Speaker 1: Hey, folks, we are recording at Chainling Smart Cohn event
Speaker 1: and joining me is a Philia Snyder who is the
Speaker 1: co founder of twenty one Chairs.
Speaker 2: Aphilia, great to have.
Speaker 3: You, Thank you start traving me.
Speaker 2: Phillia told us a bit about yourself in twenty one Chairs.
Speaker 3: So I started twenty one Chairs with one of my
Speaker 3: best friends almost eight years ago. It's actually going to
Speaker 3: be eight years in early November.
Speaker 2: Wow.
Speaker 3: And we started the business mostly to help out our moms.
Speaker 3: My mom introduced me to crypto in twenty thirteen. No way, Yes,
Speaker 3: I have the wonderful claim of being orange pilled by
Speaker 3: my mother and not the other way around. And she
Speaker 3: completely understood everything about the space.
Speaker 2: Wow.
Speaker 3: She got it immediately.
Speaker 2: I got to meet your mom.
Speaker 3: She's amazing, but she got it. She was like, you know,
Speaker 3: we're in a geopolitical anomaly. Swift is not going to last.
Speaker 3: MERK spends too much money hedging, but global trade is
Speaker 3: here to stay. We need a global reserve currency. Have
Speaker 3: you heard of a thing called bitcoin? I'm like, excuse me, no,
Speaker 3: what are you talking about. But at the time, there
Speaker 3: was no way for her to invest in the product.
Speaker 3: She didn't feel comfortable managing keys, and so she never did.
Speaker 3: And then a few years went by and this problem
Speaker 3: still existed, and my co founder had a similar issue
Speaker 3: with his mother who was Egyptian and trying to make
Speaker 3: investments of her own, and we decided we were going
Speaker 3: to solve this problem for them, and so we set
Speaker 3: out to build twenty one Shares, which has become one
Speaker 3: of the largest global issuers of cryptoetfs. We make up
Speaker 3: north to thirty percent of market share in Europe, managed
Speaker 3: about twelve billion dollars in AUM globally across the US, Europe, UK, Switzerland,
Speaker 3: the Middle East, Australia, and Brazil. So we have one
Speaker 3: of the largest footprints in the space and we've been
Speaker 3: building ever since.
Speaker 1: So that's incredible that you were in so many markets,
Speaker 1: and we know the United States was lagging behind a
Speaker 1: lot of the other markets.
Speaker 2: So what's it like to finally.
Speaker 1: Have ETFs in the United States that you were able
Speaker 1: to launch.
Speaker 3: So one of the interesting things that's been happening over
Speaker 3: the last couple of years is you're starting to see
Speaker 3: the US market catch up, and most recently even saw
Speaker 3: this with the universal listing standards that are coming out
Speaker 3: that are allowing more ETFs to launch, and what I'm
Speaker 3: hoping is that soon we'll be able to offer our
Speaker 3: clients in the US the same products that we do
Speaker 3: in Europe, where we have forty plus products covering all
Speaker 3: sorts of different assets, actually including chain link.
Speaker 1: Yeah, so let's talk about or double click into the
Speaker 1: SEC's recent updated a generical listing standards. So from your
Speaker 1: perspective as an issuer, does that make your life easier?
Speaker 2: Is it make the process faster?
Speaker 1: So?
Speaker 2: Yes.
Speaker 3: It's part of a broader trend though, of regulatory normalization,
Speaker 3: where the relationship between digital asset firms and their regulators
Speaker 3: essentially in every market is getting to a much more
Speaker 3: normal place. What I mean by normal is a clarity, transparency,
Speaker 3: a clear understanding of what it is how you're supposed
Speaker 3: to do things, as opposed to constantly needing to adjust
Speaker 3: for you know, an exception or a one off. And
Speaker 3: actually it brings the market much closer, the American market,
Speaker 3: much closer to what we had in Switzerland quite some
Speaker 3: time ago with a similar set of constructed rules. But
Speaker 3: it's really just one piece of this broader puzzle where
Speaker 3: we're seeing it with many different pieces of legislation, both
Speaker 3: in the US and abroad, pushing towards a place where
Speaker 3: people can now really understand how crypto is going to
Speaker 3: be regulated and therefore build their businesses accordingly, which is
Speaker 3: ultimately better for everybody.
