TLDW:

• Andrew Jacobson outlines the journey, highlighting a decade of efforts, with their first filing in June 2021 and a rejection in January of the previous year. The approval was seen as inevitable due to the maturation of the crypto market and comprehensive research presented by their team.
• Tom Staudt notes the uniqueness of this process compared to previous ones, emphasizing the role of historical filings and the successful track record of similar products in other markets. He points out the SEC's role as a protector and the greater consumer protection afforded by the ETF structure.
• Eleanor Terrett discusses the SEC’s consistent stance on crypto and Bitcoin, despite the approval. She highlights the significant role played by the Greyscale case and the evolving understanding of crypto by SEC staff attorneys, which contributed to the shift in regulatory attitude.
• The panelists debate the necessity of shared surveillance agreements and emphasize the strong correlation between spot and futures markets. Andrew argues for the transparency of the crypto market and the ETF’s role in market efficiency.
• The speakers agree that the ETF's approval marks a transformative event for the crypto industry, elevating it and expanding access to blockchain ecosystems. Tom adds that the ETF opens new opportunities for wealth management and diversification within digital assets.

‍Chen: Welcome, everyone. Thank you for joining us today for this DACOM Digital episode, where we’re going into the ins and outs of the Bitcoin spot ETF approval. A little more than a week ago, we have a remarkable group of leaders that really made it happen. I feel if there’s ever going to be a movie about the Bitcoin ETF being approved, these guys are going to have characters for them. My suggestion for Andrew at least is Ryan Gosling. But let Hollywood decide when the time is right. So just to briefly introduce our speakers here. Andrew Jacobson, he is the VP and Head of Legal globally for 21 Shares, which I believe was first in line and actually named on the approval notice. 21 Shares, of course, work with ARK Invest, a pretty legendary firm by now. Tom Staudt is with us. He’s the President and Chief Operating Officer. And, of course, Eleanor Terrett, a Journalist at FOX Business, who really has been deep in covering and providing insights on what was going on at the SEC and across the industry. So let me start by asking a pretty straightforward question. What was different now? What changed that allowed for it to finally be approved? I’ll just say that from our vantage point. Solidus is very focused on market surveillance, market integrity. Market manipulation has been consistent for almost 10 years now. A major challenge that the SEC has used to reject Bitcoin spot ETF rule change applications. There were a lot of attempts to address it over time, etc. But this time, it’s finally. And there’s been a lot of changes to how the applications work. So what actually changed? What got the SEC to finally approve this? And if it’s okay, Andrew, maybe I’ll start with you, giving us a little bit of a chronology and analysis of what was different about this round of applications?

Andrew: Sure, happy to, and really happy to be here. I think this round of approvals is really inevitable. If you look back at filing, it’s dating back 10 years. Our first filing was in June of 2021. And we were actually last rejected in January of last year. And so if you look at it in terms of the process, I think, the Grayscale decision did have an impact. It put the SEC in a legal bind. But I think just more broadly from a macro level, you look at the maturity of the industry, you look at some of the research that our research team prepared in coordination with ARK and our filing, really showing that it was a mature market. There was a much safer market than it was maybe 10 years ago. I think, it put the SEC into a corner politically, put them into a corner from a regulatory perspective, and really put them into a corner from a product perspective that this was the right time. And so people point to court decisions, they point to other factors. I think it was really a number of different ones that helped get this one across the finish line. 

Chen: Andrew, thank you for that. And I think I’ve read over the years every single rejection document. I’m a bit obsessed with it. I’m probably not the only one, but I think it’s a pretty limited club. And I guess, manipulation has been very central to it. But it’s also something that exists in traditional finance. I’m curious to ask you, Tom, from your vantage point. You guys, of course, ARK has been extremely innovative in terms of your ETF products, actively managed, etc. really took it to a whole nother level. What’s your perspective? Was this similar to other processes or different? And again, what changed? 

Tom: I think it certainly has been different. I think that’s fair to say. I agree with a lot of what Andrew just said, both in terms of fact that I think both ARK and 21 Shares are pretty proud that it was actually our filing that actually set the timetable that eventually led to this approval. It was the milestone on the timeline for the ARK and 21 Shares, Bitcoin ETF that is the reason that it was January versus perhaps striping on at least a little bit farther. We certainly stand on the shoulders of quite a bit of work for a decade, as Andrew said, but it’s not just that. I think you look at the fact that other markets have had these products. You talk about market concerns around manipulation, you talked about concerns about deviation or issues, we look at, and I can tell you from the ARK side, when we were entering the partnership with 21 Shares, we spent quite a bit of time looking at their performance of products in Europe. It was the only firm in this Bitcoin race in the United States that had a proven track record, and an auditable track record, where I could spend time and look through actual operational execution. And that gave me great comfort in putting our firm’s name alongside another’s to bring this product to market, go through the process, and of course, the more important part, which is to start to handle client money. But I think it’s also-- If you look at regulatory regimes and financial markets that the US wants to be associated with, you look at Europe, you look at Australia, you look at Canada, there are others as well, these products have been trading well, there have not been significant issues, there have not been massive dislocations. I think, when Andrew says, "It’s inevitable," we looked even in the US with the performance of futures products to show that it can be done. And what we’ve all come to the same conclusion is that compared to where US investors were forced to gain exposure and being driven off shore and driven into some of these unfortunate events, those could have been prevented if the regulatory schema here would have acted faster. And that’s a hindsight argument. But it’s also a consumer protection argument. The SEC is, at the end of the day, not an investment advisor. It is a consumer protector. And I think the overwhelming evidence became clear that US investors, whether they’re retail, whether they’re institutional, whether they’re large or small, are better off under the ETF structure, they’re better off with auditors and regulators and firms that have something to lose. And I think that what you’re seeing is that this is, obviously, the first stage here with the launch of the Spot pick on ETFs. But there’s a lot more that comes after this. I don’t want people to see this as the end of the journey. This is really just the beginning.

