Speaker 1: Bitcoin is clearly the winner when it comes to money.
Speaker 1: But what's unique about light cooin is it was really
Speaker 1: built to be a partnership to bitcoin bitcoin for larger
Speaker 1: transactions like poorn for smaller transactions. As more and more
Speaker 1: people own wallet's own bitcoin, it'll have a massive effect.
Speaker 2: I think for the first time, you have companies around
Speaker 2: certain blockchain projects like a Ripple that could do an IPO,
Speaker 2: but there's also that token that's connected to the ecosystem.
Speaker 1: Could we potentially.
Speaker 2: See ETFs around these companies that have both the token
Speaker 2: and they're publicly listed.
Speaker 1: Oh. Absolutely.
Speaker 2: This episode is brought to you by v Chain. V
Speaker 2: chain is one of the top layer one enterprise blockchains
Speaker 2: indie crypto asset class and they are getting adoption by
Speaker 2: many big brands and companies around the world who are
Speaker 2: building Web three and decentralized application technologies. I've been a
Speaker 2: vet token holder for many years. In fact, I started
Speaker 2: investing in v chain back in twenty eighteen, and some
Speaker 2: of the key features of the v chain blockchain includes
Speaker 2: its secure, affordable, scalable, fast, and sustainable. Some of the
Speaker 2: companies and brands working with v chain include Jivon, Chi, Walmart, China, BMW,
Speaker 2: Boston Consulting Group, and many more. Most recently, they partnered
Speaker 2: with Dana White in the UFC, and Dana White even
Speaker 2: said recently that he purchased over a million dollars of
Speaker 2: the VET token, and v chain also recently launched staking
Speaker 2: where you can stake the vet token and earn great rewards.
Speaker 2: So if you'd like to learn more about v chain,
Speaker 2: go to vchain dot org. Link will be in the description. Hey, folks,
Speaker 2: welcome into the Thinking Crypto podcast. I'm your host Tony Edward,
Speaker 2: and joining me today Stephen mccluric, who is the CEO
Speaker 2: of Canary Capital. Stephen, great to have you.
Speaker 1: Hey, Thanks for having me Tony, Stephen.
Speaker 2: I'm really excited to speak with you. We were talking
Speaker 2: before the recording. I've wanted to interview you for a
Speaker 2: long time because Canary is doing some great things as
Speaker 2: it relates to crypto, ETFs and ETPs. And before we
Speaker 2: get into all those details, tell us a bit about
Speaker 2: yourself and where you're from and your professional background.
Speaker 1: Yeah. Absolutely, so. We're headquartered here in Nashville, Tennessee. I
Speaker 1: actually spent a lot of my earlier career in the
Speaker 1: LA area. Most of my careers at Gugenheim Partners, so
Speaker 1: I was a bond trader. I was a portfolio manager
Speaker 1: for large institutional portfolios. We acquired two ETF companies during
Speaker 1: my tenure there, which is how I got into ETFs.
Speaker 1: I moved over to be the portfolio manager for those
Speaker 1: product suites and then launched some of our own flavors,
Speaker 1: which Guggenheim was really known for fixed income, and I
Speaker 1: launched all the first Guggenheim fixed income ETFs mutual funds,
Speaker 1: some active, some passive, but a lot of it was
Speaker 1: a lot of fun. So anyway were they were very
Speaker 1: esoteric strategies. And then fast forward to when I got
Speaker 1: into crypto full time was twenty sixteen, and I, you know,
Speaker 1: did a lot in the asset management space as well
Speaker 1: as security structuring and even on the development side of things.
Speaker 1: But when it looked like ETFs were potentially moving forward,
Speaker 1: we decided to get into that as well. My first
Speaker 1: foray into that was with Valkyrie, where I was a
Speaker 1: founder and we launched several bitcoin related ETFs through that firm,
Speaker 1: which was eventually bought by coin Shares. When I launched Canary,
Speaker 1: same thing I was actually looking at just running a hedgehound,
Speaker 1: which is what I've done for most of my career.
Speaker 1: And we saw an opportunity for all coin ETFs about
Speaker 1: a year ago or a little over a year ago,
Speaker 1: so we started, you know, moving forward there. We started
Speaker 1: off with filings for ETFs that were related to light coin, Adera, Solana,
Speaker 1: next RP, you know those. There's those first four for
Speaker 1: various reasons, but here we are today. Two of them
Speaker 1: are launched and two of them have yet to launch,
Speaker 1: but hopefully they will.
Speaker 2: Say, oh absolutely so Stephen, you know, with your expertise
Speaker 2: from the fun world and et ups and much more,
Speaker 2: how are you looking at this asset class? And maybe
Speaker 2: that vision has evolved over time. Is this like the
Speaker 2: next macro trade or in addition to that the tech
Speaker 2: rails that the economy and markets will run on.
Speaker 1: Yeah, I mean I actually see this as a very
Speaker 1: easy macro trade. First of all, just given that a
Speaker 1: lot of these tokens have a very direct relationship to
Speaker 1: m to monetary supply, so you know, for instance, that
Speaker 1: usually helps all risk assets go up in dollar terms
Speaker 1: or in other currency terms. Crypto falls into the same boat,
Speaker 1: but it's a little bit more clean. But the reason
Speaker 1: why I got into to begin with is really really
Speaker 1: a lot of it's global monetary rails, and that's what's
Speaker 1: really important. So when people talk about, you know, what
Speaker 1: drives price, it's really a function of two things. Bitcoin
Speaker 1: is the easiest to explain because the function is, okay,
Speaker 1: what is its relationship to the dollar, and if more
Speaker 1: dollars are being printed versus a fixed apply a bitcoin,
Speaker 1: then obviously bitcoin goes up in price. The other major
Speaker 1: factor that's been a greater factor in the early years
Speaker 1: and less of a factor now but still a strong factor.