Speaker 2: Absolutely.
Speaker 1: So with these new guidance and clarity, if we want
Speaker 1: to use that word, because it's the bill that's coming up,
Speaker 1: of course, are you envisioning that a lot of the
Speaker 1: trad FI ETF products that exist outside of crypto will
Speaker 1: now be created for crypto assets?
Speaker 3: So I think you will start to see more product
Speaker 3: and more creative product. And that's actually part of the
Speaker 3: foundation of our merger with falcon X, is this bringing
Speaker 3: together of a one stop shop that can really offer
Speaker 3: more interesting, more creative, more groundbreaking products to our customers.
Speaker 3: And twenty Winters as a firm has actually launched about
Speaker 3: sixty products that were global firsts in their categories right
Speaker 3: whether in different geographies or different underlying assets, and we're
Speaker 3: expecting to continue to do that and the partnership with
Speaker 3: falcon X really allows us to accelerate that process, as
Speaker 3: does this regulatory backdrop that we're operating against.
Speaker 1: Oh, for sure, are you blown away by the success
Speaker 1: of the crypto et apps, I mean just launched, you know,
Speaker 1: within the past year or so, and we're seeing amazing
Speaker 1: success across the boards.
Speaker 3: It's been amazing. It's been a long time coming, but
Speaker 3: it's been amazing and I think it will continue to
Speaker 3: be because there are more people like my mom. Yeah,
Speaker 3: my mom is actually exactly who you want. Do you
Speaker 3: want somebody who understands our philosophy as a space, understands
Speaker 3: the use case, wants to participate. How do you make
Speaker 3: it possible for that person of participate, how do you
Speaker 3: make them comfortable participating? And the answer is simplifying the infrastructure,
Speaker 3: which means ETFs are going to continue to be a
Speaker 3: major on ramp for people who are just interested in
Speaker 3: exploring the space.
Speaker 1: Yeah, and what are your thoughts on the Trump administration
Speaker 1: opening up investments in four to one case different assets,
Speaker 1: which includes crypto is an excuse my lack of knowledge
Speaker 1: around this, but it's very beneficial for ETFs and things
Speaker 1: like that.
Speaker 3: It all comes back to the same thing, which is infrastructure.
Speaker 3: And the end of the day, twenty one cheers and
Speaker 3: falcon X in a lot of ways are infrastructure first companies.
Speaker 3: We're seeing a moment in time where we can really
Speaker 3: streamline how people get access to investment products. And when
Speaker 3: you think about a four oh one K, at the
Speaker 3: end of the day, it's just another rapper, sure, And
Speaker 3: people who have those rappers and want to invest in
Speaker 3: them are not going to be managing their own keys,
Speaker 3: their own coins. That's not the structure, and the asset
Speaker 3: managers that offer those products may not want to do
Speaker 3: that themselves either. So I think you're going to continue
Speaker 3: to see adoption of ETFs because what it does is
Speaker 3: it shifts who has to actually run the infrastructure to
Speaker 3: facilitate the investment from either the individual or the wealth
Speaker 3: manager to a specialized player who really knows how to
Speaker 3: deliver that value, and that typically helps foster and speed
Speaker 3: up adoption of of these products.
Speaker 1: Oh for sure, I mean the ETFs of being in
Speaker 1: success And to your point, even my own parents who
Speaker 1: are interestedting crypto, ETFs are easy wrapper that they're familiar
Speaker 1: with the process versus going on coinbase.
Speaker 3: But exactly exactly, it's a tough ask for somebody to
Speaker 3: open a new what they perceive of to be really
Speaker 3: a new bank account just to make one investment. That's
Speaker 3: a tough ask for people.
Speaker 1: For sure, and are you working with or in the
Speaker 1: process of educating rias and wealth manager about your ETF
Speaker 1: products and are they receptive now?
