US Bitcoin Spot ETFs Are Live: What Happens Next?

Transcript

great welcome everyone we are planning to start on time because there's a lot of exciting things to cover so welcome to this webinar entitled us spot Bitcoin ETF St live what happens next um this is going to be a very very exciting uh conversation on a very hot topic with some of the largest names in the space so thank you for joining us just a quick uh introduction uh thank you very much to the crypto Val Association for hosting this for those of you who don't know the crypto valy Association is a nonprofit organization based out of zuk but with branches globally North America Latin America and the Middle East um it's we basically gather industry participants foundations projects

institutions web through enthusiasts um into this organization and we discuss throughout the various working groups topics of interest for for the specific um for the specific population that's part of that so um I'm super excited uh let's kick this off with the round of introduction please uh to our speakers tell us who you are what got you into crypto and why you're excited to be in the space ladies first Christa great well thanks so much for having me I'm Christa Lynch and I'm a VP at grayscale where I lead ETF Capital markets so I work primarily with ETF stakeholders like authorized participants market makers liquidity providers and the like to support our ETFs and make sure that

they're functioning in a healthy manner I originally got into crypto because I was working at a traditional ETF asset manager and I had a curiosity for crypto I enrolled in a class to learn more about it and it really got me thinking about how you could put crypto into an ETF so Flash Forward and here I am now putting it into an ETF at Great scale exciting uh Matt how about you oh hey everybody um and you know thanks for having me thank you to the crypto Valley Association for all the important work that you're doing in the space there's so much uh regulatory uncertainty in the US and nice to see Switzerland being you know a typical neutral party and trying to create some

rules of the road that hopefully make it easier to do business in this space um so I am head of digital assets research at vanc in New York City Vanek is a family-owned asset manager about a 100 billion uh in asset Center management um I came to the space uh I started my career in journalism as a reporter at Bloomberg and CNBC so I got very familiar early on with fake news uh and I was always envious of interviewing people with bigger balance sheets than me so got my CFA and um met Kathy Wood when she worked at Alliance pre- Arch days and worked for her for four years covering Tech uh on a global Equity Fund so we were big Believers in open source

even though Bitcoin hadn't come around then um left Kathy and U worked at a a uh Hong Kong based Investment Bank with denit in fact U Equity sales research and trading and that company got bought by a Chinese state-owned entity which kind of reinforced for me you know issues of censorship and self-censorship and the world was beginning to De globalize U so I was getting increasing conviction that Bitcoin would be uh you know a neutral asset that would gain market share over time obviously Co accelerated that and join vanak three years ago to build out our product Suite in the

space awesome what an intro what a life what an experience exciting uh Adam how about you thank you Denita and thank you for the crypto valy Association for having me hi everyone so Adam z h a product development here at Global X ETFs uh been with the organization for about two years now and Lead their product development function for the firm so this includes everything from new product design as well as enhancements and and refinements um our product develop mandate can include everything from digital assets to equities to options based strategies and fixed income and like uh prior to Global X as with uh the director of ETP product development for 21 shares so in that role about a year helping them design and launch new crypto edps in the

European market uh and then before that was with New York Life Investments for about 13 years in both product management and product development roles uh last role with New York Life was the head of product ETF product development for for the for the firm so definitely a pretty broad experience in both trapi and and crypto especially on the on the product side um and what got me into crypto I I really started researching Bitcoin and ethereum back in the 2017 cycle it was interesting to me because it was a emerging technology that wasn't like any other asset class I had worked with in the past from a from a product structuring standpoint um and you think about bitcoin's characteristics of you know decentralized store of value a fixed monetary policy this all something that was very very interesting and uh

and unique to me so um I uh began personally investing in it back then very small amount um but when the opportunity came about to to merge my personal interest in professional Pursuits uh together I I'd welcome that opportunity and uh and made the leap over to uh to the crypto space yeah we're all very excited to be in the space right now probably less so year ago you know yeah a good a good boom Market always helps yeah so um I'm going to be moderating this webinar U my name is Den I'm part of the BD team at bullish for those of you who don't know what bullish is it's a regulated institutional crypto exchange the fastest growing in the world I'd say we uh we started the exchange in 2021 November um and we just surpassed 500