Chen: Right. Well, you’re stealing some of my questions, which is great. We’re already getting into it. And I think maybe to still echo your point, I believe, Commissioner Peirce, who has been on the dissent side for half a decade now, basically referred to the past 10 years as wasted time, which I think reflects with you then. And on that note, Eleanor, I think that people at this point really know what was going on at the SEC. And I think of those people-- I mean, you definitely have been able to provide a lot of insight on what’s the process been on the regulatory side and obviously with the broader industry. So I’m curious to ask you from your vantage point. What changed? What happened? What allowed this to finally be approved? What switched?

Eleanor: Well, I think the gentleman made excellent points as well. For me, covering the SEC, covering the regulatory SAGA that has been "cryptocurrency versus the government" for, I’d say, I guess, last five or six years, but particularly ramped up in the last two years. I think the Gensler led SEC still has the same attitude towards cryptocurrency and Bitcoin as it pretty much always has. And I think we saw that proof with Gensler's statement regarding the approval right after it came out on the same day. He basically said we’re not endorsing Bitcoin, we’re not endorsing what it does, we still believe it’s a vehicle for illicit activity. But legally-- He didn’t actually say this, but the takeaway was that legally, we can’t put up any more roadblocks for investors who actually want this. And Tom mentioned the disclosures. The SEC, at the end of the day, their job is not to regulate by enforcement. It’s just something that they do. And it’s something that they’ve been doing to the crypto industry for a long time. They’re disclosures based on resumes. So they’re the ones that say-- They’re basically the gatekeepers. They say, "Has this company given their investors the right disclosures? Do they know everything that’s going on?" And if they do, then investors, a retail investor, a sophisticated investor, if you want to call yourself an accredited investor, US investors have the opportunity to invest in what they want. And I think at the end of the day, it was very much the Greyscale case that helped. Andrew mentioned the maturation of the cryptocurrency market, I think that also helps a lot. But also it just ended up being that Gary couldn’t really say no anymore. And he also had the ire of the courts looking over his shoulder as well. But I think the main thing that’s changed, to your question, is that the staff attorneys as well-- I think the attitude has changed surrounding the cryptocurrency market. I think we’ve seen a total shift in view that "This is not just some niche industry. That’s no man’s land." And it’s actually something that actually is a $1.7 trillion industry. That’s nothing to sniff at. And it’s been very much front and center in some of these court cases we’ve seen between, whether it’s Ripple, whether it’s Coinbase, whether it’s Binance, that’s going on today. But also just the Blockchain technology and Crypto, I think, SEC staff attorneys-- And you guys, Tom and Andrew, you can tell me if I’m incorrect here. But I believe some of those staff attorneys understand Crypto at least a little bit better than they did five or six years ago. And it’s become much more of a popular alternative form of investment for retail investors, specifically after the pandemic. And there’s actual conversations now going on surrounding Cryptocurrency in Congress, in the White House. And all these places that five or six years ago, there really weren't. So I think it was kind of a perfect storm of things. It was the right place at the right time. Whether it was 10 years too late? I’m sure the Crypto industry does think that is the case. And I’d say it also helps when you’ve got Larry Fink on your side.

Tom: I think, one thing I wanted to just add to that is, in the US here, we have a division of government, such that to create checks and balances when one strays past their delegated authority. And I think, people have certainly referenced the judiciary, obviously delivering rulings against the SEC as part of the executive branch, and effectively creating that environment where they were out of their nose, I think, it’s the way that was said. And the legislature now, as the third branch, is certainly getting-- It’s finally spending more time talking about and we’re seeing more educated lawmakers as well. But one thing is, I’ve heard some say that the fact that a court case was required cheapens this in some way, shape or form, and I disagree with that. But, in part, because I think it’s easy to forget. Canada got listed Bitcoin ETF products because of a court ruling as well. It was 3iQ up in Canada that ultimately had to go to the court system against their regulator to get the listed closed end funds first. And ultimately, that led to open ETFs. But it was-- Obviously, there are some differences between the regulatory schema. But it didn’t cheapen the outcome. In fact, if anything it reinforced, and I think gave confidence that this is the purpose of the regulator versus where the lines are, and as such, the regulators have an important role to play, but they are not the investment advisors. And we saw sort of a replay of that in the United States. It’s easy to forget, though, that’s just what it was. It was a replay in terms of the court ultimately making the final push over the finish line. Not unique to the United States at all!

