Navigating the Cambrian Explosion of Digital Asset ETPs & Structured Products | DAS London 2025
Summary
Market Outlook: The panel discussed the recent lifting of the UK retail ban on Bitcoin and Ether ETNs, highlighting the evolving regulatory landscape and its potential impact on market access for retail investors.
Investment Themes: There was a focus on the "Cambrian explosion" of digital asset ETPs in the US, driven by new SEC generic listing standards, which could lead to a proliferation of products across various cryptocurrencies.
Company Insights: 21 Shares and BlackRock were highlighted for their roles in expanding crypto ETP offerings, with 21 Shares planning to launch more products in the US and BlackRock noting significant client demand for Bitcoin and Ethereum.
Opportunities: The discussion emphasized the potential for growth in crypto ETFs and DATs, with a particular focus on the unique opportunities presented by less accessible assets like Hyperlid.
Regulatory Challenges: The panelists noted the stringent scrutiny from regulators in the US and UK, contrasting it with the relatively easier approval process for other high-risk financial products.
Market Dynamics: There was a consensus that while the market for crypto ETPs is expanding, significant barriers remain, particularly in terms of institutional adoption and regulatory acceptance.
Future Prospects: Panelists predicted consolidation in the DAT market, with fewer but larger players, and emphasized the need for continued education to broaden investor understanding and acceptance of crypto assets.
Transcript
Hello everyone. As Felix said, the last panel, Digital Asset Summit. Thanks for sticking it out with us. Uh it's going to be a good conversation with about ETPs and DATs. Um so yeah, I'm I'm Ben Stra. I'm a reporter at Blockworks and author of the Forward Guidance newsletter. U I'm just going to ask my uh panelists to briefly introduce themselves and then we'll get started. Thanks. Uh David Sheamus. I am one of the co-founders of the private equity firm Atlas Merchant Capital. We focus on financial services, banks, insurance companies, broker dealers, New York and Londonbased. Um we have done two things in crypto over the years. We were the guys that were trying to take circle public with our spa. We were not successful unfortunately, but happily along the way we um we did a couple round couple private rounds through our funds which obviously worked out real well. Um, and then, uh, last s over the over this past summer, we announced a DAT for Hyperlid. Uh, by far the largest DAT so far for Hyperlid. Uh, close to $900 million raised. Um, that's what we do. Mendy Cho, head of financial product development at 21 Shares. Um, 21 Shares, we manage about 12 billion assets, many in crypto assets. Um and that's u over 50 um ETF ETPs and and public trust uh globally mainly in the US and Europe. We've been in the market for about seven years and um we were one of the first to bring the spot bitcoin and spot ethereum ETF to the US um last year and myself um I spent most my career in ETF before this uh before this role. um pretty much a trout five person. Um and uh I've been to you know several startups and um asset management companies. Um this is actually my third startup now. Um the first one was ETF securities focusing on commodity um ETFs and ETPs um which was sold obviously to wisdom tree. Um and when I was in stere global advisors I was heading up the ETF team ETF product team not ETF team. Um and uh at the time I was really sold on blockchain technology. Um and uh then a lot of my ex-colagues were working in in crypto. So after the FTX collapse, I decided that if that didn't kill crypto, then nothing will. So I joined the industry after that. So hi everyone, I'm Matt Kunky. Uh I'm a crypto product strategist at Black Rockck. So that means I do all the hand-to-hand combat uh with clients across the spectrum from wealth to institutional uh for about $120 billion of AUM in uh Bitcoin and Ethereum ETPs. Um and then here in EMIA with our locally listed Swiss SPV. Um nice to see you all. Yeah. So I wanted to start because we're in London um news last week that uh UK UK retail investors would now have access to uh Bitcoin and Ether ETNs. Um just want to kind of wanted to get your reaction to that um the FCA kind of saying that uh the market has evolved and so that's why they're kind of allowing this access now. Um but just curious of how significant you think this is and and what you thought of that restriction in the first place. Yeah. So reactions, excitement, confusion, and excitement. Um so you're right. After four years of retail ban, um the FCS finally lifted the ban. Um it was on the 8th of October, but you'll probably find that super quiet at the moment. Um because actually none of the ETPs have been um approved by the FCA or LSC for listing yet for retail. Um and it's almost like you open the shop, but the shelves are all empty, right? Um and we we brought Bitcoin Ethereum ETPs to London last year um for professional investors only. That means people like you and me opening a retail brokerage account is not going to give you the access to those CTPs. Um and I guess to your question um I think the audience here will probably what be one of the first to to to hear that um on Monday you will find 21 shares Bitcoin and Ethereum ETPs traded on London Stock Exchange and this time for retail. So you can call your brokers now and see when they're going to on