much they think they can get a truck to the back door get it out and put it in the back of a truck and take it away and that's what the insurer and i think it's pretty typical and i think that's the typical structure for the uh for the crypto market as well that you know it's an assessment in terms of you

know you know what people can get access to and then that's the risk that you're actually ensuring on the back of it but i mean you know literally we probably give out the insurance certificate on btc probably probably three or four times a week you know for people asking for it because that's part of their due diligence now really and that's and that to me is quite nice and quite transparent from a uh from a product but i think all of that is very institutional class and i think it gives a lot of surety and uh and uh you know takes away a lot of pictures you say you don't worry about having the keys you know because ultimately all you're worried about is your passport to your com direct account or your you know your hardware's landscape account because all of a sudden you can

you can access the product in that means yeah no i think as a as either as a retail person or as an institution it's kind of a nightmare to hold all these things it's completely uh exactly but you're right as you scale up an institution it gives them a lot of peace of mind and frankly reduces their liability conducted the due diligence and having all these underlying security and insurance so uh uh township you're going to say just right i think there's there's two aspects obviously to expand in the market one is is i'm sure matt's kind of much more involved in this than i am um is convincing people about the investment case for the underlying coins right and that's really getting out there talking about you know why should you buy bitcoin but you know from a product perspective what we really focus on i think you know

what hector and laurent have done as well matt is what we're doing is we're bringing an asset that is is somewhat alternative at least the access rails for that asset or alternative and we're putting it into an infrastructure that institutions my institutions i mean anybody anybody above retail and beyond all the way up the pyramid to you know from family office to pension funds are accustomed to so it's not a question for example when a family office or a private banker goes to his compliance and says i want to buy bitcoin i want to sign up to coinbase it's i want to buy bitcoin i'm going to use the six stock exchange you're going to get a security it's going to settle into your account um you know they answer all the same questions that any other security addresses or any other ep we

encountered so it's making that ease of access to fit within the infrastructure that they're accustomed to it's wrapping it in that that really expands the adoption because you know if you imagine a large even a smallest institution trying to convince you know compliance and risk to open an account with some you know with with a pure crypto provider it not that there's anything wrong with it but it doesn't compute for them in a lot of ways and we we saw the same thing with gold for example you know when hector launched the first gold and i joined shortly thereafter a lot of investors were super excited because before trying to convince their compliance departments they could actually buy physical gold and hold it through this vault directly and how it would be traded that was a huge hassle right but when we

wrap that into an infrastructure and access rails where it was actually we're just buying enlisted security and it settles and it it embeds all the protections that you're accustomed to it made that decision much much easier i think that all makes sense the only the only kind of counter to that is that the crypto in a way was kind of set set up to be um an alternative away from kind of the mainstream right and that sort of way it's like we're converging now but the people who talk to her oh i think and as there were in the gold space you know i know i analogized it a lot because there are a lot of securities who want exposure in a different way and when

they come to us we say look understand you know but as matt mentioned before they're half the world's wealth if not more is still tied up with people who are institutionalists who aren't buying into the idea of a completely decentralized economy around you know without any controls or layers and they do understand the case behind some of what's going on here but they're not they're not necessarily fanatically devoted to that and those those investors who control a tremendous amount of money want traditional rails that are centralized that they understand how it works and that fit within their pre-existing compliance and

risk management structure i mean this is this is the question i would like to ask you i think you should i mean this is it's an important topic which was discussed a lot the last few months um by the way also for our listeners i i would like to invite you also if you have some question we have a q a section please feel free to ask some questions we try to to select a few and to ask them to our panelists um but i would like to know i mean you selling these etf etps do you know how many of your investors are institutions our institution

on how much our retails invest i mean hector you mentioned before that you have almost 50 000 trades one day i mean this doesn't seem that there are huge tickets but maybe maybe i'm completely wrong do you track this do you have some information which is interesting for us on this topic yeah the the uh i mean i think what's really interesting about generally on the etf or etp adoption is that's just really a sign that the asset class is becoming mainstream right that's just the fact that somebody you know the asset allocators who are building the portfolios you don't like the uh uncorrelated returns or they like the effect that the uh the asset class is putting into the