Chen: Well, that’s a really good point. I actually knew it, but I forgot it. So, it’s such an important reminder. I tried to remind folks in the industry, because we all get very frustrated about how slowly regulators act sometimes. And about enforcement, litigation is a form of dialogue between the industry and regulators. It is sometimes a way of moving forward. It’s obviously not the ideal way. And we all have our issues with regulation by enforcement. But to your point, Tom, it is a really important reminder. Sometimes this is how things should work, this balancing act. And before we jump to the impact and where it has taken the industry, I want to geek out for one second on a very specific legal point, which to me connects to this question of, could this have been approved earlier or not? And that is specifically-- In the later part of last year, some of the most exciting moments in the development of the applications had to do with the introduction of a shared surveillance agreement with a Crypto market. It was something that, obviously, was very interesting for us as a company that specializes in Crypto market surveillance. But it was also something that the SEC in a way had asked for in some of the notes earlier on, basically saying that if there was a shared surveillance agreement. Essentially an information sharing between a large enough section of the Crypto market and the listing exchanges, it could have made a difference. What was interesting for me is that the ultimate approval actually did not even reference that shared surveillance agreement. It is public that the shared surveillance agreement is going to do that with Coinbase. We know that there’s a legal process between Coinbase and the SEC taking place right now. But I’m curious to ask you guys, what are your thoughts on that? Because ultimately, the actual proof will boil down — and correct me from wrong, Andrew — to an independent study that the SEC did, that basically confirmed that it was enough correlation between the Bitcoin futures market and the spot market, instead of using the shared surveillance agreement that has been signed? So curious for your thoughts on that. What does it mean that he was included and ultimately not mentioned in the approval? Or am I misrepresenting it? And maybe, Andrew, I’ll start with you.

Andrew: Yeah, happy to. The SEC in the approval order actually cited our research which we have prepared for-- We’ve had it in our filings for some time now and we updated it, which really showed that the spot and futures markets were sufficiently correlated so much so that the court found this too, but 99.99% tied together.

Chen: That’s the argument that you’ve been making for a while.

Andrew: A long time! And others have made it as well. We’re not the only ones. This shared surveillance agreement, in my view, was not necessary. I mean, at the end of the day, the Crypto market is the most transparent market that exists. Anybody can hire software, including Solidus Labs to tell what is happening in the market, where it's happening, and try to dig into that. You don’t necessarily need sharing of information between the national securities exchange and an underlying Crypto market, etc. And so I think that, ultimately, the SEC abandoning that, probably, was a good sign that it wasn’t necessary for them to get to their conclusion that this is a regulated market of a significant size for their warrant approval. The one thing I want to note, not to go back, but to note about this market is that, there is a proven track record. This market existing as Tom said, as Eleanor said, overseas. Our first product was over five years ago. That’s an eternity in Crypto years. And so there’s a proven track record for these to exist and not to be complete vehicles for manipulation, etc. I actually would argue that these ETFs make the market a little bit more efficient than they necessarily were for the underlying. It’s a much more mature market than what it would have been if people are just trading on spot.

Chen: Thank you, Andrew. I guess I’ll ask before I move on, do Eleanor or Tom have any other comments? Could it have been approved earlier? I feel like we have consensus that it could. But I don’t think you have anything else to add on that point.

Tom: I mean, it certainly could. I think we’ll continue to see evolutions though in the product. I think, the money that was made from the cash was created versus in coins. There are other aspects, surveillance agreements. This is something that we’ve seen in the ETF space, though, in general, we saw, it’s been around a long enough to where we needed to get our own exemptive relief, as an individual firm, just to launch actively managed ETFs. And at a certain point, the rules were completely re-written with 6011. The United States is colloquially known for the ETF rule. And the rules changed. The products were made better, regulations were simplified, standardized, the end investor doesn’t always notice these things behind the scenes. And just like Andrew was saying, sometimes regulators think something is very necessary that turns out, is proven not to and with other ETFs. iNAVS on equity ETFs were a huge topic of conversation as pricing indicators. And then it turns out that the market was pretty clear that wasn’t really how it was being priced. But so I think that you’re likely to see iterations and evolutions continue. I think there are things behind the scenes that regulators and industry participants will want to change. I wouldn’t be surprised if we see the create, redeem process continue to evolve. That’s natural, though, that’s healthy. The conversation around surveillance agreements, I think, was part of the journey that got us here. I agree with Andrew's view relative to whether they were really a requirement or whether they were a red herring, or whether they were helpful. But it’s all part of the education process. And I think, you said it right, a couple of minutes ago, the regulator’s know an awful lot more about this now than they did, forget the industry. Like we’ve all been working on this. We’ve been in the weeds. Eleanor and journalists who have been paying attention have known a lot about this for years. But the regulators have a lot on their plate, they’ve gotten a lot smarter, and as they’ve gotten smarter. Things that matter before, don’t matter now. New things will continue to come up that aren’t being looked at today. And that’s the sign of a healthy, dynamic industry. Even if the end consumer, the end owner of these ETFs doesn’t really feel that much of a difference.

Chen: Yeah. I, at least, couldn’t agree more. And, I guess, Eleanor, maybe turning to you. First of all, if you have any additional thoughts on, could have been approved earlier or not. But also, maybe let’s start talking about how it has been? It’s been approved. What’s the impact hasn’t been successful? Obviously, there’s been a lot of debate and discourse around it since it was approved. So, I guess, if you have anything to add on the question, on the first on the earlier question, and other than that--