billion of traded volume on it since so I can easily say it's one of the fastest growing exchanges in the world um I am also chair of the institutional working group at the CVA we GA and discuss topics of Interest like like this one just a little housekeeping item for for those of you who are not members please consider joining us um we need you we need more more brains um in the industry overall so let's gather forces and do and do great things and also they're hosting um a very good conference in dup on the sixth and sth of June this year so if you're in Europe please join us it's always a a fantastic event all right so um why don't you guys tell us more about your organization we're going to start with grayscale because

grayscale is the hisory of us crypto ETFs um Krystal can you give us some like a a quick trip down memory lane um you did to Thea so what how did it start how did it Rel where are you now and what products are you excited about within grayscale is probably best known for suing the SEC and kind of Paving the way for the cohort of spot Bitcoin ETFs that came to Market in January um so that was actually a 10-year project of ours um that finally came to fruition this year and we're very excited about that um so gbtc is our spot Bitcoin ETF and we do also have a series of other single and multi- token assets uh that

are available in various stages of their product life cycle we ultimately hope to uplist all of them just like gbtc into the ETF form um so gbtc is really like the poster child for what we hope that all of our products will be able to do and then we do also offer some other products like staking and we have an equity thematic ETF that's available in the US and Europe and then you might have seen that we recently filed for another spot Bitcoin product um we're calling it BTC the grayscale Bitcoin mini and uh we hope to see that trading in markets soon are you also introducing various products with various fee structures anything we should be excited about in particular yeah so the product that I

just mentioned BTC or the grayscale bitco mini is going to be a lower fee alternative to uh investors who are more fee sensitive so gbtc was always envisioned to be a capital markets tool with great liquidity a great track record um it's been around for 10 years operated by Crypt native Specialists and we wanted to bring a product to Market that uh took into consideration that some are more sensitive to fees and maybe don't care as much about those Capital markets features um and we're really excited about the way that we're going to be delivering it so we're taking the concept of an airdrop for Crypton native investors and we're going to apply that to the traditional Finance ETF so shareholders of gbtc will actually receive shares of BTC in a uh

corporate action similar to uh an airdrop if you will interesting it's great to see that you're innovating and adapting to what the market needs Matt tell us about Vanek also theand behind the operation anything you can share sure sure so uh vanak is a family-owned business started in 1955 and what's unique about the origin story is that the founder was was going to school at night getting his business school degree and he was studying you know Austrian economics and he got he started an international mutual fund which at the time was quite unique because there's a lot of Home Country bias and in n in the late 60s he got conviction that gold uh was going to

deeg and he pivoted that International mutual fund into all gold mining stocks and it became the best performing mutual fund in the 1970s and really built the success of this firm so when the current CEO Yan you know took the Reigns uh he took to heart the innovator's dilemma and was quick to understand bitcoin's uh potential role as a store of value and also a competitor to our existing asset base a large percentage of which is still in gold and gold mining stocks so we for the first trafi manager to file for a Bitcoin TF in 2017 and when it became that clear that the regulation was not going to allow it uh we started

investing privately across the space in venture to well we bought Bitcoin of course and we bought ethereum um when that came to Market but we also started writing tickets into venture to build relationships get access to deal flow uh and that formed the foundation of our uh several private liquid token strategies um so of we have 100 billion in assets about 1.5 billion of that is in crypto related of the crypto related half of that is in European uh etps like Bitcoin and ethereum and some multi-token baskets about 400 million in US ETFs uh including dap which gives you exposure

to equities uh that are kind of pure play exposed to crypto and then hodal uh our Flagship spot Bitcoin ETF uh and then the balances and various private strategies um we didn't love the kind of the over-the-counter trust uh structure that some brought to Market because of the volatility and how they trade premiums and discounts to nav You could argue that caused the entire the end of the last crypto cycle because three hours Capital was using these shares that began to trade it at a discount and then they had margin calls and you know your deleveraging Cascade kicked off so we do our token strategies in private form uh and the way we try to differentiate with our hotal about Bitcoin ETF uh we put in the largest