board those ETPs. But this is really the first step. Unfortunately, I would say um because there's still a lot of restrictions in place above and beyond the general um um uh ETPs in London and um a lot of the leading brokers have literally said that um they do not encourage or they were not planning to put those ETPs on their platform. So if you have a UK retail broker account, I would really encourage you to contact them and ask them to on board those products um onto um those uh those platforms. So still a lot of uphill battle uh battle, but we will celebrate the small wins on Monday first. Yeah. Yeah. Um and in terms of I guess the the explosion of ETFs that we're kind of referring to in this panel is is probably going to be in the US. Um the US had lagged uh Europe uh with the the way the SEC had been posturing for a while. Then we saw Bitcoin ETFs and Ether ETFs last year. And then um the generic listing standards that the SEC recently approved which kind of streamline the process as long as ETPs fit a certain um certain requirements. So just kind of curious of yeah how you think about generic listing standards and and Yeah. Yes. So, I guess just as a starting point for context, the process for getting Bitcoin and ETH approved in the US effectively relied on I mean there was a 10-year process and effectively relied on a lawsuit and the SEC kind of putting themselves in a very tough position, but it really only applied to these ETs that already had futures in them on those assets. And so, there wasn't really a clear playbook uh until recently of like what it took for other single asset crypto ETPs to become approved. Um and now uh you know new administration, new SEC, they they've come out with what are known as generic listing standards. Effectively it says again I mean this is US but effectively it says any underlying asset that has a CFTC regulated futures contract that's been trading for six months is an eligible to be in one of these ETPs. And so what that means is you have a very clear playbook on which products you can launch. I think you're going to see a whole host. I mean, they'll probably be an asset manager uh that will launch e everything that you can imagine that falls within this scope. Uh and so you're going to have absolutely a Cambrian explosion of of products across anything that really meets these criteria. I guess our event team uh named this panel correctly then. Um, so I guess and I I do want to get into debts, but um, so Mandy, you know, 21 shares, like you said, has a bunch of crypto ETPs in the in Europe. Um, you've filed for a bunch in the US. Uh, so if you could just kind of take me through what goes into the decision making. um into what to file for, what assets these products are going to hold and yeah, I think I'll start with the this disclaimer that um obviously we have filings in the in place and we're in quite period so I can't really comment too much about that but that just makes it even more tempting to comment, isn't it? So, so um there's like a dozen I believe that 21. Yes, we have 13 filings in place right now and hoping to add more. Obviously the U US government shutdown hasn't really helped. Um but um you will see more coming to the markets. Um we like you said we've been a supporter of of um old coins in in Europe. So you will see similar sort of approaches will be taking in the US because that's what we are really strong at. And in terms of what goes into the decision really I would really simplify by saying there's no difference between crypto versus other asset classes. It's about whether or not you have the investment case and are we ready to get behind it as an asset manager. Right? This is not about predicting the price but is about whether there's a real investment case or user case for the technology. So you wouldn't be surprised that we do token due diligence for example right is the onchain activities um the the tokconomics um uh the the risk assessments and the governance which are also very important. All those factors goes into whether or not we feel that this is something that we should bring to to the investors. And the last but not least, we we do have a very strong client base who are always very keen to give us feedback. So those feedback would validate our research and also a lot of time that leads to anchor investors and and and some early investment as well. So a lot go into the decision- making process. Right. I was just going to say I have to say that it is amazing when you see the level of scrutiny the regulators particularly in the US and the UK are giving some of these things in crypto on the in the in the ETF world when in fact you have you know triple long triple short Tesla ETFs as an example that seem perfectly fine to everybody like that that that you know where where they rebalance every day like that is that is very risky business um that again I don't these These guys might know better than I would. I don't think there was a lot of drama in getting those things approved. Yet, Bitcoin, which is a whole lot less volatile than 3x Tesla leverage, um, you know, sells right through. It's pretty amazing. Yeah. And I do want to get into your bet on Hyperlid. Um, but because we have an executive from Black Rockck on the stage, it it would be weird not to mention IBIT was the the Bitcoin ETF from Black Rockck was the most successful ETF launch in history. um it's approaching 100 billion in aumumumumumumumumumumumumumumumumumumumumum um and then