Eleanor: Yeah, something I want to bring up that you and I mentioned briefly when we were talking about this question, and is the notion that Coinbase itself is still in litigation with the SEC, we had the hearing last week, the motion to dismiss Coinbase asked a judge to drop the case. And the SEC said, "No, we don’t wonder if this is totally warranted." So we’ve obviously got a big case where the future regulations could potentially hinge on the outcome. And you mentioned something interesting to me. The shared Surveillance partnership with Coinbase, you said that they didn’t reference it specifically, they made a big fuss about it for a while, and then they actually weren't mentioned in the approvals. And could that be because they don’t want to admit that Coinbase, who they’re currently suing, is a regulated market of significant size. So could be another way of looking at it. And now the SEC doesn’t want to give too much Kudos to Coinbase. Even though we talked about ETF winners. Who was the biggest winner? Was it BlackRock? Was it ARK? Was it Bitwise? But everybody seems to come to the consensus that it was really Coinbase because they got to partner with so many of these issuers in this project. So, I think, it definitely could have been approved earlier and watching interviews with Hester Peirce, over the last couple of weeks, she’s said as much and she said, it really shouldn’t matter what we think like, because we always ask her. I guess journalists, media, we always ask, do you think Bitcoin is a commodity? Do you think Ethereum is a commodity or a security? I think the consensus now is that Bitcoin is indeed a commodity. But how do you see Ethereum? Is it security? Will that have any bearing on potentially approval of a theory and spot ETF? And she’s like, it doesn’t, it shouldn’t matter what we as commissioners think, like it should matter what the market wants, and we should listen to what the market wants and actually have do more of the legwork when it comes to participating in regulation, participating with people who want to provide these products in a safe and regulated way. And I think for a long time, it really was Crypto and the industry was so marginalized, and it’s still being vilified by people like Elizabeth Warren and Jamie Dimon. I think we’re gonna continue to see that. But, yeah, I think we’ve all come to the agreement that it probably could have been approved earlier. But, like I said before, it seemed to be really just the perfect storm when it was approved. A couple of days last week or the week before. And for what it means for the industry. Just from a journalistic point of view as someone who’s been covering it and someone who actually works at a Trapfire media company, as it were, more visibility to the space. I started covering Crypto in 2021 off the back of the SEC vs. Ripple lawsuit. That’s how I got really interested in space. And I felt like then, it was just me and my boss, Charlie covering Crypto and we would cover prices, Bitcoin theory moves on the network, just in terms of how it looks from an investor’s standpoint. If you put 10 bucks in Bitcoin 10 years ago, then how much would you have today? But there was no real conversation around. Is this a serious industry? I think because there was that sort of-- People thought, it was maybe a bit of a joke. Like I know, I went on a NFT space kind of recently. And I just remember everybody asking me about NFT’s, like people who will work, people who aren’t in this industry just being like, "Aren’t NFT’s just like pictures of toilets that are worth a lot of money?" There are a lot of misconceptions I do feel around the space in general. And I think those are starting to be flushed out as the space gets more understood as it’s more integrated into the Trapfire system with the birth of these ETFs with the knowledgeable staff like you mentioned, Tom that knowledgeable, industry is just bringing so much education, I do feel like we’re seeing companies like Coinbase start initiatives where they’re lobbying the hill, they’re saying-- in the right way, this time, not in the way that Sam Bankman-Fried did it were saying. We are not Sam Bankman-Fried. We are here, as honest people who want this honest money mechanism to work. And I think that really is having an impact and just the integration has been noticeable, at least, from covering it the way I do. 

Tom: Now, one interesting point on that, every time we talk about the regulator and Congress is that we’re about 11 months away from another Inauguration Day. And this SEC, regardless of which party wins, may or may not look the same in terms of some of its leadership and key personnel. And also, what is important as a part of the executive branch? There is a growing increasingly educated congressman, but our entire House of Representatives is up for re-election again, and some of the Senate. So, every time that we start to play politics here or politics gets intertwined, including from the regulatory standpoint, this effectively was approved in the last year of a presidential administration. One that may continue may not continue, and it’s not the first year. It’s quite possible that even from the regulatory front, we have more questions that could be Tailwinds or Headwinds ahead. Should any of the central cast of characters here change in the coming year?

Chen: Yeah, definitely in an election year, I think, the kind of prospects for more clarity are hard to expect. But it can also bring a very different next year. I think it's a really important point. And there is a lot-- I mean, it’s pretty unfortunate that it’s become to a large degree a very Partisan issue. But there is a lot of interest on Capitol Hill. And I’m sure you guys all spend time there as well. 

Tom: I think, I mean, two last questions. And the last thing I would say on that is, certainly Chair Gensler has gotten quite a few arrows on this topic. And I think certainly has been in this chair for the three years, that certainly the three years that we’ve had filings. But the filings on this topic are 10 years old, and Chair Clayton beforehand had opportunities, that was a different political party, and it didn’t get approved in that window, either. So, I think certainly, we do have to keep in mind that while we have short term memory on some of this stuff, and rightfully so, there is a longer story here that spans both parties, different administrations, different leadership at the commission, and we got the same result for quite a while, and that does have to be taken into account, both, as you said, a potential risk moving forward, if new players are in the game, but also as an opportunity to engage in that dialogue that we’re coming at this now with far more awareness and education. And that’s going to have to be right off the bat, in really all three parties of government, as new players come along, they’re walking into a role now, where this exists, not should this exist.

Chen: I always try to remind everyone who was willing to listen that Bill Gates is saying in this context that we tend to overestimate what can be done in a year, underestimate what can be done in ten years. If we really look at the development of the Crypto industry from a five or ten year perspective, it’s a completely different story sometimes, and when we’re very focused on what didn’t go well, right now or last month. But we have been waiting to hear these terms, Bitcoin, ETF, and approved, in one sentence for a while. I guess, let’s talk for a second about what it’s been looking like since it started trading. Obviously, very successful based on the numbers. But let me hear from you. I mean, I guess, Andrew, Tom, how’s your ETF doing? I guess, what’s the sentiment so far?