seed investment uh of any manager so $70 million off of our own balance sheet we have the most skin in the game we aggressively eat our own cooking is kind of the culture here uh design intelligent investment Solutions and then um employees buy uh I think we have uh uh differentiated research in the space with price targets and models for Bitcoin ethereum and a number of larger layer ones uh we've got the best intern on Twitter and we've got the best ticker uh with HL um so it has been a a fee fight in the uh spot Bitcoin ETF arena with 10 very very similar products um so we kind of joined the party a couple

weeks ago and cut our fees to zero for the first 1.5 billion and that catalyzed a lot of inflows um yeah I'll leave it uh there for now um I think uh yeah bullish and uh your hot ticker can probably compete if if you were ever to list but yeah very aggressive cutting piece to zero Adam how about global X um we know it's owned by Mir you also recently launched a very exciting new smart beta product tell us what's tell us tell us more yeah absolutely so Global X ETFs was actually founded in 20 uh 2008 I should say and we're a leading um provider of thematic ETFs and our mission was really to provide investors with unexplored and intelligent solutions you know so our

product line currently here in the is consists of 91 ETFs with over $45 billion doar of assets and management and you know while we're we distinguished for our thematic growth and our income based strategies we also have um strategies in the digital asset front uh Commodities and and risk managed uh and strategies as well and denit as you mentioned Global X is a member of the Mite asset Financial Group uh which is a large uh Korean asset manager uh with more than $500 billion do of ass management and uh also a a pretty worldwide footprint in terms of ETF platform issuance as well so not only do we have um uh Affiliates here in the obviously us where we're

headquartered but we also have Affiliates in Canada in Europe um Colombia Hong Kong uh Korea Vietnam Australia and Collective collectively over a hundred billion dollars of assets management within that ETF platform but also very um uh regions where that are more crypto crypto-friendly right um from what we're currently doing right now we obviously have three um ETFs that are crypto Equity focused that are listed here in the US our largest one being the global X blockchain ETF uh the Ticker on that is bkc has roughly around 167 million dollar of asset management but I think uh what is really interesting to us now and what you uh uh

um teed up for me very well is uh we recently launched the global x uh Bitcoin Trend strategy ETF uh in partners ship with the coind Des indices so it's very unique strategy that is uh designed to help navigate the various crypto Market Cycles by providing Dynamic exposure between Bitcoin and US treasuries based on the the the current price trend of uh Bitcoin so very excited to to have that product launched last week and looking to build some product awareness in it we uh for those of you who don't know bullish bought coin desk uh at the end of last year and the index business alongside consensus obviously the media business is one we're extremely excited about so yeah look forward to seeing how this

partnership intervals right so we have a really broad public that has dialed into this webinar I'm told we have over a hundred participants some are great experts others are just trying to catch up and understand what's happening in the space given the incredible price action can someone actually explain to us and Christa maybe we can start with you how these ETFs actually work and can you guys all of us help us understand what the opportunities because just by schimming through some and talking to some industry experts we're sitting at 110 trillion registered SEC that advisers currently hold but only a few clients are actually testing the grounds um I was in London last week at the digital asset Summit and was told that black black AR has only approached 15% of their of their client base so how do

these ETFs work and what are clients waiting for to see to jump in the space cha yeah I'm happy to start so I'm a huge ETF nerd self-proclaimed um and I would say that the spot bit coin ETFs are designed to work just like any other ETF and that's part of the beauty of it so if you have experience trading an ETF or even trading a stock then you've experienced something similar to what it's going to be like trading a spot Bitcoin ETF so Bitcoin etf's track and underlying index which is the price of Bitcoin and that ETF actually invests in Bitcoin so the etf's issuer is buying and selling Bitcoin um based on the supply and demand Dynamics in the secondary Market which is where you or I reta ret investor would be buying or

selling that Bitcoin ETF and I think one thing that's important to note is that ETFs were actually designed in the early 90s as a way to give access to investors to hard-to-reach asset classes and that's exactly what they started doing with the S&P 500 and other broad Equity indices which Believe It or Not were actually hard to get access to at that time then in the 2000s we saw this evolved to commodity ETFs and GLD a gold ETF was actually brought to Market in the 20 that was kind of the blueprint for how these Bitcoin ETFs work and now we can finally say in 2024 that we have our spot Bitcoin ETF um so I think part of the reason why we're seeing uh what you alluded to as only a be the beginning of