Speaker 2: Is.
Speaker 1: Access to the ecosystem. So as more and more people
Speaker 1: are onboarded into having bitcoin wallets and to use them,
Speaker 1: whether it's for savings or spending, then that, you know,
Speaker 1: that network effect actually causes the price to grow because
Speaker 1: more people are involved in that. It's no different than
Speaker 1: looking at say the Swiss frame versus the US dollar.
Speaker 1: More people global citizens that use the dollar contributes to
Speaker 1: the value of the dollar, and then the Swiss franc
Speaker 1: has a smaller set or Singapore dollar or whatever it is,
Speaker 1: has a smaller set of users, so it's not going
Speaker 1: to be quite as valuable. So as more and more
Speaker 1: people own wallets own bitcoin are onboarded, it'll have a
Speaker 1: massive effect. And over time that effect goes down because
Speaker 1: law of large numbers kicks in and a smaller percentage
Speaker 1: of people continue to be onboard.
Speaker 2: So on that note, if you double click a bit
Speaker 2: on network effects like metcaps law and reads law and
Speaker 2: so forth, when you're analyzing a token for a specific blockchain,
Speaker 2: are you looking at, like you said, on chain activity,
Speaker 2: number of wallets, number of users, maybe daily active users,
Speaker 2: monthly after active users, things along those lines.
Speaker 1: Yeah, so we're not only looking at that, but we're
Speaker 1: also looking at what the potential is, right. So that
Speaker 1: was one of the things that drew me to bitcoin,
Speaker 1: was the potential of more and more users coming in
Speaker 1: opening wallets, transacting or just simply holding.
Speaker 2: Uh.
Speaker 1: And if you look at all the other various tokens,
Speaker 1: there obviously is a you know, number of wallets and
Speaker 1: number of individual unique users that are that are actually
Speaker 1: either holding it or are developing it. A lot of
Speaker 1: developers will hold the tokens that they're you know, they're
Speaker 1: developing blockchain, uh, you know, for future gas fees. So
Speaker 1: you have that, but then you all start to think
Speaker 1: about the potential, right, you know, and I hate to
Speaker 1: say this because you know, you know, Eth was you know,
Speaker 1: really early in in kind of like you know, and
Speaker 1: adapts sort as the protocol goes, but the potential has
Speaker 1: run out and the potential has now moved to you know,
Speaker 1: other chains and other areas depending on what people are
Speaker 1: interested in. And this is why we like things like
Speaker 1: you know, h BAR, x RP Suite is another good
Speaker 1: one that we like a lot. Even even Salona, Salana
Speaker 1: still has a lot of potential, there's a lot of
Speaker 1: people on it, there's still potential of more users, more adapts,
Speaker 1: but something like Suite that's I would say direct petitors.
Speaker 1: Salona probably has a higher potential because as it is,
Speaker 1: is a fully realized yet whereas like some h bar,
Speaker 1: you've got not only enterprise people that understand enterprise value
Speaker 1: and enterprise users using it, but also the potential for
Speaker 1: enterprise or XRP financial rails.
Speaker 2: That definitely makes sense. Now, since you mentioned some of
Speaker 2: those tokens like h BAR, like cooin XRP, let's talk
Speaker 2: a bit about those. You know, based on what you
Speaker 2: just discussed, was that part of the analysis to launch
Speaker 2: products around these given or were there additional things as well.
Speaker 1: Yeah, I mean what we try to do is find,
Speaker 1: you know, in the initial four we were looking for,
Speaker 1: you know, category winners. Right now, Bitcoin is clearly the
Speaker 1: winner when it comes to money. But what's unique about
Speaker 1: light coin is it was really built to be a
Speaker 1: partnership to bitcoin bitcoin for larger transactions, like cooin for
Speaker 1: smaller transactions. But also what makes like coin a little
Speaker 1: bit unique is that they have implemented bimble Wimble, which
Speaker 1: is a privacy feature that Bitcoin doesn't have. So you
Speaker 1: do have the option of selecting privacy for some of
Speaker 1: your wallets. Not isn't fully integrated across every wallet yet,
Speaker 1: it's people have to choose to. But privacy has become
Speaker 1: a really important factor. Even in the last year. One
Speaker 1: of the things that's been a high correlation to people
Speaker 1: just buying gold in other countries has been to buy
Speaker 1: privacy tokens like minera, z cash and even like coin.
Speaker 1: So we see a potential there on the privacy side,
Speaker 1: and privacy is really really take it off in the
Speaker 1: last month, so we see that as an important category
Speaker 1: winner there. XRP the category winner for financial services in
Speaker 1: my opinion, HBAR category winner for enterprise and then Solana,
Speaker 1: in my opinion, is still the next category winner for
Speaker 1: broad open source protocols.
Speaker 2: Absolutely, And I apologize that I remember this at the
Speaker 2: top of my head because I remember reading it, but
Speaker 2: it gave to me your ETF products their spot. Are
Speaker 2: they launched under the thirty three rules or the forty rules?
Speaker 1: Yeah? So, and maybe I'll explain the difference between those two.