portfolio and actually it tells you exactly right you know having an equitized product makes that dead simple for them right you know in front of the current constraints or whatever the story is so and the great beauty of an etf i always say you know my mother in bittersburg can buy one share and put in her icer all the way through to uh you know the biggest institutions the world can uh can buy it including sovereign wealth funds you can do it anonymously as well because everybody buys it in the secondary market right rather than uh doing it uh doing it uh face-to-face filling a form and sending a check off but uh but typically the split i would say martin is probably in this product is probably far higher retail than uh than probably normal etfs so

maybe you might be talking 40 to 50 45 maybe retail and then i think you've got like the institutionalization of the asset class now you know with probably family offices coming first with wealth managers and private bankers following them after and then the big institutions are working up to now as we saw with the tesla news and various other things i mean you know i'm actively talking to you know three or four of the biggest uh hedge funds in the in the euro in the london market now about you know how it works and how they can understand it what the story is you know a lot of these guys have been trading grayscale and uh and the futures and they hate it because they're having to pay carry costs and premiums that you know

are just done just unjustifiable and i think actually if people in the u.s realized how close the european uh the open-ended european etps tracked the nav off the uh or the fair value of the underlying crypto market i think those assets would leave that market instantly because efficiency of the products over here is just infinitely better than uh than over there and uh and i think that's the power of it but i would say you know going back to your point i think the retails got got on the bandwagon of this far more than the normal etf in the etf market i would say yeah i would agree with that i meant a lot because xbt first product to market a tremendously strong retail holding i

think you know in many ways i i joined coinchairs about um over a year ago i joined with another colleague who was uh pregnant as head of sales that i wasn't here in europe i mean we we joined to push to to increase the institutional adoption was our primary focus that's still developing um there's an echo sorry um but it it's taking time and so i think you'll see retail will continue to push this you'll see smaller trades but you also see a lot of institutions beginning to not only show real meaningful interest because they're being pushed by their clients to show interest yeah i don't i don't think today you you

can uh you the answer to to uh your customers if they ask you about crypto especially if you're an advisor financial advisors is this i don't know i mean that's just not acceptable uh anymore and i think to matt's point that's probably the audience he's targeting they're going to their private wealth manager and they're saying tell me about crypto and and you have to have a product to offer them and maybe europe has has more products uh but in the us it's coming um so any any other thoughts of actually the custody mark matt is really interested in insurance to custody i know a lot of a lot of a lot of uh because hector i made a point about another i won't say the name just being being the lawyer but another well-known uh

trust you know product in the u.s about about the premiums right and how expensive they are but i think the counter argument is is the premium is there or or the the management fee is there is because the quality of the insurance the quality of the custody and so i think that's the other argument is that you know there's a management feature of it but look what we're bringing you and you get what you pay for what do you think about that 100 percent and ease of i mean that that's entirely true we run into clients all the time who have lost significant amounts of money because they're keeping it on app and their phone got sim hacked and the money goes and that's it poof gone bye uh so that has real value also ease of access right i'm a fairly sophisticated crypto investor the cio of a 900 million dollar

crypto pioneer and i've bought gbtc why have i bought gbtc not because i don't know how to directly buy crypto not because i don't have contacts with custodians and market making desks but because of ease of access and the ability to buy it through a brokerage account uh the other thing i'd say on custody and tax and all those things um which i think the rest of the people would agree with is you have to understand where most investors are coming from most investors are anchored on the ghosts of crypto past most investors when you say crypto are still thinking mount gox quadrita silk road crimson 2014 100 and so when people have an anchor

that's so far to the left of reality it's not just good enough to get them 51 across the line you have to get them to 90 you have to anchor them so far on the other side of normalcy that it be able to counterbalance their anchoring point that's the reason why i think all the people on this uh think very deeply about who they partner with we don't partner with any custodian not because the smaller custodians aren't good at what they do i think they're good at what they do we partner with fidelity and with coinbase for our custody because when i go to a financial advisor and say i'm costing my bitcoin at fidelity they say great and if i say i'm costing my bitcoin with a smaller