the investment into these products is because this is really bringing a novel asset class to Market in a traditional wrapper uh but it requires some time for institutions to get comfortable see the track record Etc and so this is really going to be a way for people to continue to get comfortable investing in an asset class that maybe they weren't comfortable with maybe they were curious about but now they finally have the tools to do so and so I think in the coming months we're going to see continued inflows into these products exciting and how how big um how big is the opportunity ma uh let me just add one thing to what Chris is saying just like to contextualize it maybe there's some software developers on here I don't know

but we think of the ETF as like like an API connection that delivers a Bitcoin only exchange directly into the brokerage account of every investor in the US and that is tremendously powerful and the reason is uh regulation in the US prevents money Managers from holding client assets directly and with Bitcoin you know the not your keys not your coin there's just no regulatory structure to create that separation of power which is a Hallmark of American governance in general if you look across how we do things check a lot of checks and balances and the enforcement of that General concept that an investment

manager cannot hold client assets directly enforcement became much stricter under the Biden White House especially under Gary gendler and we uh the the the money managers in the space really are forced to use just a tiny handful of custodians including coinbase and Gemini uh and that's why um the you you see such consolidation at the custody side is a function of Regulation so it's the ETF rapper this handy mechanism that can represent a lot of different assets both Securities and commodities uh and it um delivers that asset into this whole range of money managers who buy stocks on a discretionary basis for their

clients meaning that the client says you know what if you think Apple's a good buy you could just buy for me you don't have to ask me and there's approximately 5050 trillion of assets you know tied to that type of model uh and none of them have really bought Bitcoin yet and that includes now if you look at the bank-owned and broker owned Distributors uh they still have not um approve these products and that's because a lot of times those financial advisers are operating off of a model portfolio that's set at the office of the CIO it might typically be something like 60% equities 40% bonds those models have to be Rewritten hopefully so that they're 60 391 or maybe even higher um and that just takes time but uh from

talking to our clients we know that they are doing the work and I think you're going to start to see some of those models trickle out some of them already have from integrated platforms like Fidelity uh that has included Bitcoin even in its u a conservative version of its all-in-one portfolio so 1% allocation of that 50 trillion you're talking about 500 billion you know that is multiples of the inflows that we've seen uh here to date so that's why we think the story is just getting started great thank you so much for the granularity Adam thoughts on the opportunity or anything you want to explain on the inner workings we actually had a question from the audience I'll go through these at the end but someone asked please explain the

naked truth about the real workflow of ETFs for Bitcoin does it involve buying and holding BTC in first instance or not I think we largely covered that but yeah anything you want to wasn't clear the answer is yes yeah yeah yeah I think Kristen and Matt both sumed up very well in terms of their their their points on the the Bitcoin ETF one thing maybe even just to even oversimplify it because I I think that um you know obvious you mentioned there's a range of knowledge on this on this call right now I think the the the spot Bitcoin ETF uh is really just a Kent key access to get exposure to bitcoin without the need of things like self- custody remembering passwords you have better like Financial and tax reporting for you know at an extremely

you know low charge right zero right now but um I think uh I think that's why that the beauty of the ETF rapper lends itself very well to an asset class like like Bitcoin and I think the question that comes up a lot is like well why don't I just go on coinbase and buy it myself and hold it well I think all those things that what I just mentioned that the the need for self- custody you know God forbid you get hit by that proverbial bus right and what happens to your your password you know if you're your spouse or your loved one doesn't know it then those could be could be lost forever so um so I think that uh that's the the the one point that I really just wanted to make is that that TurnKey access to getting exposure which is is a very nice feature of the ETF

thanks very well said I think you can never really oversimplify anything in crypto um there's a lot of assumed knowledge but you know there's still billion people that are yet to onb boed in the industry so thanks for that clarification okay so moving on uh now that Bitcoin paved the way for ETFs in the US what's next what are we excited about um eth ETFs Solana ETFs what's next what's coming um M maduna kick us off yeah sure uh but first I think just how accessible this product is it's gonna it may surprise people who buys it uh the one of the largest Bitcoin miners is Marathon they just reported earnings I was reading the transcript they bought

