Ark's Cathie Wood, 21Shares' Snyder on Spot Bitcoin ETF

first of all what is your reaction to the hack and in your view does this delay the decision process around spot Bitcoin ETFs at all well uh we were on with you Katie last night both ailia and I were on with you and we saw this come up and I said what's that Bitcoin logo doing in this SEC release and why is Gary gansler's face there but we thought we had confirmation from an exchange uh turns out it was a hack uh we from from all that we can see right now it is not going to delay uh the arrival of uh a a spot Bitcoin ETF um but again you never know you can never say 100% you can never say 100% and Scarlet we were on the phone uh all three of us and I have to say it's a phone call probably never forgets yeah I wish for some reason it might have been taped and it'd be just great to kind of revisit that um ailia I want to ask you about the fee War that's taking place Eric mentioned all these fee reductions in addition to fee reductions there are waivers as well is it more important to be able to attract inflows early on thanks to those fee waivers or have the lowest permanent fee which is right now uh bitwise at 20 basis points so I think there's a few ways to look at this from our perspective you know we've we really see this as an access product this is about welcoming new people into the sector and we want to make sure that they the cost isn't something that is making that prohibitive for people right this is about ensuring that as many people as possible can participate in what is I mean as Kathy puts it you know a massive shift in financial infrastructure and I think that's really exciting and so we're pricing it accordingly um you know this isn't a product where you know it's not where we're necessarily looking to make you know all of our margins or things like that this is really about providing access and you know obviously we we priced our product at 21 basis points um 21 million Bitcoin 21 shares 21 basis points it sense for us yeah it kind of all works out I I noticed that myself um Kathy one of the things we noticed over the past uh week or two is that arcw has sort of transitioned out of gbtc looks like you put a chunk of money into um Bido which is the proch shares Futures ETF very liquid is that like a placeholder where you're going to maybe transition or leg into Ark B which I would think would be important because then you get out to a fast start in the derby well we can't say what we're going to do uh especially since the the spot Bitcoin ETF has not been approved yet um your your logic would seem sound if uh all works out according to plan but again Anything could happen between here and there okay so watch this space it sounds like it uh I ailia I want to go to you on on the fact that fees are so low I think uh most people would agree that it's surprising to see just how low these fees are is there a certain Break Even level for you when it comes to Assets in the fund uh at which point you would start making money on this product I mean look yes all of these providers are competing they're all businesses at the end of the day right and we obviously do have costs associated with this and we've talked about this in the past that you know costs assoc iated with crypto products are quite a bit higher than they are for other more traditional um ETFs simply because you actually have more service providers in the mix than you would otherwise um so I think you know obviously scale is going to play a role in that one of the things that you know is particularly interesting from our perspective is obviously we're bringing quite a bit of scale here already um as a firm we manage close to 2.5 billion in crypto assets on a global basis already um and have been doing so for a number of years uh company actually celebrated our 5year anniversary in November so we're trying to really ensure that we're bringing that and we're bringing that kind of scale and that operational um stability and robustness to to these products and I think over time obviously that skill does play a role as does quite frankly um you know we obviously this product forms a portion of a broader Suite of products for us um which include a number of actively managed products and I think for us those are a little bit different and actually support um our efforts in this sector more broadly so we look at this really as a single component of a broader business activity all right thank you so much may I add something there uh there's something uh very important about what ailia just said um uh 21 shares our partner has has been up and running for 5 years with 40 funds before we partnered with them and they have been through extremely volatile markets through Forks uh and havingfun so really important uh to make that observation thank you for explaining that and giving that context Kathy I want to follow up by by getting a sense from you what do you anticipate will be the breakdown of initial inflows into ARB when it is approved what share will be retail investors versus what share will be institutional and how might that look in six months time you know it's interesting we are we're we're going after all of these categories um and of course our bread and butter historically has been uh retail whereas uh 21 shares has been much more institutional uh and uh we're even speaking with um with uh State State Pension funds uh as well as even some uh treasurers so the interest is far and wide and certainly uh We've we are um we're satisfying a lot of curiosity out there right now with meetings uh so we're looking forward to seeing you know how this breaks down into flows one things though one thing though when you're dealing with institutions it's not going to be overnight there are so many boxes to check so much due diligence a and we'll and if the approval takes place that is for many of them the starting point uh for due diligence so I wouldn't expect um overnight uh success I I from from Eric's lips to God's ears in terms of for billion you know that would be amazing I want to get your take Kathy on the price of Bitcoin