custodian that they're not aware of they're not as easily persuaded right hector sends out those insurance certificates no one comes to me for an equity etf and asks do you custody at bbh or bny no one cares but they do care in crypto so it's not just good enough to get people to 50 you have to anchor them to 90 and that means gold-plated partners down the mix again that this is why you see crypto products that are relatively expensive compared to other products because we all have to partner with the single best providers and they can charge premium prices because trust is so highly valued and it's so highly valued because people are anchored so far from the reality of the current market that you have to overwhelm them

with quality so that's what we do just one point to add when i talked about premium i wasn't talking about the fees oh yeah yeah yeah no premium that is 20 it's not two percent it's 20 right on uh but that's a function of the market i guess we were talking about you know what it's it's already a function of the us products it's not a functioning yeah you know right yeah it's not a function of the market it's a function yeah to allow for an open-ended product i mean i don't blame grayscale for that it's not their fault yeah you have regular regulatory intervention slash you know rent seeking that eventually forces investors to have bad outcomes and so it's not the

issuer's fault i mean obviously if if there were an open-ended product that was available and they could issue it listed they would i think it's just the reality that the sec you know obviously um not bad not with any bad intention isn't willing to allow that which then of course managers like matt and also others came up with really good arbitrage is around that within the existing rules which ultimately necessitate a a premium because you have a six-month 12-month lock-up there's a lot of demand and if demand exceeds supply and supply can't be open-ended then you're going to end up with a premium that's a classic problem of closed-ended products what about you uh laurent in terms of the swiss market and

custody and insurance because i've been you know reading about there's a famous provider that actually literally has um you know uses salt mines in the mountains of switzerland to custody crypto and so that's that's kind of a fascinating case well we we take uh security you know very seriously i mean one of the things and and i totally agree with what matt says you know we we look at our our um custodian and we scrutinize them i mean that this is one of the things you have to go because you know there's not that many around they're all brand new a lot of people don't know who they are i mean matt mentioned fidelity yes everyone knows that but they're very new in the crypto space

uh he's mentioned coinbase again everyone knows them in some way form but not not many people know their custody um division and this is something that you know you need to spend a lot of time on only a year ago there weren't even that many custodian let's alone institutions uh institutional grade custodian and this is one of the things to lean on you and that's why i totally agree with matt i mean yes you can have insurance certificate that hector sends out to everyone but one of the thing is you need to be close to your clients you need to have you know that exposure one one of the things we do and we proud ourselves is that yes we're in switzerland so we know a lot of our private wealth

we know a lot of our family offices they come to us they want to meet us they want to see how that process work again we don't have huge amounts of volume as as hector mentioned uh with our product but a lot of people trade otc with us and we know who they are and that's a lot of you know trust that goes into that and this is very much a swiss uh aspect that we've covered and we're very proud of it one of the things you've discussed as well is very allocation of retail to institution we we have probably and we're very proud of this we have probably over 90 percent of our asset that is quality institutional asset so you can be sure that these clients

will come to us and scrutinize us who our stakeholders are who are custodian who are administrators who do we deal with can we speak to them how does that process work and we really go through a huge due diligence like no other people will because that's how the the swiss market works and these people are willing to allocate a large amount of money they're not willing to do it on exchange they will do it otc and they'll make sure that they've met with us first and we sat down on many meetings and we've explained to them exactly what we're doing and how we're doing it and with which partners we're doing it now you mentioned some of these vaults yes i'm aware i've actually seen one there's one with

zappo in the past people probably don't know or remember who they were but have been taken over by coinbase i mean they were the first institutional grade custody you needed to know who these people were let alone just knowing that their existence you needed to scrutinize all survey the management because you didn't even know where who they were to start off with and we've done this exercise and we showed this to our clients so one of the things is we take safety very seriously because of our institutional broad broad access and also because our institution will demand it and they demand it because yes like matt said everyone knows who brown bovary and and northern trust