the Bitcoin ETF during the month because uh it seemed I mean it seemed like fomo but that's just an indication uh that there's a corporate buyer uh who may yet emerge uh we still don't have uh listed options on many of these products those are likely to come this year and that will bring us dollar financing into the space because if you want to make a market on options uh you have to bring a dollar balance sheet and so I think that should make the derivatives Market more liquid uh including spot Market uh in crypto and maybe alleviate some of the uh High funding rates that we're seeing

in the space and then if you look at the market structure in this space typically Bitcoin dominance tends to rise into the having uh and then um subsequently Bitcoin has its most explosive returns but dominance Falls so you we're expecting with the US election in Q4 to be the fireworks for the space and and I would expect Bitcoin dominance to fall um and in our private funds which have performed very well both beat Bitcoin after fees last year and off to a good start those are where we are uh hunting for um good risk reward interesting yeah we we'll delve into the US elections um shortly Adam

anything to add what do you guys ex said maybe something you you that you can talk about that you're launching like what next that we should be excited about yeah I think you know obviously you know Bitcoin is uh uh has been in the headlines and I think all of like us that have been working in the space for a number of years now we understand how Bitcoin works and the benefits of it Etc but I you know to to Matt's earlier point that there's this huge segment of wealth management that still doesn't understand it right so I I you know I personally think for the balance of this year is going to be that continued education of Bitcoin how how that you know what it what it what it is you know how do you add it to a portfolio what are the correlations between traditional

Etc so I think there's going to be a lot of Education that's going to be um uh uh front and center or for the balance of this year um but I think you know from a products perspective you're already seeing this this shift away from just pure exposure to bitcoin you're you you really have leveraged products here in the US we have short products here in the US and also in Europe um and then we're starting to move into this kind of a factor based um uh approach of getting exposure to bitcoin and and as I mentioned earlier uh the launch of the the Trend strategy ETF that we had last week is um you know our uh you know that further kind of evolution of um of getting unique exposure to to Bitcoin in a in a new and novel way so certainly

very excited about about that what about grayscale we need to know what gr grayscale thinks is trending well I think one point that Matt made I really really liked which was we kind of went into this thinking that this was going to be a way for people to get access to bitcoin who Maybe didn't have experience with it but we are also seeing that those who do have experience with Bitcoin are using the ETF as a tool to diversify how they invest in it so it's not necessarily just a tool for those who are entering the crypto space it's also a tool for those who are crypto natives who want to diversify how they hold it um and I think we would be remiss if we didn't talk about the ethereum filing so as many of you probably know there is a

host of filings in the works right now may is kind of a soft circled Milestone that many are looking at because there is an SEC deadline to aine on one of those filings um so I think a lot of people right now are kind of speculating whether or not there will be approval for ethereum uh spot products in the ETF form um you know that has changed tone over the past few weeks and it's it's you know people are speculating in both directions uh there's a lot of kind of fact patterns similar to what led to the uplisting of Bitcoin products but there's also some differences and I think people are going to be really really laser focused on that may deadline to see what comes next there exciting times ahead I mean it's I

just listened to this and I feel so lucky that I work in the space um so we need to talk about the US elections because there's a change of administration happening very soon uh which could potentially change completely the course of uh regulation in the US who's willing to take a step and walk us through what we can expect uh with the highest likely good Matt do you want to start that's a very broad question uh uh but I guess I'll give some ifs like hypotheticals um the environment for uh crypto both entrepreneurs and investors is very poor

in the US uh partially because of these custody restrictions and also because obviously the government is suing like the largest player in the space which coinbase um and then just practically as a user I still can't really use the lightning Network in New York as an example um if you try to claim a bunch of airdrops or interact with a bunch of protocols in the US uh you can't do it um the market share of um uh us developers crypto developers as a percentage of total has fallen from 42% to 28% in the last three years there's strong disincentives for banks and brok Brokers to be in this space High Capital requirements stringent licenses required