Andrew: Tom, you’re welcome to give you probably know the numbers as well as I do. He’s doing very well. I think that’s pretty clear. I think we’re one of the top in terms of volume. I think that our operational and trading infrastructure, which is the same that’s been in place for five plus years, more than any other issuer is really proving why that’s the case our spreads are among the tightest. And from my perspective, all the hard work that we did behind the scenes, engaging with the staff at the SEC, preparing our filings, working with broker dealers and other counterparties is really paying off. I think that’s reflective in how our fund is doing. But, Tom, you’re the business guy.

Tom: No, first of all, I think what Andrew just said is really important. Around the initial launch, there’s going to be a lot of exuberance in firms have their certain money lined up, whether that’s money that they have discretionarily under their organization or their closely held friends, if you will, but as things get settled down, and we look about growing the market, and I think that’s what this was ultimately really about-- it was about bringing in segments of the market that have been kept out for so long. And a lot of these segments, when you look at the institutional buyers, when you look at sophisticated advisors, and consultants, the intermediated channel, again, really the retail intermediate channel, as well as the institutional intermediate channel. This is really not started yet. For by and large, these buyers are just starting to take a look. They’re digesting the numbers we’re seeing. And that’s where what Andrew just mentioned is going to be critically important. What’s your cost of execution? How well is it tracking? What’s the market making ability? Remember, these are cash, create and redeem. How much is that influencing price and performance? What’s the overall cost? All in cost, as they would say. And of course, from ARKB for the ARK 21 Shares, ETF, we feel extremely good, to be honest with you, where this is. I think we’ve shown that we have the support of the general retail buyer, the direct to consumer, do it yourself buyer that’s been reflected in the support base of the volume and the flows and the AUM that isn’t necessarily. One of the big firms, liquidating one fund and putting it into another fund and looking really good. But we also have to support the quality of the product. And again, I go back to this is where partnering with 21 Shares for us, and being able to have a demonstrated track record of everything that I’m saying for five years. Gives us great confidence, gives institutions that we’re talking to great confidence. To be honest with you, if we’ve had really substantive discussions with public state pension plans, public treasuries, parts of the ecosystem that we never would have associated with this. And they’re not looking at allocation sizes of 20%, 15%. Of course, they are not, but are they looking at it in the 1%, 0.5%, 2%. They’re having active discussions and quality of product, quality of trading, quality of operations, quality of security, and being able to look at a demonstrated and auditable track record of those things, is really going to matter to that. So we know that we have that, we know that not all of them do. It’s not-- I think overall, a lot has been made over the first couple of days, when I think that really-- we’re just getting started in terms of what is truly going to reflect these products. And I feel really good that we’re-- For us on this call, here ARK and 21 Shares is the combination, and it’s showing up in the assets in the flow. And the numbers were the only combination that has a fully Crypto native firm, and an ETF, TradFi, if you will, though, we’re certainly on the leading bleeding edge of track five and has the distribution and capabilities in partnership. We have a partnership with resolute investment managers to support that intermediated channel. That’s not to speak ill of any of the other competitors in the race, there are some extremely fine firms which speak a ton of Bitcoin. It speaks a ton of the opportunity. But I feel really, really confident where our offering and all of the ancillary pieces of that come to market and I think the performance here through the first week plus really highlights that when we’re going up against much, much bigger firms and more than holding our own.

Chen: It’s definitely an exciting playing field out there. It’s been fun to follow. So we know we talked a little bit, you guys provide a lot of insight into how work response you’re getting from institutions, from the traditional financial industry. I’m curious, obviously, Eleanor, if you have anything to add, but also a little bit what’s been the response from the Crypto industry? A lot of, I think, disappointment on the Bitcoin price, not necessarily skyrocketing, is obviously one thing that’s kind of dominated the conversation, but what are you hearing? What are you seeing? What are your thoughts?

Eleanor: I just want to add quickly to Tom’s point, just from my own reporting, a couple of weeks ago, I think, a week before the approvals, we got that advisor survey from Bitwise. And, I believe, 88% of advisors were waiting for the potential at that point approval of a Bitcoin spot ETF in order to start really kind of taking this thing seriously and letting their clients know about it. And I think Tom also mentioned that, it’s pretty early, right? We’ve seen some really good inflows, we’ve seen some really good volume in the last week or so. But a lot of advisors and I’ve been having conversations with issuers, a lot of advisors they’ve been speaking to don’t know about this yet, or are they just kind of now understanding that it’s a thing. And I think that just shows that I guess in Crypto speak right were early. So there’s a lot of future interests that will eventually flow into these things. So I think that’s a really encouraging conversation that I had with someone last week. And Chen, run me last question again. I know you did ask me.

Chen: All of us, you’re definitely the biggest start with Crypto Twitter star, and just in general, are extremely well plugged in. So I’m curious a little bit for your thoughts on what’s been the response of the industry? 