and and state street banks are but they don't know who the custodian people we use many uh custodians because we need to diversify and we need to challenge them that they are our best partners so all of this is something that we keep very transparent and we show our institutional clients for and and we've done this first of all in switzerland we're now reaching to european um uh countries where we've never really had that uh questions most of them ask of course for an insurance certificate and we're more than happy to give it to them because we have that institutional base exposure from the start so people have already seen that it works with us and we can proudly say that because we

have that institutional base uh assets you know people tend to lean on you much easier and scrutinize you less so we've been very blessed by the fact that yes um we we are in a country where people can buy crypto through their bank but no they want to go with 21 shares and buy their product from an institutional grade product because they trust exactly that process that we go through and we highlight exactly these custodian and these entities that we deal with because most people will have never heard of them and this has worked also in the etf space some 10 15 years ago when the market makers when you mentioned flow traders in jane street no one ever knew who they were look at them today they are in the forefront of

the uh of the crypto space making markets for all of us and this is where we actually highlight this to our client and we take this very seriously i think that makes sense and that's part of the benefit of the listed products that was the whole thesis behind this this webinar was list of products and and and why we need them and why our customers need them and this summed it up very nicely in terms of custody and insurance and all this maybe uh martin we only have 15 minutes left we could go to the questions i would like to um ask nick if we have some some questions from our audience yeah it's in the chat uh if you want should i go through i know we're gonna see some yeah absolutely yeah so there's one that there's like four but i

think we could combine uh combine them we'll get to three of them now so one is uh around uh the tokenization and this is specifically the nils so tokenization is basically this digital representation uh of of something and we understand the value of tokenization as relates to something like a art or real estate or watches but how do you uh convince a large institution that there's a benefit to tokenization of a traditional asset like an equity or a bond so that to nils please i miss the most relevant for him so so first of first of all uh it's especially relevant for us to tokenize these illiquid assets but when you want to search for an

advantage why to do that um with traditional assets such as equities and bonds um i can just try to give you two small examples um the first are um for example transaction costs so when you try to to bring a share from the usa to to germany into a depot of uh into a bank account of a german customer there's a lot of work to do that we don't even see so you they work with adrs and all this stuff and and this makes it very very easy smooth and you have lower transaction cost that's the first thing but the second second thing and this is something that we might not see in europe because we live in a quite normal world

and our targeted audience and we've seen who is really interested in in these topics um we were contacted by people from asia you can see that in our news we were contact from people from from singapore from middle east um so from from countries uh where people or also institutionals family offices say if it's when it's not my private key it's not it's not my asset and for them it's very interesting to have an asset on their ledger key and not on a bank account that can be can be frozen by the state your ledger can't be frozen by the state and this this is an uh this is a point

for them which makes it interesting to also put traditional assets into this tokenization form okay superb uh another question is for townsend so townsend what is specifically for town so what products are you most uh most excited about uh my competitors on the line but um you know i mean i'll answer a part that we're not looking that i personally think is going to come um and maybe it'll tie into something probably matt will talk about which is i think it will be very exciting in europe after micah gets introduced to see when someone wraps an index of digital currencies into a proper use it's fun so we talked earlier about the etf etp the

main difference between an etf is that it's a fund under the regulated fund regime in europe that's usage in the united states since the 40 act now right now in europe you can't do a digital currency etf a fund for a wide variety of reasons mainly because digital currencies aren't eligible assets you could theoretically do a diversified index of digital currencies in the usa's fund but you need two things one you need a proper financial institution who will write you a swap because the only way you can do the exposure is the actual swap and this is how commod this is how uses funds commodity products and the second of course is a usage

regulator willing to approve that um i do believe i'll throw this out here that we will get there here in europe with a proper etf so i mean a regulated fund in the use of infrastructure offering digital currency access before the us will get a single bitcoin etp hey sounds like do you think do you think germany would allow that now i i sort of think like what uh you know hector i don't wanna i mean you know i don't know the answer to that because i have not i mean i think um it's something that will the biggest challenge i think you have is the first one is who's going to write the swap because you need obviously a proper financial institution and none of the banks right now are dealing that maybe some in switzerland um i think of one or two that come out but