um and it we can see from the performance of both the stock market and the crypto Market When Donald Trump is rising in the polls uh the market is acting better I've seen um sside research on this so a base case is that uh there would be uh if you know the presidency changes there'd be first and foremost uh changes at the OCC which is the controller of the currency uh who can um make it easier or harder for banks to just hold this stuff on behalf of clients um I interviewed Brian Brooks former head of the OC last week at the USC vanak blockchain conference uh first he said if there's an ethereum ETF approved before the election I'll eat your hat he was talking to me U so he's

very skeptical that he says it's political uh that they will just make up any excuse to not approve these products um obviously if the election goes through given that Trump owns ethereum um you know he would likely change the head of the SEC and then the enforcement um and some of those operational hurdles like custody would probably ease but in order to clarify for sure the security versus the commodity question in the US is unique because we have two different Regulators on this question uh unlike you know many jurisdictions that have one and right now our two Regulators are Turf fighting we probably need legislation to solve the underlying issues and as a result we try to just

not think about us regulation too much uh and remind ourselves this Emerging Market asset class Frontier Market asset class when you look at who's bullish on this on bitcoin it's people in uh Nigeria and the Philippines and Indonesia young countries when you look at who is skeptical about Bitcoin it's people in France Germany Japan that's old people uh so you want to be on the side of of the youth um uh but I do think and the market is telling us that uh uh change in White House will be a positive Catalyst for the price thanks that was really interesting I think the government intervention in Nigeria is what reminded us again why Bitcoin exists it's uh it's pretty

incredible stuff for witnessing how about you um Adam how how do you guys think about regulation the uncertainty the upcoming change in administration anything you guys are holding your breath on in particular yeah I think like what's interesting about the upcoming election right is that um obviously you know markets are following it very closely in in terms of um terms of who the the new Administration could potentially be but I think what's unique about like Bitcoin itself right you don't it doesn't necessarily need a president right it's kind of greatest strength is that it's an uncorrelated asset and doesn't uh necessarily move with you know the stock and bond markets so uh instead Bitcoin moves with you know the supply and demand uh uh uh uh Supply demand their kind of rates of

inflation uh you know so I think the the there's positive Tailwinds associated with Bitcoin and crypto as a whole right so obviously the having event that's coming up kind of the strengthening of the US uh economy and obviously with the with the launch of these spot products um you know it's obviously another strong Tailwind for uh increased adoption within the within the space so I agree with you but I still think that the lack of a comprehensive legal framework in the US is dragging the entire industry so it just be such a huge catalyst um for crypto if to get a bit more transparent yeah no totally and I think some of the regions are doing it well like in the EU with the m right obviously passing a framework that at

leis uh um provides a um a Sandbox in terms of how uh crypto issuers and and crypto companies are able to operate within the EU um so I think uh you know that's obviously a positive sign but yeah you know I would I would agree with you more regulatory Clarity is g to be helpful yeah I'm going to take the other side even on the MAA stuff um like we've looked into asset issuance stable coins gold tokens all that stuff it's just still if you're not launching at scale it's hard to make the economics work uh although I will say we have an nft uh um product called segment which is a a way to fractionalize um erc20 uh nfts um using ERC 1155 and uh it's a

fractionalization engine basically that could have real world asset utility and we've chosen to uh do that project out of Germany and how ironic this new york-based company and when you go to our nft project uh you can't get all the utility if you're us-based so there are some advantages to Ma I I grant it but still Europe you know picking winners uh surveillance capitalism at its Max I think when it comes to make a Devils really in the detail so we just really need to see what thecb is going to do especially when it comes to stable coin regulation um because it's in a couple of months and there's still quite a lot of scrambling but that's here for you Christa anything you want to comment

on with regards to the the election chain before we actually jump into discuss other regions yeah well I would say grce scale is certainly well acquainted with uh the regulatory regime having sued the SEC to get to where we are um I think one thing I would note is that the success of the launch of the Bitcoin ETFs I think is only going to provide more momentum for having to to pay attention um you know they were successful I think we're going to continue to see the masses invest in them and that's only going to drive the upward momentum um from both a political standpoint and also from just everyone being more well acquainted with what these are um so I think to most people on this podcast we always thought that Bitcoin and crypto had validity and were