Eleanor: Definitely, yeah, a little disappointed in the price I guess. I don’t follow price action charts or anything like that-- But I think the overwhelming sentiment was positive. I think everybody’s happy that this industry has really kind of been rationalized now. It’s been given a platform, right? It’s not just this, like it was before this marginalized industry that people will just put their money into, hopefully get a giant return and then they end up losing all their money like it’s not seen as that anymore. It’s definitely seen as a real alternative form of investing that traditional Americans, I guess, people who typically do to put their money in stock market, in bonds, in real estate, it’s something concrete that they if they choose to can put a certain allocation of money in. And that’s been encouraging. I have heard from some, I guess, who would say, Bitcoin Maxi or Crypto Maxi that-- having the Bitcoin ETF go being approved was-- Peter McCormick specifically said this. He wished that the Bitcoins body hadn't been approved because you still really believe in Satoshis original message of everybody owning their own wallet and their own keys and operating their own nodes and having this be very much just still a vehicle for retail investors to have financial freedom. But I think on the other side of that, it is important for the integration because it helps give the space credence and visibility. So, I think it’s kind of a, I guess, you call it a double edged sword, right? You kind of lose that, like, maybe a little bit of what Satoshi had imagined, but at the same time, you’re getting the validity, that’s the word "Thank you," you’re validating this asset that before was maybe just not really taken seriously. So, I think, that has been sort of the overwhelming majority of the Crypto industry seems to be happy about it. And now, everybody seems to be well. Well, Bitcoin spot is already trading. What are we getting Ethereum spot? That’s all I keep getting. All the questions that you get in. 

Andrew: Soon. 

Tom: I was just gonna say, we were the front of the line on that filing as well. So we’re going to say soon.

Eleanor: Excellent. Oh, really? All right.

Andrew: Nothing official.

Tom: That’s unofficial. There’s no inside information now. That’s a difference in our own filing and our own.

Eleanor: But I believe it is public that there are applications.

Tom: Yes, and all combinations are at the front of the timeline on that. That’s also public. 

Eleanor: Tom, do you feel confident because of the approval of a Bitcoin spot in the same vein, they’ll approve the theory of spot? Or do you think regulatory uncertainty might stand in the way just quickly? What’s your take? I’m curious. 

Tom: I think-- And Andrew can weigh in also. But I think what gives us the confidence is that the dialogue with regulators in the same way Bitcoin has really matured in terms of the sophistication of the conversations, the education base, the depth at which the conversations are actually we’re taking place, which I think is a little bit of what Andrew’s point was, in terms of the inevitable. Obviously, this is writing, there’s a lot more of a base to build off of, both from legal principle, from execution in the market, just philosophical ABC, and also the infrastructure that sits underneath and behind this, is now not hypothetical, it’s on paper and it’s operating. So I think that for all of those reasons, some of them legal, some of them operational, some of them philosophical, some of them just purely educated. This is not the same place where we were in this-- You know, I’m a timeline for Bitcoin at this stage.

Chen: So it’s not going to be another 10 years, that’s for sure.

Eleanor: Hope not. 

Tom: Never say never to anything on that. But I think they’re much more substantive.

Andrew: I agree with Tom 100%. I think that it’s a totally different ball game that it was a year ago, the SEC played. God knows how many hours writing comment letters, reading revisions to our S1 refining the creation and redemption process. I think the fact that the SEC greenlighted the futures helps from a pure legal perspective, I think there’s very little room for them, if any to reject these legally speaking, they can do whatever they want. But I think the momentum and the fact that they approved spot Bitcoin is a pretty, pretty strong precedent as it gets. I do want to add one thing to what Eleanor was saying before but the impact of the Crypto industry-- I’ve been doing Crypto blockchain regulatory work for eight years now. And there is a sentiment, and we do other types of work at our sister companies, the token space, etc. I think there is a sentiment, I feel that this really elevates everybody, and really elevates everyone by expanding access. That’s one of our core thesis of us. I know ARK also agrees that you expand access to certain types of investment strategies. I think this also expands access to the entire blockchain ecosystem. So yes, this elevates Bitcoin fine. Yes, it does. But what about other protocols? What about other native tokens? I think this is a total game changer, complete, historical transformative type event, where it’s going to bring everybody up. It’s gonna bring other blockchains up. It’s gonna bring more assets, more interest into the ecosystem. And from a decentralization perspective, folks might say, "Well, you’re not holding your tokens, blah, blah, blah--" But, I think, ultimately speaking, this is probably perhaps the most important event that’s happened in Crypto in a long time. 

Eleanor: If you want to invest in exchange, you can totally do that. And if you want to feel a little bit more safe and secure with an ETF, then you have that option too. I guess, optionality is the key here.

Tom: But I think what’s important is that, it’s sometimes-- so I 100% agree with that. I don’t think it’s this binary argument between the two, I think it’s sometimes lost that there are segments of the investing population, especially when you get more into the institutionalized space, that have custody rules and requirements. And holding your own is just not an option, in the same way that they can’t hold gold bars in the office even if it’s locked down the hall, they have to have a custodian and they can’t hold paper stock certificates just because-- Like there’s custody is a very serious topic in the industry. And I think in the Crypto debate, it’s sometimes put as this binary choice, but it’s really not that simple. There’s quite a few that just don’t have the luxury of availing themselves of custody in the way that the Crypto community has been talking. And so, custody of the assets in a securitized ETF, opens up this space in a way that it was never opened before, it does lead to benefits, though, there are things that you can do with an ETF that you cannot do with assets, even if you utilized a Crypto custodian. I think one of the ones that will be interesting to watch is even those who have a significant amount of Bitcoin themselves, they can now bring that under the umbrella of their existing banking relationships. And because it’s inside there, this is going to be able to be used as collateral, and to effectively use it to borrow against in a much more meaningful way. Most banks wouldn’t allow straight Bitcoin custody, either coin base or self-custody, to be posted as collateral to borrow against. Now that it’s under the umbrella of our traditional banking system that’s going to open up entirely new opportunities for those with wealth to borrow against to create velocity of their own assets. So that’s just one example of use cases that now come to the forefront that we really have not had in a meaningful way. And I think that this oversimplification of A versus B, is that it’s an oversimplification. And also look at the reality of the situation . For years now, we’ve been stuck with either you do it yourself, or you use the Grayscale product that was a flawed instrument in an over the counter closed. And that was skewing market dynamics. Certainly, I mean, they themselves said, it wasn’t an optimal vehicle. So, I’m not saying anything. They have said themselves. So this approval of an ETF was more than just Satoshis vision or not. A lot came in between that made this argument a lot more complicated. And, I think, also FTX opened some eyes that driving certain people into parts of this ecosystem, because there are no alternatives is not necessarily a good thing. It doesn’t mean it’s the elimination of use cases, for those parts of the ecosystem. That’s not. We’re not even saying that as sponsors, but it’s about making sure that depending on the use case, you have the tool for the job. And I think ETFs play a critical component to that in the same way that they did for gold. But a lot more people have access to gold, because it’s in an ETF, you could always have your own gold bars, you could always have your own gold coins. And yet, we see just how much is captured in ETF products. It’s because there is a utility and a value added. But it’s not either, or it depends on what the unique characteristics of the situation are.