Speaker 1: So forty ACT is a you know, a forty act
Speaker 1: ETF essentially is an ETF that holds a good portion
Speaker 1: of it in actual securities. So you and you have
Speaker 1: to have securities in the vehicle in order for it
Speaker 1: to even be under forty Act. Thirty three Act is
Speaker 1: for non securities. So we filed all of these under
Speaker 1: forty Act I mean sorry, under thirty three Act because
Speaker 1: they're all pure SPOT and we don't believe any of
Speaker 1: them to be securities. Now, there are some forty act
Speaker 1: ETFs out there for crypto, but what they are is
Speaker 1: not quite so clean. So, for instance, when I was
Speaker 1: leading Valkyrie, we launched a bitcoin futures ETF because that's
Speaker 1: what the sec was accepting before SPOT, and that was
Speaker 1: under a forty Act wrapper. Because of the nature of
Speaker 1: how you hold futures in a in a product, you're
Speaker 1: essentially holding securities using that as collateral to buy the
Speaker 1: to buy the futures. So some of the ones that
Speaker 1: you might see out there today that our forty ACT
Speaker 1: is a combination of things like futures, swaps, offshore vehicles
Speaker 1: that might hold SPOT, or a fund of a fund
Speaker 1: type type situation where it's holding ETPs from another country.
Speaker 1: So you know the reason why we didn't go the
Speaker 1: forty ACT route is because it is a bit more
Speaker 1: expensive than going pure spot pure spot. You know, it's
Speaker 1: you know, it cost us less and we can of
Speaker 1: course you know, pass that on to you know, our
Speaker 1: our customers, uh in terms of fees go. Whereas, if
Speaker 1: you notice forty ACT funds that that are trying to
Speaker 1: mimic Spot are a little bit more expensive and they're
Speaker 1: also not a pure wonder one. Got it.
Speaker 2: Thanks for clarifying that. I know a lot of people
Speaker 2: get confused, even myself at times.
Speaker 1: Now.
Speaker 2: There have been talks and I saw the folks a
Speaker 2: Canary Capital posts on x that the XRP ETF may
Speaker 2: be coming soon. I know it is probably not a
Speaker 2: lot you can say, because it's still something that's not
Speaker 2: launched yet, but tell us about when we could potentially
Speaker 2: anticipate that and what that product would look like.
Speaker 1: Yeah. Look, you know, we we can't really name an
Speaker 1: exact date yet, even though we internally know what the
Speaker 1: date is. So, you know, we you know, we have
Speaker 1: very high hopes that that this does launch very soon,
Speaker 1: but it is, it is coming soon, and if you
Speaker 1: kind of look online and do the math, you can
Speaker 1: probably figure out what that date might be.
Speaker 2: Sure, dumb question, Steven. There has been the government shutdown,
Speaker 2: so folks who are wondering, did you already get pre
Speaker 2: approval of these from the SEC before the government shut
Speaker 2: down or you don't need the exact approval given the
Speaker 2: recent ETF listing standards update from the SEC.
Speaker 1: Yeah, so when you file a nineteen thirty three x ETF,
Speaker 1: you typically file under two different scenarios. One is what's
Speaker 1: called a delaying amendment, and you typically want to file
Speaker 1: a delaying amendment anytime you have to sort out rule
Speaker 1: changes with the exchanges. So this was the whole drama
Speaker 1: around bitcoin. You had to file this nineteen before in
Speaker 1: addition to the ETF, which means that you're applying for
Speaker 1: a rule change with the exchange that you're using. In
Speaker 1: our case it's NASDAC. And then once that rule change
Speaker 1: is approved to be able to list that particular underlying token,
Speaker 1: which in that case was bitcoin, then the SEC will
Speaker 1: make effective your s one perspectus, right, And in the meantime,
Speaker 1: they're giving you comments, making sure that you know they're
Speaker 1: reviewing it. They're like, hey, can you add this disclosure?
Speaker 1: Can you add this, can you fill in this blank?
Speaker 1: Can you clarify this statement that you made? Those are
Speaker 1: all part of the comment process. So initially all of
Speaker 1: these ETFs are filed alongside a nineteen before for rule changes,
Speaker 1: and then what happened was that the SEC created what
Speaker 1: was called the Generic Listing Standards. That way, you don't
Speaker 1: have to apply for a role change because the rule
Speaker 1: already exists. So under the Generic Listing Standards, essentially any
Speaker 1: spot cryptocurrency that has a futures associated with it trading
Speaker 1: in the US for more than six months as follows
Speaker 1: that rule. So in this case, all of these follow
Speaker 1: that rule. And then you know, under normal circumstances, you
Speaker 1: want to continue to go through the process having SEC
Speaker 1: review and then and then they will make you effective. Well,
Speaker 1: many of these products were opinion essentially ready to go,
Speaker 1: that had gone through several rounds of comments with the
Speaker 1: SEC uh Cork Finn staff, and the government shutdown actually
Speaker 1: slowed everything down. Well, the SEC put out guidance saying that, well, look,
Speaker 1: you know, even if even if we're shut down, it
Speaker 1: doesn't mean the market should be. And they put out
Speaker 1: guidance to simply remove the delaying amendment and make it
Speaker 1: a what's called an ad A filing. So we did
Speaker 1: that with light Coin and and h bar E tfs first,
Speaker 1: because you know, those were the two that were further
Speaker 1: so long we had filed them over a year ago
Speaker 1: and received several rounds of comments wow. And then as
Speaker 1: you may have noticed, some people did that with Solana.