the ether launch uh six months later or so. So with the overwhelming expectation that the SEC is going to be okay with Salana XRP, Litecoin ETFs and others u we haven't seen any other filings from Black Rockck just was wondering if you could share a little bit about um you know how you think about some of those altcoins and if we might thinking about it if and when we might see something there. Yeah, I mean I I would echo that we do actually have two outstanding filings currently, so I can't speak about those. They are not on altcoins though. Um, from our perspective, I think first and foremost, it's it's a client it's a client demand question and as a person at least for Black Rockck that does the majority of face-to-face client um combat, if you will. Um, it's overwhelmingly skewed towards Bitcoin in terms of demand. I would say this past year with the passage of Genius and sort of this narrative of ETH being the institutional smart contract chain, I would say that kind of accelerated demand for ETH pretty meaningfully. But then beyond that, we're still seeing I mean we'll certainly get the Salana and XRP question. It's just a very small fraction compared to and and and maybe there's big pockets of investors I don't speak to because again I'm mainly speaking to professional investors. Um but we've we've publicly come out at this point and said we don't have plans for a Salana or XRP or other spot uh single asset crypto products for now. Uh our focus is we just see such a big skew and interest um in the the two majors while education levels still quite frankly just need to be elevated. A lot of these firms we're speaking to still have blockers in place. A lot of people we're speaking to are coming with the most um 101 level line of questioning. And given the relative size of those two markets compared to some of the smaller ones, I think commercially um we're probably better off prioritizing and elevating um those two main products from an education perspective and a marketing perspective. Yeah, please take your time uh with the hyperlquid ETF. No rush. Take your time. That's fine. Yeah, we'll get into that. I I So, so David, yeah, with with the digital asset treasury company, DAT.co, co, whatever you want to call it, um that you guys are launching. Just first would be interested to know why you're focusing on Hyperlid and kind of the opportunities you saw there. Yeah, I would say that um we started getting very serious about this last spring and I will tell you last spring I wasn't sitting around my office thinking about how we could be the 101st Michael Sailor knockoff. Um, by the way, it's pretty good business being the 101st Michael Sailor knockoff, but that wasn't high on our list of things to do. But the more we got to know Hyperlquid and the more we understood uh certainly when it comes to the United States and weirdly enough Ontario where you're not even allowed to access the hyperlquid exchange and the only place even to this day where you can actually trade hype in any serious volume is on the hyperlquid exchange. there's an actual scarcity value that our debt and maybe uh Mandy's uh ETF is actually solving which is um for a regular way retail investor or even a number of large institutional investors we talked to um who want to get that exposure you know hype is a top 10 coin now if you take out the stable coins um if you want to get that exposure you just there there's just no good way to do it and even even if you're not in the US or Ontario um you know, getting money onto Hyperlid, like it's it it is a system really designed for very professional traders. Um, you know, there's nothing wrong with being a casual investor. I'm a casual investor in lots of lots of equities and lots of things. Uh, doesn't mean I'm I'm I'm a I'm a uh, you know, trading 247. So, it's just very hard to be a casual passive long-term investor in what I think I'm biased, but what I think is by far the most interesting and exciting thing in crypto in the last three years, which is hyper. Yeah, I'll echo that as well because obviously we have a hyperl and I would really echo what you just said about just that I think some of things were taken for granted when they become available. Um but when we identify from from the time when we identify hyperlquid to actually we're able to deliver this product it took quite a few months just to get the custody on boarding and imagine how difficult that would be for other investors who don't really have that sort of that sort of access um and behind the scene the result I'm pretty sure um Dave is the same it might look very easy on the surface because just placing a trades um but we always say index investing and I'm sure with that as well it looks It's like a duck paddling on a pool, right? It looks very smooth on the surface, but actually underneath there was a lot of paddling, a lot of hard work um to make it so smooth um above the water. Can I just add one comment on that because I've made a I've made a lot of skeptical comments about DATs historically and I think I I think this is an interesting example. Not to say I wouldn't interpret this as positive or negative. I just want to point out uh a unique aspect of this. Like that's when you're talking about the 20th iteration of Bitcoin, they remind me a lot of that closed in fun like grayscale premium discount trade where you're betting on two things. You're betting on like price of the underlying and you're betting on markets perceptions. Like