Chen: I feel like you’re all really touching something that’s really dear to my heart. And this process that I feel like the Crypto industry has been going through. And traditional finance has also been seeing where we’re moving away from this approach to decentralization and decentralized products is a binary. 

Chen: It’s either centralized or not. This is going to replace traditional finance and we’re moving to-- we’re seeing a spectrum of isolation. And, I think, the Bitcoin ETF is really an important step forward in showing that it’s not about replacing centralized finance, it’s about expanding the amount of ways we all will have to engage with finance. We can do it completely on our own, we can do it completely with the help of a bank, and there’s a lot of places down the middle.

Tom: Bitcoin ETFs cumulatively-- So for all providers are-- Now the second largest commodity traded in ETF form behind only gold, day one past every other commodity that we’ve been trading in ETF form for years, past silver, past oil, past lumber, past palladium. And this is part of your question about Ethereum, quite frankly, is that as digital assets, as an asset class, forget just Bitcoin, but digital assets as an asset class now starts to get into portfolio allocation, there is an argument to be made, that diversification within that allocation is going to only really be available to certain buyers if a theory of actually gets approved as well. And these arguments that we’ve been talking about in different contexts on this webinar start to emerge very quickly, when you say in terms of consumer protection and disclosure, in terms of portfolio allocation for those who need the ETF vehicle, and are due to friction and other limitations kept out of either using Crypto custodians or self-custody. The argument for an Ethereum becomes clear even on that path again we saw how fast this can happen, even those who are saying that this was a disappointing launch, which I don’t agree with, but especially considering how many are still just coming online. Most advisors and institutions are not in yet. And we’re still the second largest commodity that’s in ETF form, think about both where this can go. But also the need for diversification once you’re now allocating to an asset class, gold’s more powerful because you have silver, even though the investment cases are fundamentally different, but they’re both precious metal commodities, the same will be true in digital assets. And we have the right people on the call here, 21 Shares has seen this in Europe, there are well beyond just Bitcoin or Ethereum. But in the United States, we’re obviously going to be talking about Ethereum as we’re not going to get that far that fast. But you can see where the conversation went and the value of that conversation, it raised straight through this for those exact reasons.

Chen: So thank you for that. And look, we’re getting towards the end of our time. So I’m gonna, if it’s okay with you, ask for essentially a closing round of remarks, a couple of minutes for each of you. I guess I have two questions. You can decide if you want to address the first one and most importantly, the second one. The first one is, can what’s being given be taken away? Is it something the industry needs to be worried about, etcetera? Obviously, a lot of you have-- Is it something that we need to be concerned about? The second question is, I guess, what are you focusing on, now moving forward? What’s on your mind? We got past this hurdle. Tom, you already said, this is not a we-made-it-moment, it’s a we’re-getting-their-moment. So, A, can what’s been given to be taken away? And B, what’s biggest on your mind as we move to the next stage? And maybe we’ll start with you, 

Eleanor: Sure. So, I think, I don’t see them taking the Bitcoin spot ETF off the market in such concrete terms. When you say, can it be taken away? I’m not sure. And Tom could probably speak to this, whether that’s actually ever happened. If they’ve actually ever rescinded a certain type of ETF. And to your point, I think, the industry has a long way to go in establishing itself as a more serious industry. I think the last 10 years has proven that they’ve definitely taken steps to get there. But I think the SEC, Gary Gensler, although his term is up in 2026, and it might be different with a different administration. I think you've got to prove to a lot of skeptical lawmakers as well that this isn’t just an industry for money laundering and criminal activity, right. And then, the Crypto industry knows it’s not and many lawmakers know it’s not as well, but I don’t think the industry could survive another SPF, FTX like, catastrophe. I think a lot of the bad actors after that have been weeded out. I think there's good potential for growth and positive momentum. But I think, as an industry, it has to be cautious that it’s really kind of living up to the expectations that TradFi, Wall Street, the SEC has given the industry. So just in terms of like-- Can it be taken away? I guess, like the trust issue, could be taken away. But, I don't foresee that happening, hopefully. And then your second question was, what am I working on? What am I looking at? Personally, I will be following [unclear] guys for all the new deadlines for the Ethereum spot. ETFs are also looking at potential movement in those bills in Congress this year. I know, it’s kind of a long shot because it’s an election year. Might not be too much movement, but I’ve heard that the House members are looking to put some new components into their Crypto market structure bill, the fit for the 21st century act, that actually would have to clear the House and then go to the Senate, go to the President’s desk. So we saw that leave Committee last summer, the House Financial Services Committee, now it would have to go to a full House vote, but I think they’re incorporating some new terminology, ideas in the wake of everything that’s happened with the ETFs. And kind of a little bit more maybe concrete regulations surrounding Bitcoin. So definitely looking at that stuff. And then also, I’m really interested in the SEC hack. I’m really interested to see if we’re gonna see anything, maybe come to a conclusion on what happened and who was involved and why they chose this particular day to go. I guess so-- that’ll be I think, as we get hearings, and hopefully Gary Gensel will be able to address that and a hearing, maybe hear from some staff members as well, just exactly what happened because Hester Peirce has been asked about it, obviously, they can’t really talk on the record about it, because they’re under investigation by the FBI and everything. So it’ll be really eye opening, I think, to kind of see what comes with that. So those are a few things I’m looking forward to. 