Speaker 1: You know, we we paused on Solana just because of
Speaker 1: the staking, even though we felt like it was essentially ready.
Speaker 1: And then when we saw others go, we followed. And
Speaker 1: then with the x RP, we we felt like that
Speaker 1: was always you know, uh, you know, that's been ready
Speaker 1: to go for a while. Well, so so we went
Speaker 1: ahead and changed that filing for that ETF so that
Speaker 1: we're now relying on an aight A as opposed to
Speaker 1: a a laying amendment and what that when what that
Speaker 1: does essentially says that a you become effective twenty days
Speaker 1: from when you refile a complete filing with the you know,
Speaker 1: with the SEC. So so yeah, we we did that
Speaker 1: way back in October and we're you know, coming up
Speaker 1: close on that twenty day.
Speaker 2: Period, oh for sure. Now you mentioned staking, and we're
Speaker 2: recording this on Monday, November tenth for those folks who
Speaker 2: are going to be watching and listening to this. And
Speaker 2: I would love to get your take on staking and
Speaker 2: et apps and ETPs. But also we got some big
Speaker 2: news from Scott Messent saying the US Treasury and the
Speaker 2: i r S are giving clarity to allow staking and
Speaker 2: ETPs and much more. I would love to get your
Speaker 2: take on both items.
Speaker 1: Yeah, no, that's fantastic. And and of course Tony, you
Speaker 1: know we you know, as we discussed earlier before we
Speaker 1: came on, that that tweet had just gone out and
Speaker 1: I probably only read about ten percent of it before
Speaker 1: we before we got on. But it is really important
Speaker 1: because what we have to do right now when it
Speaker 1: comes to staking is we have to come up with
Speaker 1: a formula. And by the way, we had already cracked
Speaker 1: this cold code within a grant tor trust structure. So
Speaker 1: I actually launched the first crypto grant or trust that
Speaker 1: that that had staking in it. That this was several
Speaker 1: years ago, working with you know, work working with tax experts,
Speaker 1: and you know we we so we structured that shoot
Speaker 1: four years ago. And given that ETF thirty three at
Speaker 1: ETFs are essentially grant tor trusts, you know, we had
Speaker 1: already again already saw that issue, had already structured a
Speaker 1: way to do it. And really all we need to
Speaker 1: do is just get that extra you know, kind of
Speaker 1: you know, legal opinion from from from the tax side
Speaker 1: of things, because you know, it's one thing when you're
Speaker 1: doing in a private gren int or trust, a whole
Speaker 1: other thing when it's when it's in ETF with you know,
Speaker 1: hundreds or thousands or tens of thousands of people investing
Speaker 1: in it. You want to make sure that everything is right.
Speaker 1: You know. Again, that's that's something that has taken a
Speaker 1: lot of time and energy and structuring and and and
Speaker 1: of course you know cost and illegal opinions. But if
Speaker 1: you know, really clean guidance comes out, you know, it
Speaker 1: saves us, It saves us that effort. And I think
Speaker 1: it helps the whole ecosystem and be able to take
Speaker 1: those rewards for staking on the network.
Speaker 2: And do you anticipate as staking the clarity starts making
Speaker 2: its way through the market, issuers like yourself start integrating
Speaker 2: these things that we may see even more inflows into,
Speaker 2: like etherorem ETFs and solana ETFs and so forth, because
Speaker 2: you now have the confirmation that staking is okay, but
Speaker 2: you get that built in yield that's running you know,
Speaker 2: twenty four to seven and earning that passive reward if
Speaker 2: you want to call that.
Speaker 1: Yeah, and I agree with that, you know. So, so
Speaker 1: we actually filed the first We actually filed for the
Speaker 1: first uh salona staking meut yet And I think at
Speaker 1: the time a lot of people were, you know, a
Speaker 1: little sketchy about doing that, but we were pretty comfortable.
Speaker 1: But what I will say about that is, even though
Speaker 1: we'd crack the code, we believe a lot of people
Speaker 1: would be interested. A lot of institutional investors would not
Speaker 1: be interested because even though you know, we say we've
Speaker 1: done it, we've got a legal opinion that only goes
Speaker 1: so far. You know, people want real assurances and if
Speaker 1: you've got a you know, real guidance coming out of
Speaker 1: the I R. S and Treasury Department that hey, this
Speaker 1: is this is this is the way it works, and
Speaker 1: this is how you're going to treat be treated from
Speaker 1: his tax perspective, you will see a lot more institutional
Speaker 1: investors interested in investing.
Speaker 2: Oh yeah, the clarity is so important. And I'm assuming,
Speaker 2: you know, just spinball and are guessing here that some
Speaker 2: of the guidance here that Scott bessoned to put out,
Speaker 2: I'm assuming that you might that in the Clarity Act,
Speaker 2: which is you know, currently in the Senate.
Speaker 1: This way, I don't know.
Speaker 2: I don't know if they need to, but I think
Speaker 2: it would make sense.
Speaker 1: Yeah, I agree. I agree.
Speaker 2: Now, with all these different types of ETF products that
Speaker 2: you're launching, and you have extensive experience with these products,
Speaker 2: are you planning to launch let's say, an index or
Speaker 2: basket e tips.