a legitimate asset class but now that we're seeing it come to Market in this structure in a regulated way I think that only um lends credibility as far as the entire population can see to what we're building in the crypto space exciting times ahead indeed yes so let's discuss other regions obviously you know the US has been leading back what what about Asia Latin America Europe um what other regions are we excited about Matt you alluded to Europe um anything else um yeah in our Venture Investments we've tried to focus on Emerging Markets exchanges and so we have stakes in some of the

local exchanges in Argentina and the Philippines and India in the Middle East uh and I think what happened you mentioned binance uh what happened to them in Nigeria to me reads more of a a local versus Foreigner issue and less of a crypto issue and actually is uh helping the relative market share of some of the local players so the most sensitive part of crypto is when you're offboarding to Fiat and each country wants to have its own U visibility into that process and who the major players are uh so Emerging Markets exchanges uh in the private markets many of those

valuations came down quite a bit in the bare Market uh big layoffs and restructurings and we continue to see uh stable coin volumes um rising in specific you know I mean the obvious places right latam uh Middle East and Southeast Asia and we're expressing that through first like not losing conviction when it's a a tough tape on us regulation because that's not what's driving this what's driving it is the real adoption um in in emerging markets and then we also have a actively managed uh Emerging Market debt and Equity strategies and we have been collaborating with our fixed income

colleagues as they analyze sov debt um they've they made money from the El Salvador bonds um they've done some work in Ethiopia which is the most recent country to uh adopt um to to mine Bitcoin for its own reserves um and and they are in the process of negotiating with the IMF so there's a lot of uh game theory behind the scenes as to what countries will do with Bitcoin without before they get that stick from the IMF that's like we're not going to bail you out if you don't do X like what happened in Pakistan last week p Pan's negotiating with the IMF for $3 billion bailout IMF says well you have to collect these taxes on crypto it's like dude crypto is illegal in Pakistan what taxes are you talking about but this is

the uh the back and forth and some percentage of those countries that are on the fringes of the Global Financial system and looking for financing uh will object to these IMF demands and instead choose crypto and Bitcoin looks like that's happening in Ethiopia obviously it's happened to a certain degree in Argentina oh thanks for that trip around the world super insightful Adam what about Asia um maybe you know you can you can even tell us what meor as a group thinks it's a pretty significant one so what what can we expect in Asia or anywhere else um in the world yeah I think uh uh Hong Kong is seems to be an interesting spot right uh obviously there's a lot of um uh opportunities

there with they actually have a a listed Bitcoin Futures ETFs like I think I believe three of them but also um the the Securities Exchange over there is actually um um getting these spot Bitcoin applications as well and I think it looks like today that uh Hong Kong may allow for inine creations and redemptions for their uh for their spot their spot ETFs uh if and when they should launch which actually is obviously you know different from what the US structure is currently right now which is uh cash crates creates only right so I think that's going to be an interesting um uh bright spot within within the world is is Hong Kong right because you know obviously um southeast Asia is is a is a a large crypto Hub and

should investors have access to these spot uh products in Hong Kong that could again create U um even more demand for for for for Bitcoin um so which is again very interesting location that we're looking into anything you guys anything for you guys at gr scale yeah I actually just got back from London and one thing that is promising to see there is the FCA had a kind of change in stance two weeks ago on their um acceptability for spot Bitcoin and ethereum products um for institutional investors and through their kind of preferred mechanism which is an etn but it's promising to see any traction um in this kind of regulated vehicle around the world so that was one

takeaway for me from a trip that I was on great I mean that's so very very exciting I think um we can jump into the Q&A from the audience um we have a question what is the relationship between crypto between options Futures crypto ETFs and BTC price moves I mean you you guys knew that we were gonna have to talk about the BTC price Target you can pick short shortterm midterm longterm um Can someone walk us through you know how these inflow inflows are imp impacting um impacting prices and what we should expect this is not investment advice obviously I can jump in quickly so I