if you could solve that and that i think will come around eventually in europe um i think you will find a regulator who's favorable for that it'll be an interesting thing i will i'm willing to say that in europe we will get there with that structure so a minimum of five diversified in a usage fund before you'll see a grain or trust that's listed on nysc or nasdaq doing bitcoin exposure in the us that could be a good uh a good strategy for the uk right to establish an etf yeah you know i mean i mean they're scratching their heads trying to think about how do they compete with u6 and etfs you know that would be the way to go create a critical regime where you could do uh crypto

uh etfs out in the uk yeah definitely i think we should put a sorry fancy think we should put a fancy dinner bed on that that's good for sure you have another question for matt anyway i see here know what uh forbade wise what what's the main hurdle for bitwise to have the sec approval yeah uh it's a great question uh we did something like a dozen meetings with the sec over the past year uh they used to have a huge number of concerns custody audit risk liquidity arbitrage etc their primary concern right now is around market manipulation

uh and the ability to surveil the market uh uh i have one word gamestop there you go counter argument the answer is some you know a bunch of issuers not just us uh vanek others are doing some really sort of groundbreaking academic work i think trying to solve their problems uh and i'm hopeful that we will get there uh i'm very hopeful that i will be first but i'm not a hundred percent confident of either of those but look the bitcoin market today is much more advanced than the bitcoin market was three years ago and way more advanced than it was six years ago so axiomatically we have to be closer than we have been in the past that doesn't

mean we'll get there but i'm optimistic uh it won't be tomorrow um but uh you know we'll get there in the next 24 months i'm i'm hopeful but in the current regime like what is like anyone could go on and buy some of these products in the trust structures like how much more improvement will be to have an etf versus what currently exists right now oh massive i mean huge for one you'll you'll get away with uh you you'll at least severely limit the the premiums and discounts that hector was talking about uh that's the lawyer sitting on my shoulder talking about imperfect um and then the other thing is you open up huge areas of the market most likely that currently don't access those funds so like wire houses

uh by and large uh probably don't have direct access to gbtc they may be non-standard lists once you get an etf you open up the possibility of that um so i think it will significantly expand the market look all of us just want investors to be able to gain safe secure easy access to crypto uh that will be in my opinion a good thing and an etf will be a substantial improvement uh in my view over the otc traded trusts that exist uh that exists right now including including bitwise's zone absolutely good i want the sec to prove one of the products i think it'd be fantastic i just think the road map which i agree with matt is finally very clear

right i think after multiple decisions and and bitwise and others did a really good job of finally getting the sec to put down in on paper here's a road map to approval i i think when i survey the markets they've come a long long way and it's a great thing but i still think there's more to be done to meet that roadmap and i think i think it's great you see change at the level of commission but i think the staff is pretty wedded and and matt knows more about this because i mean i wrote a lot of blogs on this in my spare time like a few years ago but i think the staff from what i understand is quite wedded to that road map and despite you know whether it's gary gasler others coming in they've they've they've drawn that line of the sand and they will simply tick

that box when it comes and that's around how much of the volume and trade abilities on markets that are subject to some surveillance regime but it's not just the sec just to go to hector uh the ecb and the bank available itself england itself you know has has made statements against well negative to bitcoin so you know hector how do you see that in your home market yeah i mean probably the one i think is the most insane was the sdas uh ruling recently that you know i think they said something ridiculous like they're gonna save retail investors 53 million by you know cutting the access to uh two etps you know completely losing sight that uh you know every third uh email people getting

their spam nowadays is some fortunate bitcoin uh scheme which if you can't have a product forcing you down that road i think the biggest thing people miss on it on etps and etfs though from a protection perspective is you can't get access to a product unless you have a trading account with the brokerage and by definition that brokerage should be making a decision on whether that instrument is suitable for you or not right so there's a natural gatekeeper to giving access to the product and it's the same argument for active funds as well that you know active funds always worry about who's on the other side of the table and that's actually an etf fixes a lot of that