Speaker 1: Well, we actually have already filed for one. We we
Speaker 1: do have a little bit more work to do on that,
Speaker 1: and we haven't been able to move forward on that
Speaker 1: at all since the government shutdown, you know, against some
Speaker 1: of the ETFs that we filed for that you know,
Speaker 1: we filed for in twenty twenty four, that has already
Speaker 1: had you know, several rounds of comments and you know,
Speaker 1: we're you know, those those were easy to get out
Speaker 1: during the shutdown, but pretty much everything else is on
Speaker 1: hold until the government reopens and we can you know,
Speaker 1: get you know, regular comments back from the SEC and uh,
Speaker 1: you know, and we want to make sure that we're
Speaker 1: fully compliant there, so we so we definitely have to
Speaker 1: we definitely have to wait on that, but we have
Speaker 1: filed and you know, we hope that moves forward pretty
Speaker 1: quickly once the government reopens.
Speaker 2: Now, we've seen incredible growth for these ETF products around
Speaker 2: crypto steven As. There are more being put.
Speaker 1: Out there because there are a lot of crypto assets.
Speaker 2: And look, I'm not necessarily saying we're going to have
Speaker 2: a thousand ets where all the thousand coins, but with
Speaker 2: the records that are being broken here are crypto ETF
Speaker 2: is going to dominate the ETF market.
Speaker 1: You know, I think for a short period of time,
Speaker 1: because it's a new asset class, it probably will. But
Speaker 1: what I will say is that, you know, it's not
Speaker 1: going to be everything right. So so far you've only
Speaker 1: seen things in the top twenty, and you know, I
Speaker 1: think once you get to maybe the top thirty, it
Speaker 1: starts falling off, and I don't know if if anything
Speaker 1: beyond that is going to be viable. It could be,
Speaker 1: you know, there could be a few here and there,
Speaker 1: but it's not a really clean pattern of Okay, these
Speaker 1: are the top thirty that are going to win. It's
Speaker 1: going to look a lot like it's going to look
Speaker 1: a lot like the et apps for commodities in metals,
Speaker 1: so you know, gold obviously dominates, silver is pretty popular,
Speaker 1: and then you start getting down to like copper, magnesia.
Speaker 1: I mean, you know, like you know, you start getting
Speaker 1: into fringe metals that people aren't really speculating on, and
Speaker 1: these are very very small ETFs and people don't care
Speaker 1: a whole lot about I think Crypto's gonna look the
Speaker 1: same way, where you're gonna have a few that really dominate,
Speaker 1: and then kind of a few that's more mid tier,
Speaker 1: and then there'll be a few launches that I think
Speaker 1: we'll just absolutely do nothing. And by the way, I'm
Speaker 1: not the expert, because you know, I've launched things and
Speaker 1: I thought we're gonna kill it, and it doesn't that.
Speaker 1: I've watched things that I thought were kind of nih
Speaker 1: and they end up killing it, So you just never
Speaker 1: know what the market's going to like and accept. I
Speaker 1: mean there's some things that you have a you know,
Speaker 1: strong conviction like okay, bitcoin XRP, Marcus going to love those,
Speaker 1: you know, other things. I mean, look, by the way, Hbar,
Speaker 1: you know, I had a very strong inclination that it
Speaker 1: was going to do quite well, and it even exceeded
Speaker 1: my expectations. You know, I was expecting about fifty million
Speaker 1: in eight which is a lot. I mean, launching an
Speaker 1: ETF and getting fifty million in three days is is
Speaker 1: unheard of, right, And we got seventy million in three days,
Speaker 1: so you know, that's really exceeded expectations. And it's like
Speaker 1: number twenty as far as market cap goes. So it
Speaker 1: just goes to show that it's much more of an
Speaker 1: institutional product. People that are you know, that Brokera's accounts,
Speaker 1: they know it, they know the name. It's not as
Speaker 1: popular within crypto circles, but it's very popular outside of
Speaker 1: crypto circles, and that's and that's really important, right Whereas
Speaker 1: you know, like Solana, you know, I you know, Salona
Speaker 1: launched last week and yeah, it was a great launch.
Speaker 1: So I mean it's it's but it's also you know,
Speaker 1: the what is it the fourth largest cryptocurrency by market cap, right,
Speaker 1: but it didn't perform like it was you know, I mean,
Speaker 1: you know, I think it could have been bigger. So
Speaker 1: it just goes to show that that crypto people really
Speaker 1: love Salana, but people outside of crypto really don't know it.
Speaker 1: And that's what, you know, is really going to mix
Speaker 1: things up.
Speaker 2: Oh for sure. You know something that came to mind
Speaker 2: as you were talking about that. I think for the
Speaker 2: first time we have yeah, definitely, for the first time,
Speaker 2: you have companies around certain blockchain projects like a ripple
Speaker 2: that could do an IPO, but there's also that token
Speaker 2: that's connected to the ecosystem. You also have exchanges that
Speaker 2: could do that. You have binance and bn B and
Speaker 2: then coinbase their public and then they're talking about, you know,
Speaker 2: they're floating the idea of launching a token. Could we
Speaker 2: potentially see ETFs around these these companies that have both
Speaker 2: the token and they're publicly.
Speaker 1: Oh absolutely, you know, I think you'll see one of each.
Speaker 1: And then I mean there's so many ETFs out there
Speaker 1: even today that are all they do is hold companies
Speaker 1: that are in the cryptocurrency ecosystem or the black chain ecosystem.
Speaker 1: So so you'll see that and those are going to
Speaker 1: be more for equities and they're going to see more
Speaker 1: some some that are more for tokens for sure.
Speaker 2: Would it be possible to merge them together or maybe
Speaker 2: not because there are different assets.