guess what I would say is that as we mentioned before these spot Bitcoin ETFs do actually purchase Bitcoin when there are inflows to the funds and so you have all these products in market now that are buyers of Bitcoin um as we see inflows to the cohort and so that is just another Avenue for uh demand to be you know manifest for Bitcoin and I think also as we alluded to earlier on the podcast we're just at the beginning of this being something that the masses can invest in easily we've made Bitcoin much easier to access and I think we should expect to see um the space continue to grow uh and that's only going to again lift the price of Bitcoin as we go forward yeah the the growth in the

derivatives market and Futures volumes is uh just the other side of the coin of the ETF demand because when the market makers are uh receiving orders for Bitcoin from an ETF sponsor like vanac they have to go out buy the Bitcoin and then they short Futures on the other side to hedge themselves um so I think that helps explain you know the large increase in the Futures and options Market it's still a very immature Market in crypto because of the counterparty risks that we've seen uh cycle after cycle but I think one interesting data point is that uh when Gary gendler made his speech at the Aspen Institute in

2021 giving the green light for uh Bitcoin Futures ETFs he remarked that the underlying liquidity on the CME Futures Market had reached a point that these products were appropriate that was about $2 billion do in open interest recently ethereum Futures passed that $2 billion dollar in open interest so it's from our perspective going to have a hard time for the SEC to deny those products based on a liquidity argument at least my personal opinion no no information on that um so I you know I think you'll we should expect to see the derivatives Market grow because now it's tied up with regulated entities in the space and that will make balance sheet expansion

uh somewhat less risky also as as exchanges like ours get more regulated people are just going to feel more comfortable to trade them um I think there was another question from the audience someone was asking how long are these ETFs going to run run for until people get comfortable enough to start buying the coins directly um if you guys were to just take a guess how long do you think what that would take I mean there's always going to be a room for the speculative uh route the self- custody route people have different use cases for the asset in different ways I think the ETF package will be enduring yeah and it's a way diversify your exposure too so while you may have spot Bitcoin you may also have the ETF

it's not that the two are mutually exclusive so I don't think there will necess necessarily be like a point of crossover you may start to see people actually hold both shades of crypto full full on in your portfolio um there's another there was another interesting question from the audience over the last couple of days um with regards to uh Bitcoin liquidity specifically so uh what happens if uh there's lack of Supply which means that onchain transactions fall which means that there there's less revenue for miners um it's rather Technical and we need someone who understands the Dynamics also of of Mining and and and how that changes the price of Bitcoin anyone willing to shed

some light on the topic I I mean even when an ETF sponsor you know is purchasing Bitcoin there is an onchain transaction that is made now it may be a larger size and Consolidated wallet but uh there is gas being used so um or rather Bitcoin being mined and fees being generated uh so I just think this is the push and pull between what's the narrative in use case that's dominating the asset at any given point uh right now it is you know more speculative buying from North american-based investors um this will EB and flow right and we're hopeful that some of the

Innovation going on in layer twos is going to catalyze more utility uh at the kind of P2P payments level but frankly our our price Target on bitcoin is based on a multiple to Gold we are not including the upside from you know possibly micro payments uh utility uh so that's a you know hopefully the next leg of this bull market go out there and build some better L2 apps yeah and if you look at how long it took go to get to the a ETF a that we're seeing in Bitcoin it's U it's definitely a very stying difference so great so we are perfectly on time um I don't think we have any other

questions that would be relevant um to discuss anything you guys want to talk about any closing remarks I think this has been super useful for anyone who's willing to learn more please feel free to contact our panelists um they can share some reading they can I'm sure that all your companies publish extensive research on on these fs and and the market dynamics um yeah so please feel free to reach out um anyone else want to talk about anything specific I think we've covered a lot of ground I would just Echo that education point I think all of us are very open to talking about all of these topics and we welcome questions so certainly feel free to reach out and we're happy to discuss further thank you um yes and yeah if

you're not members of the CVA Valley please join us for more for more web like that thank you guys so much uh I think that you know we're you you you've managed to give us a wealth of knowledge a lot of interesting points to think about and yeah maybe we can gather again in a couple of months and the etfc would have completely changed and exploded so yeah stay tuned thank you thank you everyone thank you guys bye