Speaker 3: Yeah, So we've been doing that for years and twenty
Speaker 3: one Shares as a business has always led with clarity,
Speaker 3: transparency and education. We both want to make it possible
Speaker 3: for people to buy the products. We also want to
Speaker 3: make them comfortable in buying the products, and those are
Speaker 3: actually two different things. And we've been on this road
Speaker 3: of educating different investor bases around how they can allocate
Speaker 3: to this space for a long time. What we've seen
Speaker 3: is there's a spectrum to institutionalization and I think people
Speaker 3: often miss that, which is you can have either an individual,
Speaker 3: which I think most people understand. You can have a
Speaker 3: brokerage who's going to allow that individual to execute. You
Speaker 3: can have an investment advisor who, if their client asks them,
Speaker 3: will let them buy the product. That's mostly where people
Speaker 3: are at today. The idea that that investment advisor is
Speaker 3: going to give you advice on a crypto allocation, for
Speaker 3: the most part, hasn't really even begun, let alone what
Speaker 3: would be considered much more institutionetionalized players thinking about like
Speaker 3: insurance or pension plans or government funds or endowments. That's
Speaker 3: really the upper end of what institutionalization looks like, and
Speaker 3: we're in the very very early innings of what that
Speaker 3: will be, which is why the success of the ETFs
Speaker 3: today is so interesting.
Speaker 2: Yeah, are their plans.
Speaker 1: Look, there's a lot of crypto assets out there right
Speaker 1: and we're still waiting on the market Structure bill to pass.
Speaker 1: But are their plans to expand the portfolio of ETFs
Speaker 1: around different all coins. It may be too early to
Speaker 1: answer to that, but I'm curious, you know, how you
Speaker 1: guys are planning as more clarity comes.
Speaker 3: So I think if you look at our products suite
Speaker 3: in Europe, that will give you a lot of the answers.
Speaker 3: We offer forty different underlying assets. We have index products
Speaker 3: and we've been running a lot of these four years. Actually,
Speaker 3: the first product we ever brought to market, all the
Speaker 3: way back in twenty eighteen was a index product. It
Speaker 3: wasn't a bit QUINNYTF, it was actually a crypto index. Wow,
Speaker 3: bring a bitcoin ETF to market until a bit after that,
Speaker 3: and I think you were hoping that the same thing
Speaker 3: will be able to occur in the US market. That
Speaker 3: we will be able to really see clients have the
Speaker 3: same level of access they do in Europe, and that's
Speaker 3: my expectation for where the market is going.
Speaker 1: It's exciting to see all the building and innovation, and
Speaker 1: you guys are ahead of the curve in many ways
Speaker 1: building that index product because that is you know, the
Speaker 1: majority of investors, they're not they don't have time to
Speaker 1: pick stocks or stuff, but they.
Speaker 2: You can invest in an index.
Speaker 3: Yes, yeah, and I think that is We've seen that
Speaker 3: in every other asset class, that that is what investors like,
Speaker 3: and I think you're going to continue to see that here,
Speaker 3: which is we will there's some people who love picking stocks,
Speaker 3: and we'll always want to pick their own stocks and
Speaker 3: that's wonderful, but there are a lot of people who don't,
Speaker 3: and I think you will see increasing popularity in some
Speaker 3: of those types of products over the next several years
Speaker 3: as interest moves from being a very bitcoin heavy story
Speaker 3: to being a broader story.
Speaker 1: Talk to us a bit about staking, because that's been
Speaker 1: a recent addition to certain ETFs with the SEC it's
Speaker 1: still some approval still needed.
Speaker 2: And so forth. But are you guys working or anything
Speaker 2: like that.
Speaker 3: So we've offered staking atfs since twenty nineteen. Wow, so
Speaker 3: we've been doing this for a long time. We brought
Speaker 3: the first staking atfs to market in Europe. We were
Speaker 3: some of the first, like big institutional clients for staking
Speaker 3: products with our providers, and so I'm really excited to
Speaker 3: see that expanding and continuing to see market normalization that
Speaker 3: just because you're in one jurisdiction versus another, you can
Speaker 3: access a similar type of product, and I think that
Speaker 3: is very much the theme for crypto markets right now.
Speaker 3: We are normalizing our relationship with regulators, we are normalizing
Speaker 3: our relationship with asset allocators, and we are becoming part
Speaker 3: of this global ecosystem as an industry. And it's really
Speaker 3: interesting time. And it's actually that timing that made the
Speaker 3: merger with Falconex so interesting.