Speaker 1: I mean I think you could. It would It wouldn't
Speaker 1: shock me if if that does happen. I mean I've
Speaker 1: actually seen some ETFs that have I mean, let's take
Speaker 1: micro strategy for instance. I mean, micro strategy is essentially
Speaker 1: a lover bitcoiny TF Yeah, and that is included as
Speaker 1: an equity in you know, and other equities that do
Speaker 1: things more you know, as far as building an ecosystem,
Speaker 1: whereas micro strategy is kind of like a buying old
Speaker 1: and leverage.
Speaker 2: Yeah, that definitely makes sense. So since we're on that
Speaker 2: topic of micro strategy, you know, there's a big talk
Speaker 2: right now dat's digital last of treasury companies versus ETFs.
Speaker 2: I'd love to get your take on that. And do
Speaker 2: you see them co you know, running parallel, side by side,
Speaker 2: or the ETFs are you know, maybe a far more
Speaker 2: superior product that people trust and that's you know they'll
Speaker 2: have a sliver of the market.
Speaker 1: Yeah. Look, I think I think a lot of dats
Speaker 1: out there, you know, for for better or worse, there's
Speaker 1: a lot of leverage, so they're actually paying people to
Speaker 1: do things. But if you just want like a pure play,
Speaker 1: exposure to a token etf is far more of a
Speaker 1: superior product. I mean, I've seen dats you know that
Speaker 1: that come across my desk that are like, Okay, we're
Speaker 1: gonna we've got this massive management team. We're going to
Speaker 1: pay bankers five percent. We're going to pay these people
Speaker 1: five percent. We've got lawyers. We're going to pay an
Speaker 1: asset manager. I've seen in some cases three to four percent.
Speaker 1: So what they're paying for an asset management feed of
Speaker 1: just like by tokens. So I mean, you know, at
Speaker 1: the end of the day, you're putting in a dollar
Speaker 1: and you're getting eighty five cents back, and it's a
Speaker 1: it's a it's a very inefficient vehicle and also doing
Speaker 1: something special. I think Micro's strategy worked because they were
Speaker 1: kind of early and they had they had this operating
Speaker 1: company that was profitable, and then as time went on,
Speaker 1: the gains and bitcoin outperformed the operating company, but the
Speaker 1: operating company covers the bills, so it's like, you're not
Speaker 1: there's not a lot of drag there. But I've seen
Speaker 1: some of them where it's like, Okay, you're you know,
Speaker 1: we're taking fifteen percent off the top and you know
Speaker 1: you're lucky to get eighty five. So so yeah, that's
Speaker 1: are interesting. They're they're they're they're not one size fitable, right.
Speaker 2: And I'm I'm a big concern Stephen, because it feels
Speaker 2: like there's a little bit of a bubble forming in
Speaker 2: that area with dads, and I'm concerned what's going to
Speaker 2: happen when a bear market or a major market downturn happens,
Speaker 2: like some of these could potentially collapse.
Speaker 1: I mean, I think the bubble, I think the bubbles
Speaker 1: already popped. I mean, look look at some of these
Speaker 1: dats that have that have come in quite a bit.
Speaker 1: And I mean look, I get calls every day from
Speaker 1: makers wanting to participate and a DAT and I haven't
Speaker 1: seen any of them get off the ground in the
Speaker 1: last month. So I I think I think that market's run.
Speaker 2: Oh for sure, what's on your road map? I'm assuming
Speaker 2: there's plans to launch additional all coin et apps. You know,
Speaker 2: you mentioned like you guys had filed for the basket
Speaker 2: ETF as well, anything else you want to highlight.
Speaker 1: Yeah, I don't anticipate doing a whole lot more beyond
Speaker 1: some of what we've already filed out there. There there
Speaker 1: might be some things here and there that that I
Speaker 1: think are interesting. But look, you know, I mean I'll
Speaker 1: just talk about a few other you know, like like Avalanche.
Speaker 1: You know, I know a couple of people filed for
Speaker 1: Avalanche ETFs. You know, we probably won't file for it.
Speaker 1: Not that that we don't love AVAS and we don't
Speaker 1: love the team, but like you know, we were not
Speaker 1: going to compete with two other issuers that have already
Speaker 1: done it, given that it's you know, you know about
Speaker 1: number twenty in marketcap. Sure, just like with some of
Speaker 1: the things that we've done, we haven't seen other people
Speaker 1: file because okay, yeah, the Canary guys are doing that one,
Speaker 1: there's probably not room for two or three. Yeah, and
Speaker 1: we're kind of we're saying the same thing is right
Speaker 1: height as another one. A few people filed for that Avalanche.
Speaker 1: You know, we're just you know, if you're if you're
Speaker 1: coming in coming in second or third it's you know,
Speaker 1: second maybe third not worth their time.
Speaker 2: Question that just came to mind. So as we build
Speaker 2: out these all coin ETFs, let's say unfortunately one of
Speaker 2: these blockchain projects fails, right, and that's a real possibility,
Speaker 2: just like companies in a real world can fail. What
Speaker 2: happens in a scenario like that, How does that get
Speaker 2: liquidated and funds and all these things? Or is it
Speaker 2: just an inherent risk that you know when you're investing,
Speaker 2: that's that's part of the game.
Speaker 1: Yeah, No, I think that's an inherent risk when you're investing.