price action because when beeto launched that's when Bitcoin prices soared to their record high and we haven't gotten back to those levels just yet so once a spot Bitcoin ETF is approved do you expect this to be a sell the news kind of scenario for Bitcoin prices you know there's been a lot of anticipation we've had a big move uh and I think a lot of people are saying this is going to be a sell the news event and so maybe maybe there is but is going to be a sell on the news but so many people are now saying it that I'm beginning to wonder if they really believe it they're probably selling ahead of time so um we think that uh longer term which is our focus of course you know with institutions really getting the green light now uh uh with an SEC approval assuming that's what we've got here um we think that even uh going to 0.1 or 0.5% % of a portfolio for institutions is going to be a a price moving event um because we're already at 19.5 million uh Bitcoin outstanding 15 million in long-term holders strong hands they haven't moved uh their Bitcoin in more than half a year or roughly half a year uh and uh the limit is 21 million uh and so this this is true scarcity Evol in here and Kathy um I want to ask you something uh about the sort of Bitcoin crypto Community you had said on a different interview that this is a way to get exposure to bitcoin what I see amongst the crypto like the hardcore types is they're like this is paper Bitcoin you're supposed to store it yourself the whole point is a currency outside of the system and it kind of gets it this like wedge between like what's the purpose of Bitcoin and traditional Finance just looking to make a buck off of it and the idea that the Bitcoin isn't there because gold had dld had to deal with the same thing people didn't trust that they actually hold the gold bars and so the State Street people had to go take a picture with the Vault and the gold bars what do you think of all that in terms of that reaction from the crypto crowd well I I can understand it uh from one angle but let me address uh first of all uh the Bitcoin is going to be backed one for one in Cold Storage in our case we have uh listed our service provider as coinbase uh so uh I want to make sure everyone understands that I think what you're hearing from uh the Bitcoin Community uh and maybe they they'd be called Bitcoin maximalists is there is a fear of uh centralization the whole idea behind Bitcoin is a decentralized network transparent Network and so there's this fear of centralization um we believe that this is a step is going to be a stepping stone in terms of access for many for many individuals it's just an easier way to access it and over time may as as this movement matures maybe they will get their own wallets and and it's highly likely they will for institutions right now they are not going to custody they're not going to go through all of the steps of the process that we've gone through um they need to get used to what this is first this is uh this is a new technology it's a new asset class there's so much to learn so this is a stepping stone and as the uh as the movement matures we do think and we will encourage more and more decentralization we think that's very important and uh I want to Circle sorry I want to Circle back to uh the concept of Futures ETFs because to Eric's point that some people have come out said that these are paper Bitcoin products ofilia usually you see that criticism levied against Futures backed ETFs and with the spot Bitcoin ETFs launching what does that mean for the Futures based products who would necessarily be interested in Futures products and in favor rather of the spot product so look there you see this in Commodities right where you do see both physical um physically backed products as well as Futures products um there are some advantages uh to both obviously we think physical is a little bit easier to understand going to be more appropriate to a larger number of people um it's typically simpler to add to a portfolio and is therefore going to have a wider audience that being said Futures products can serve a really important tactical role there are some benefits around liquidity there are some benefits around you know certain phases of Market Cycles or that may be beneficial or may be beneficial in combination I think one of the things we've done as a firm is really wanted to ensure that we are welcoming people into the space and you know Kathy alluded to that this is a critical stepping stone to Bringing more people into the space if you believe in the long-term prospect that Bitcoin is going to change the way we do Finance globally you need a couple billion people using it this is a way to do that there's going to be a number of different ways to access it Futures products part of that we also have a wider Suite of actively managed products for people who are looking to you know take more advantage of our expertise in terms of markets and and active management element from Arc at the end of the day this is not a one-sized fits-all um thing this is a new asset class we're going to have as many ways to access it as we do essentially every other clet class on the market so I got to follow up with that Kathy um how long before we see leverage Bitcoin ETFs short Bitcoin ETFs approved or an xrp ETF or an ether ETF at this point well okay that uh really depends on the SEC and I think uh the stepping Stone to those is well how does how does this um roll out go and um we think it will go uh we we think it will go uh very well um and uh so I think the SEC again we know that the the research people at the SEC and uh they know what they're doing uh so I I I can't give you timing here this one has taken so long but maybe maybe the learnings associated with this and the fears associated with it or the concerns about risk will be allayed by this roll out and those others will come along more quickly so in other words Kathy before 2034 yeah yes

Channel: Bloomberg Television

Views: 37,497

Keywords: Bloomberg

Id: L1ZThTCSbD0

Length: 13min 43sec (823 seconds)

Published: Wed Jan 10 2024