because you know you often find you know so to me the fca's response should have been to make it a complex instrument rather than make it a uh retail owner professional only if they've made it a complex instrument aligned with things like short leveraged etfs or or some synthetic products whatever that would have made a lot more sense to me i mean i still think you know i i can understand to a certain extent the regulators and the and the uh authorities have been very concerned on the volatility i think that that to me is the biggest killer uh for the products as it currently stands where it can move 28 in a day you know that i think is where the main concern is for these guys that

you know people get completely wiped out through that uh sort of scenario but but equally if you look at the uk market that is heavily dominated by cfd and spread bets and people you know even when they have to carry on their adverts that 93 percent of people lose all their money right trading this stuff they still allow it i mean it's insane well that's all we saw in the us right we've had short squeezes and we saw this the all of last week yeah in regular stocks but in the uk they make the cfd and spread that firm's put on their adverts like it's like a cigarette warning yeah help people lose money and investors still come to these bloody things and get churned through them you know

so so to me they they usually they use a sledgehammer to crack a nut here and they could have they could have made a sensible decision which is which is that but look again as i say this is very similar to the gold story you know we used to have people when we did the gold would even argue it's not even asset class people shouldn't be allowed to invest in it they used to say that you know it sounds insane now but that's what people used to say but this this is on the march this this this horse has bolted now they need to they need to find the way to make it work now because otherwise it's just going to end up in a complete mess whether it's ecb the bank of england or whoever i did think once baffin made its decision the german government his

decision i felt everybody else would start to come along because nobody wants to be first and i think when they uh when they made uh crypto's official financial instruments in uh in march last year i thought that was the opening of the door for everybody really yeah i mean should we start wrapping up remember yeah i think this is really regulatory arbitrage and you know you you can talk about how different countries operate and they and they block certain products but you know ultimately what's going to happen is that everyone's going to come to switzerland and list their products i mean we've we've done this and we've shown it with matt's product we have a bitwise product in in switzerland obviously now all the other issuers here

are now listing in switzerland before there will be a bitcoin etf going to the us i guarantee there will be two or three more issues coming into the swiss market why because the doors are open and um you know under the actual swiss law you know with the collateral structure that you have for a product uh people can actually um list their products onto the market we haven't really discussed much about this but this is something which i think has got more value because hector talks about buffing and and germany uh with with bitcoin but that's only one one crypto asset we've shown we can actually list 10 products with variety of crypto asset not only just in

switzerland we've done it in in germany we've also done it in in austria and we're gonna do it in two or three other um exchanges in in europe so before people can do that what they'll do first they'll come to switzerland and issue their product either with us because we can do a white walk or they'll do it themselves so we're going to see a lot more people coming into this market in switzerland before anything else happens around the world that's great martin you want to sum up wrapping up thank you very much i would i mean first of all thank you all very much i think we had a very interesting insights i don't wanna do a long summer now at the end i just would ask you i mean based now

on your experience what you have seen in the market the last 12 months looking into crystal ball where do you see the market heading in the next 12 months what will happen with your products or in general it's not about now bitcoin price by itself but just where do you see the developments if you feel your clients and you see what you what the traction from the past year i think you'll see like we saw rougher make a pretty big announcement i think you'll see you'll see that into our products um one of one of the providers here will all of us i think we'll start to see more and more

established names in europe coming to us looking for for access investing and then ultimately letting their investors know that and here i'm talking about more traditional fund managers letting their investors know that they are now taking bitcoin or other digital currencies seriously as an asset class and i think you know i really think uh 2021 is going to be the year and not just the teslas of the world but you know some of the traditional asset managers fund houses the level above even potentially pension funds starting to take this asset class seriously starting to figure out how it fits in the portfolio whether it's an inflation hedge or insurance type exposure whether it's simply just