Speaker 1: I mean, these are these are passive products, so people
Speaker 1: do need to do their own work and make sure
Speaker 1: that it makes sense. I mean, we're we're trying our
Speaker 1: best to be a screener to make sure that you
Speaker 1: know that that you know, we follow the project, we
Speaker 1: know it's happening there before we you know, agree to
Speaker 1: do it. And then and there are some things that
Speaker 1: are just like mean coins, right, you know, like there's
Speaker 1: been filings for for for I think was I can't
Speaker 1: remember if there's been a Siba one or not, but
Speaker 1: there but there's been some you know, other other meme
Speaker 1: coins that are out there, and you know, mean coins
Speaker 1: aren't really a project, it's uh, it's it's culture. So
Speaker 1: you've got to decide if if you think that it
Speaker 1: has staying power or not. Right, So I do expect
Speaker 1: to see a lot more memes now, memes are actually
Speaker 1: a meme. Coins are safer from a security perspective because
Speaker 1: the SEC declared that they're not securities, so that one's
Speaker 1: super easy. But they are cultural and culture does change,
Speaker 1: so we'll see what happens.
Speaker 2: That's a great point. Yeah, it's so fascinating those steven
Speaker 2: to see. Well, I guess it's a natural evolution of
Speaker 2: the Internet because there's memes online and we know how
Speaker 2: that culture has expanded online and in different ways. But
Speaker 2: now you can financialize it on the blockchain and it
Speaker 2: can have a global reach. It's it's just a crazy concept,
Speaker 2: but it's incredible.
Speaker 1: Yeah. Well it's no different than art too, right, So
Speaker 1: so so if you think about it, there are financial
Speaker 1: products that hold art, you know, publicly traded funds. Yeah,
Speaker 1: and art is a cultural phenomen you know, different people
Speaker 1: like different things, and if it goes out of favor,
Speaker 1: it goes out of favor. So so you know, art
Speaker 1: generally holds, its value, generally goes up in value, but
Speaker 1: it could go out of favor very quickly. I mean,
Speaker 1: here's a good example. There was a there was actually
Speaker 1: a company that all they did was hold a bunch
Speaker 1: of Charles Schultz drawings, you know, the Peanuts, Charlie Brown.
Speaker 1: Oh yeah, and you know, and it kind of went
Speaker 1: out of favor for a little bit a few years ago,
Speaker 1: and that company went down like eighty percent. So you know,
Speaker 1: so it's it's it's no different than than than things
Speaker 1: that have already existed. It's just happens to be, you know,
Speaker 1: in the world of crypto.
Speaker 2: Oh for sure. Yeah, well said, I would love to
Speaker 2: get your take on what's happening would trad fis adoption
Speaker 2: at crypto Stephen This year, it seems like we've seen
Speaker 2: a lot of the nace just do a one to eighty,
Speaker 2: you know, Jamie Diamonds and all these guys, But all
Speaker 2: the banks, all of the major Wall Street firms are
Speaker 2: now tokenizing, looking to launch crypto trading, even the likes
Speaker 2: of Vanguard capitulating right to allow your clients to trade
Speaker 2: et apps and much more. What are your thoughts on
Speaker 2: how these folks are adopting crypto.
Speaker 1: Yeah, no, I think it's great. I mean I got
Speaker 1: in a tokenization back in twenty seventeen and it was
Speaker 1: just way too early, and so you know, we went through,
Speaker 1: we figured it out, and then there was just no
Speaker 1: market for it. And it seems like there's finally starting
Speaker 1: to creep in a market for it, and we have
Speaker 1: large players are that are jumping into in tokenization that
Speaker 1: they control two sided markets, then you will see transactions
Speaker 1: starting to occur. I think what's happening is is a
Speaker 1: lot of the large banks have realized that, look, you know,
Speaker 1: tokenization of assets is a way more efficient form of
Speaker 1: of of trading and creating baskets. And if we can
Speaker 1: get in front of this, then we can put in
Speaker 1: esoteric assets that people want and they can trade freely
Speaker 1: twenty four to seven. So that that's that's probably the
Speaker 1: biggest driver right now. And by the way, that's one
Speaker 1: of the reasons why Solana is super interesting because it
Speaker 1: is so involved on the tokenization of asset side of things,
Speaker 1: and you know, same thing with with Suie, with injective,
Speaker 1: they're really important on tokenization. But then if you can
Speaker 1: get back to like x RP you know, XRP is
Speaker 1: building out rails for tokenization of any kind of financial
Speaker 1: instruments such as you know, they just launched a stable
Speaker 1: coin this year, so you know, and and and that
Speaker 1: partnership with Gemini think is super important. So so you know,
Speaker 1: there's there's a lot happening there that is you know
Speaker 1: that it's really gonna be quite interesting to see several
Speaker 1: years later.
Speaker 2: Yeah, and it seems like the move to tokenization is
Speaker 2: to kind of mimic what crypto is doing, because Crypto
Speaker 2: has been the twenty four to seven three hundred and
Speaker 2: sixty five. They market no more, no opening or closing bell,
Speaker 2: no holidays, and now Tradifi wants to go twenty four
Speaker 2: to seven. And then it also opens up a global market,
Speaker 2: more liquidity coming from different parts of the world.
Speaker 1: YEP, that's right.
Speaker 2: Yeah, it's teresting. I've I can't remember who mentioned is
Speaker 2: if it was Larry Fink or someone else, but the
Speaker 2: folks are looking to tokenize ETFs. What are your thoughts
Speaker 2: on that?