Speaker 1: Absolutely, it may be too early answered his question, but
Speaker 1: there's a race to tokenize different assets equities, money market funds, gold,
Speaker 1: precious metals, real estate much more. Do you think those
Speaker 1: assets might find their way into ETFs eventually?
Speaker 3: So I think you need to look at it as
Speaker 3: a wrapper, Okay, Right. ETFs are just a rapper. You
Speaker 3: can think of them like an empty box. You can
Speaker 3: put anything you want in the box and trade it.
Speaker 3: That's actually how ETFs work, and you can think about
Speaker 3: it like imagine like a gift box that you can
Speaker 3: buy and you can put anything in it. You can
Speaker 3: put a PlayStation in it, you can put anything you want,
Speaker 3: and an ETF's work exactly the same thing. You've put
Speaker 3: anything inside that wrapper you would like to. Tokens are
Speaker 3: just a different type of rapper. So imagine an ETF
Speaker 3: is a blue box and a token is a red box.
Speaker 3: You could theoretically put a red box in a blue box,
Speaker 3: but I don't know why you would like it. Depends
Speaker 3: on what the use case is. Why do you want
Speaker 3: to do that?
Speaker 1: Right?
Speaker 3: Obviously, for things like investible crypto assets, so you know Bitcoin, Solana, ethereum,
Speaker 3: people are looking for that exposure and so the rapper
Speaker 3: provides that functionality. When you think about tokenization, the question
Speaker 3: is you're providing access to that product in a different
Speaker 3: way for a different audience. And I think that is
Speaker 3: something we will continue to see both from a distribution perspective,
Speaker 3: but also from a settlement's infrastructure perspective. Tokens are just
Speaker 3: much much much more efficient as financial instruments. From a
Speaker 3: settling from a clearing perspective, and so I think you
Speaker 3: will start to see more and more TRADFI assets on chain,
Speaker 3: including ETF's, being put into tokenized formats. And I'm my
Speaker 3: perspective is I'm actually not even sure the end users
Speaker 3: will know. They will know, not necessarily because this is
Speaker 3: back end infrastructure for brokerages, and I think that is
Speaker 3: very much the direction of travel. And that's what I
Speaker 3: mean when I say TRADFI on crypto rails.
Speaker 1: Yeah, that definitely makes sense. And it's amazing, affiliate the
Speaker 1: amount of trad fi institutions that are entering the crypto market,
Speaker 1: all the big banks, the big Wall Street firms. What
Speaker 1: do you think about how they've all started jumping into
Speaker 1: this race and they're all trying to tokenize, launch stable coins,
Speaker 1: trading ETF's custody and all that.
Speaker 3: It goes to show you that we're at that inflection
Speaker 3: point where this now makes sense and the technology is
Speaker 3: mature enough to actually support those types of use cases.
Speaker 3: In the very early days of building the company, we
Speaker 3: went and tried to pitch some very large allocators and
Speaker 3: they told me things like, if I can't put five
Speaker 3: hundred million to work, I don't without moving the market,
Speaker 3: like I'm not going to do this, This doesn't make
Speaker 3: sense for me, Like I need to write bigger checks
Speaker 3: than that. And these were like large I think, like
Speaker 3: you know, large pension funds or even UH endowments and
Speaker 3: things exactly governments and things like that. So one of
Speaker 3: the issues that I see is that we're finally at
Speaker 3: a scale where these technologies can actually be used in
Speaker 3: that way. And it goes to this idea that we
Speaker 3: will have a world where it is easier to transfer
Speaker 3: value in the format of a token than it is
Speaker 3: in the format of an otherwise created security. And that
Speaker 3: has much more to do with infrastructure than anything else.
Speaker 3: And so when you see all of these large financial
Speaker 3: institutions building out that infrastructure, whether it is whether it's
Speaker 3: custody services, staking services, trading services, investment solutions, it's just
Speaker 3: part of the trend moving us towards what ultimately was
Speaker 3: the vision for crypto, which is we want to run
Speaker 3: the world's financial rails.
Speaker 1: It's funny, it seems like blockstream rails are going to
Speaker 1: be powering all the markets eventually, economy and certain parts
Speaker 1: of the government. Yes, it's exciting CD innovation. That's happening.