reflective or protective against you know concerns around um monetary policy in the basement really seriously considering how they're going to fit and i think that will be something that all three of us in europe at least offering these products will experience over the next 12 months who wants to go next you're not mute lauren you're muted sorry i'm not 100 confident that we will see pension funds coming in you know this year because they work on a much more conservative basis but certainly from private wealth uh family offices and wealth management where the door and the gateway is definitely switzerland we're going to see a lot more

institutional uh demands we're inundated by demand at the moment uh with people wanting us to either list new products or uh have allocation on a much bigger scale with with our existing one and as i said we're very humble we don't have you know huge assets like the other players uh on this panel uh and so obviously there's some certain restriction but we know the people uh are benefiting from the fact that they can't go directly so they have to go for a lifted product and we're likely to see an explosion this year of institutional investors and maybe not the real conventional one that's here one tier two but certainly flooding in the markets buying

uh listed products certainly in crypto whether it's single asset class or baskets or even more innovative that we're about to launch we've got two two uh very good products that they're going to come under the market very innovative and i think that's what people want and and the institutional showing and and bringing the pain the path for it superb oh i'll jump in i think townsend and laurent have talked to and we've talked a lot on this panel about bitcoin uh i'll just add the other thing i'm really excited about um not from a product perspective but just where i think the market is going i think the sort of people who are wrestling with bitcoin today are going to start wrestling with and decentralized finance within the next 24 months

uh i think decentralized finance is the the riskiest most exciting uh development i've ever seen uh and and both of those are true risk and exciting and uh there's been essentially no coverage in the mainstream press so so fascinating discussion around bitcoin i'm hugely focused on getting a bitcoin etf across the line uh but my intellectual curiosity and where i think like the wall street journal and the financial times are going to migrate their interest to in 2021 is going in part to this d5 market that's just now emerging which is so fragile and interesting and exciting uh uh so so i'm really thinking a lot about

that and and matt your your index fund actually covers d5 yeah two five assets made it into the index fund uh in in the last rebalance uniswap and ave and that's the first time uh those classic defy assets it also holds chain link it holds ethereum which we could debate but those are classic direct d5 apps they just made it into the top ten but there's a there's a wall behind them and honestly even the sort of crypto savvy traditional finance people i talk to have no idea uh what's going on in that market so i'm really excited about it do you think you'll change your your balance just like do more of that or that's to be decided we let the market decide that's the

beauty of market death waiting uh i have personal opinions about every asset in my index uh but but they never influence what goes in the market will tell us what's the most important and the index rebalances and reconstitutes monthly so it always is invested in in those assets i think i think market cap weighted indexing is a great strategy uh for people who don't want to underwrite single assets um and i think it'll become more important in the market it also it's well tuned to the the advisor and professional investor market who's interested in crypto uh but couldn't tell you what ave does um regarding regarding your appointment i think i also think that d5 will be the most important topic for the next one or two years

but what i'm afraid of or what i hope is that we don't see as much scam as we have seen 2017 with all the icos and when i see uh who in germany and austria is talking about defy it's the same guys um that made icos in 2017 and and this this can be really bad for the image of of blockchain and this is where i'm really afraid of and regarding regarding our project i would say i hope that in two years our share is the one of the most boring digital assets that we have tokenized and there will be a lot of more exciting stuff and i also hope that in three years we don't even need our

digital twin anymore because we can have the real share on the blockchain thank you very much for being here i would really love that uh you know we maybe we we we redo our our panel in a few months or in one year and we'll see where we stand and i think it's a it's a very exciting market and i i i mean it was really great having you here and giving us

these insights i think we learned a lot shantanu thank you very much also for helping uh um so much with this um with this panel and um yes my dear friends i hope that we have soon the opportunity to exchange ours of our opinions again and to our listeners and viewers thank you for attending please keep cva crypto valley association um in in in in your view and and join other events we are really here to try to educate the market to bring information from expert from first

sights to you so that we are all well educated and we can learn about this very exciting space okay thank you everybody thank you very much everyone all right bye-bye all right okay right see you guys