Speaker 1: You know, it's interesting because here in the US, you know,
Speaker 1: I think ETFs trade at decent hours where I think
Speaker 1: tokenization might work. Though for ETFs is globally. So for instance,
Speaker 1: you know, our checks in out of the UK has
Speaker 1: tokenized a few crypto ETFs, including HPAR and what that
Speaker 1: does It allows people in Europe to trade these without
Speaker 1: having to go through their local exchanges. So that's actually
Speaker 1: really important from a global standpoint. I don't know if
Speaker 1: it's that you know, you know in the US, we
Speaker 1: tend to tend to think in US terms, it's like, okay, well,
Speaker 1: how's that useful? Well, for other people, it's very useful.
Speaker 1: That can't you know that don't want to be at
Speaker 1: the up and you know New York hours trading.
Speaker 2: It's it's kind of crazy. I think sometimes about this
Speaker 2: where to twenty four to seven, Marcus, are we going
Speaker 2: to drive ourselves nuts? And maybe we have AI helping
Speaker 2: us trade while we're sleeping. But we'll have to see
Speaker 2: how it all falls into place. I didn't want to
Speaker 2: get your thoughts on this. The Clarity Act, right, that's
Speaker 2: that's in the Senate the government. We're still waiting for
Speaker 2: that to be reopen, hopefully today, and you know, the
Speaker 2: Senate could get that through and President Trump signs it
Speaker 2: into the law. What are your thoughts on the impact
Speaker 2: that will have? Any industry and innovation and building and
Speaker 2: much more.
Speaker 1: Yeah, look, I think it'll be pretty important. I think
Speaker 1: a lot of the impact from the potential of the
Speaker 1: Clarity passing has already been priced in, and I think
Speaker 1: you know a lot of people care about price. But
Speaker 1: also we've received a lot of clarity regulatory clarity outside
Speaker 1: of the Clarity Act, So it really all it does
Speaker 1: formalizes it. So you know, under this administration and under
Speaker 1: this sec we have seen very pro crypto policies and actions,
Speaker 1: but this will codify most of that into law, so
Speaker 1: that under the next administration it's somebody that's not so
Speaker 1: friendly crypto, it'll it'll persist as law. So I think
Speaker 1: that's really where it's more important, is three years from
Speaker 1: now as opposed to next month. Yeah, that definitely makes sense.
Speaker 2: And to your point, folks, all the spirit of the
Speaker 2: law is out there where folks are, like the banks,
Speaker 2: and these guys are starting to innovate and build, even
Speaker 2: though they haven't put anything out to the public necessarily,
Speaker 2: I think they see that it's coming. It'll be written
Speaker 2: in stone, so to speak, and they don't have to
Speaker 2: worry about getting a lawsuit or whatever it may be. Yep,
Speaker 2: that's right, all right, Stephen, great stuff. I love what
Speaker 2: you and the folks Can Area are doing, and I'm
Speaker 2: looking forward to the launch of the x RP ETF
Speaker 2: and the future ETF products. I've often covered you guys
Speaker 2: in the news and all the things you're launching, but
Speaker 2: I got some wrap up questions here for you. First,
Speaker 2: if you could create your own metaverse, what would the
Speaker 2: theme be?
Speaker 1: Oh wow, that's that's an interesting one. You know, the
Speaker 1: two things I like to do probably the most is
Speaker 1: work on old cars and shoot guns, So that'd probably
Speaker 1: be my metaverse. I'd just be out in the country
Speaker 1: tinkering on old trucks and honey.
Speaker 2: Can I can I confess something? And I've spoken to
Speaker 2: my wife about it. I told her, if you know
Speaker 2: I portfolio gets to a certain amount of cash, hot
Speaker 2: be prepared. I'm going to buy a couple of hobby
Speaker 2: cars and I'll be working on them because I love cars,
Speaker 2: and I watch videos of people fixing and bringing to
Speaker 2: life old cars, and you know, I just love that.
Speaker 2: So I would love to have like a sixty seven
Speaker 2: Ford Mustang or something and just be a project I
Speaker 2: work on.
Speaker 1: You know, it is one of my favorite things to do.
Speaker 1: And I learned by watching my dad growing growing up,
Speaker 1: you know, because he was a mechanic an engineer, and
Speaker 1: you know he would he would always, you know, he'd
Speaker 1: get bored and like drive to the junk yard and
Speaker 1: pull a car out and start make it run. So
Speaker 1: but yeah, my my, I had a COVID project where
Speaker 1: I bought a seventy one Scout and made it run.
Speaker 1: You know, that was a lot of fun. I drive
Speaker 1: it around. I haven't finished restoring the outside of it,
Speaker 1: so it looks like like orange with you know that,
Speaker 1: you know that nineteen seventy one orange with yeah, you know,
Speaker 1: eight peeling off and you see splashes of gray and
Speaker 1: some rust. But like it drives. It drives great. And
Speaker 1: have fun driving it around.
Speaker 2: Oh yeah, I love it. I like the idea, the
Speaker 2: idea of engines and working on them, and I'm fascinated
Speaker 2: by how it all works. So I'm with you on
Speaker 2: that rapid fire questions, favorite food, pizza, favorite musician or
Speaker 2: band led Zeppelin, favorite movie Zoolander, favorite book Thinking Fast
Speaker 2: and Slow? I think you answer this, But when you're
Speaker 2: not working, what are you doing for fun?
Speaker 1: I go to the gym. That's about it. I'm a
Speaker 1: i'm a i'm a big gym rat.
Speaker 2: Nice Steven, absolute pleasure. We're gonna have to have you
Speaker 2: back on as you guys launch new products. Well, thank
Speaker 2: you so much for joining me.
Speaker 1: Great thanks for having me, Tony H.