Chen: When I’m certain that once there’s any news to report on it, you’re going to be the first to report them. So I’ll keep on following you. Andrew, we move to you, I guess. First, can it be taken away, if you want to respond to that at all? And second of all, what's the biggest on your plans?

Andrew: It cannot be taken away. It’s not like candy I give my children then take away when they’ve eaten too much of it and get sick, this will not be taken away. The industry has earned this, the industry deserves this. And so I would echo to my fellow colleagues and Crypto, this is not a gift, this is what you’ve earned, this is what you deserve. So, I will not be taken away. What do I want going forward? I want regulatory clarity. This industry has been doing this for too long, it has too many smart people in it. It’s invested too much money in doing things the right way for legislators, for the executive branch, and for regulators as part of the executive branch not to give clarity. So we need clarity, I think, then we need to resolve the status of the asset class, resolve the status of the native tokens of the various protocols that will promote the technology, the most important thing is the underlying technology. We have to resolve the asset class that will come with regulatory clarity. And, I think, lastly, keep pushing the boundaries when it comes to innovation. Chen, your company always says transparency is the best disinfectant. --Innovation will bring sunlight. Innovation is key, keep doing it. Those are my views.

Chen: Louis D. Brandeis quote. I went to Brandeis University, it’s part of why I like it so much. But now, I agree with you 100%. And, I guess, Tom, you get the closing words. 

Tom: Yeah, I echo a lot of what Eleanor and Andrew said. So, leave some of that said. When you look at the firms that are involved in this launch, these are firms that have a lot to lose, right? I mean, they have a lot of other base business that they didn’t need to get into this race. And yet, so if there were deep seated concerns about this industry, we wouldn’t have, none of them, none of them would have, right? I mean, this is not the theme of this entire webinar, but this is years in the making, these are thousands of hours of work and conversations with regulators, and security, and operations, and trading, and markets, and exchanges. So, I think, there should be comfort that some of this perception that still needs to be shed, think about the firms involved in this, they don’t need this, and yet they’ve chosen this because we believe so deeply, that it is better for US investors of all shapes and sizes to have access as a tool in the ETF, where it is regulated and audited and transparent. And where markets can gain access for everybody rather than just saw. In terms of what that means from my chair moving forward. There certainly is always an exuberance around launch, any ETF you really see there’s a chart that the day one tends to be really high and then it smooths out down in a curve to where it settles in and from AUM and a flows of volume. We’ve seen that continue to be much higher here and I think that speaks to the enthusiasm and the demand and the interest. But what I’m really excited about is some of the most sophisticated buyers of any asset class are really just starting to take a look. These are people who wanted to see these things trade, see these things price, see these things settle, see the market depth, see the market quality, see the pricing, the spreads, the cost, the commissions, the premiums and discounts. I feel so confident with the offering we have that I get up every morning excited to talk to the advisor, who’s just now able to look at this, or the institution, or the consultant, who’s had to wait a long time. But even this first week, a lot of these organizations can’t even look at a product or start to look at a product until it actually exists. So while we had a number of good conversations leading up into this, so many have internal policies and guidelines about hypothetical product discussions that while they know who we are, and we know them, we’ve probably talked to him about other products over the years, we’ve probably even talked on a very high level generically about Bitcoin, because they were allowed to have that conversation, we haven’t even been allowed to start to talk until now. And these are very smart people who, for so long, have had an excuse to not think about digital assets as part of their allocation because they couldn’t, or they weren’t allowed to, or whether it was custody or regulated product, or pricing, or sponsor, any number of rules. Now, if they are not in Bitcoin, now they made a choice not to be, whereas before it was just NA, right? It’s just not part of the calculus. And these are the same asset allocators who are now going to be held accountable if they choose not to be, more accountable for their allocation. And so I think that degree of accountability and responsibility, even if it’s going to end up in different asset allocation levels, across the different customer segments, is a huge, huge psychological shift, fiduciary shift, attention shift, because now, not allocating is also an explicit decision. And those conversations have been incredibly enlightening. On our side, they continue to be incredibly informative and educational. And I’m excited to continue those with some of the smartest money managers, wealth managers, asset managers in the country and beyond. And it’s been a long time since people have had a new asset class to talk about, that they’ve been able to get exposed to. And that’s what this is. It’s a conversation about a new asset class, and that is honestly, a hugely exciting conversation to get up and have every day.

Chen: Thank you so much. It’s been enlightening to me. Really appreciate you finding the time. And if it’s okay with you, I’m going to be waiting for the same conversation we’re going to have once the spot ETF is released. Have a wonderful rest of the day and thank you for sharing your knowledge.