Speaker 1: We touched on it a bit earlier, but the Market
Speaker 1: Structure Bill is coming up. Everybody is waiting for that
Speaker 1: because it's going to give clarity and what you can
Speaker 1: do can do and what the regulators.
Speaker 2: Need to do.
Speaker 1: Do you think we see that pass by Q one
Speaker 1: twenty six and what impact do you think you'll have
Speaker 1: on the market? Oh?
Speaker 2: Our question?
Speaker 1: I know.
Speaker 3: So. Look, I think timing is always tricky, especially with
Speaker 3: like the way the US government's been functioning. I think
Speaker 3: the timing of knowing when bills are going to be passed,
Speaker 3: I couldn't tell you, But I think what's really interesting
Speaker 3: is that you are seeing this trend not just here
Speaker 3: but globally. This isn't an America's story. This bringing of
Speaker 3: clarity is not an America centric issue. You're seeing it
Speaker 3: in many jurisdictions. In fact, in most major jurisdictions, you're
Speaker 3: seeing this real push towards having regulatory clarity, knowing who's
Speaker 3: in charge of regulating these assets, defining them in some way.
Speaker 3: And the way I typically conceive of regulation is sort
Speaker 3: of like a layer cake. The bottom layer is how
Speaker 3: do you define what you're regulating, who's in charge of it?
Speaker 2: Sure.
Speaker 3: The second is what are you actually what are the
Speaker 3: rules of the road, And then the last is figuring
Speaker 3: out how that's going to fit with every other piece
Speaker 3: of financial regulation out there. And so, for example, if
Speaker 3: we're going to create crypto's new asset class, that's amazing,
Speaker 3: what does that mean for equities? What does that mean
Speaker 3: for fixed income? How is it going to change the
Speaker 3: definition of these other things? And I think what we're
Speaker 3: seeing is that first layer, who's in charge? How do
Speaker 3: we define this? Who's in charge? Has finally started to
Speaker 3: really take shape on a global basis, and we're starting
Speaker 3: to see what those rules of the road are going
Speaker 3: to be so that we can eventually get to a
Speaker 3: place where crypto is just another part of the existing
Speaker 3: and financial system as opposed to this super special thing
Speaker 3: on the side, which is actually not to anybody's benefit.
Speaker 2: Yeah, well said.
Speaker 1: And even the coordination of the world governments on how
Speaker 1: they can at least have some synergy in how they
Speaker 1: view this asset class.
Speaker 3: That requires harmonization. Yeah, that's actually the European word for it,
Speaker 3: is you have to harmonize regulations across the Eurozone. But
Speaker 3: given the way crypto markets work, you will need to
Speaker 3: actually harmonize a lot of this legislation on a more
Speaker 3: global basis to make sure that it works together in
Speaker 3: some way. And I think that's what we're seeing is
Speaker 3: there's as that clarity is coming through, As we're starting
Speaker 3: to see global standards for how you can do these
Speaker 3: things emerge, we will start to have a much clearer
Speaker 3: way to build sustainable real businesses in this sector, which
Speaker 3: is ultimately what we need to have staying power through
Speaker 3: market cycles.
Speaker 1: Oh, absolutely, final the question for I let you go,
Speaker 1: what's on your roadmap that you can share?
Speaker 3: So you know, obviously we just announced the acquisition by
Speaker 3: falcon X, so sure one of the things that we're
Speaker 3: really excited about is how these two firms together are
Speaker 3: going to build a one stop shop in crypto strength
Speaker 3: and derivative strengthen trading strength and regulated product and how
Speaker 3: we're going to be able to use that as a
Speaker 3: cornerstone for bringing more creative, more innovative products to market,
Speaker 3: stay on that bleeding edge while doing things faster, better
Speaker 3: and more cheaply than trad five players and then other
Speaker 3: players in the market. So I think, really that's what
Speaker 3: you can expect from us.
Speaker 1: Well, I'm looking forward to the updates. We keep an
Speaker 1: eye on twenty one shares. Thank you so much for
Speaker 1: joining me, Philli, thank you.
Speaker 3: For having me.
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Speaker 3: Two