at least in this scenario, it's it's actually just bridge. It's just like an access problem. And so it's it's kind of in some ways more attuned to an ETF. Like there's no way to easily get access. And so it is definitely a lot more unique than say the hundth iteration of a Bitcoin DAT or the 20th iteration of Ethereum DAT where in my mind you're just taking excess risk when you already have a really good isolated exposure to the underlying. It is kind of a unique scenario here. Yeah. And and before we saw Bitcoin ETFs, you know, Micro Strategy was a way that a lot of people got exposure to Bitcoin. Um you know, you joke about don't don't launch a hyperlquid ETF too quickly. I we saw I think we saw Bitwise file for one a few weeks ago uh in the US. Um so yeah, just kind of curious how you kind of think about the the differences in in a way that an investor can get exposure via an ETP versus a DAT and yeah, having both on the stage is kind of interesting here. Yeah, look, obviously they're different. Um there are things that that ETFs do that DATs can't and vice versa. Um I think, you know, I'll speak for our own. Um obviously we plan on I shouldn't say obviously we plan on staking the hype we have um which earns you a yield but also beyond that that's sort of the base case. So like if you're an investor in our DAT at the very least you should be assuming we're going to earn whatever it is two and a quarter percent whatever the staking rate is today. Um but particular hyperlquid is a particular ecosystem where there's a lot of things that people want to do in the ecosystem where you actually need the tokens to do the sort of a you know if you want to be a hip 3 um um you know builder you need a half a million tokens and half a million tokens is 20 million bucks. It's not it's not nothing. Um we are going to investigate whether there are thoughtful lowrisk ways we can earn even more yield um uh by doing things like that. whether it's lending tokens or or partnering with people in different ways to to get that yield even higher. Um that I think these two people on my left could correct me if I'm wrong, but doing creative things like that where we're actually locking up our tokens for a period of time um for more yield, I think are things that DATs can do that I think ETFs and other whatever the other acronyms are, I think would have a hard time. Now, the flip side is, you know, when you get into an ETF, you're getting in more or less at par. uh whereas DATs you know certainly often trade above above par you know positive have more than one MNAV and you have to weigh those two things off um I think definitely there's a I think the market is big enough for both um and I think ultimately is really this decision should be relying should be relying really the quality right and the investment objectives um we are a bit more our hands are a bit more tied in terms of staking for sure because we need to provide the liquidity for ETFs um but I think and I'm I'm personally I'm I'm very biased because I've been doing ETF for so long. Um, and I wouldn't be doing this for so long if I didn't believe in it. I think that transparency and the simplicity and predictive uh is predictable as well because it's all about tracking. Um, and that in itself is still a very attractive feature because you know what you're getting. Um, and with that I feel like you do get the benefit of some experts who do the hard work for you. Um, because they can. Um but I guess the result is slightly more less predictable than ETFs. But you know to the earlier point um ETPs are not always accessible to everybody UK especially and when that happens if you have a quality DAT I think the market is is is there for both. So I I would agree with that. It's a liquidity trade-off if you think you can um make some sort of yield off that active management. I I I just think uh c certainly that that should be like a reasonable premium. There shouldn't be like a 200% premium and you've seen the market correct, right? We've seen the market certainly correct already in that sphere. So yeah and and another development has been right you mentioned staking um Gayscale recently uh got the green light to add staking to they are staking their underlying ETH now and their their ETF. Uh curious of how you think that will impact demand if at all. Um because I guess one of the thoughts by a lot of people was that ETH ETFs didn't see the type of demand uh that maybe was expected at first. Can I just add 21 shares also started staking as well? Okay. Yes. And um so yeah, how do you think that will affect demand and make it more attractive for ETF investors that maybe were waiting for staking? You go ahead. I I can't comment too much. We have an outstanding filing so I'm a little bit landlocked here. I think they have a they have stricter compliance rules than us, but we've started. So that's definitely true. Yes. Um so we're definitely very positive about the developments because you can see the the growth of the Ethereum ETFs in the US just nothing compared to Bitcoin ETFs, but they are know equally very um strong um tokens. Um we if we look at the numbers for example the the bitcoin ETFs in the US is probably 20 times of the aum of the European bitcoin etc and etc's whereas if you look at ethereum the the the multiplier is only 12 and there must be a very significant reason behind that and we do have experience with staking and product non-staking in Europe. So we for a period of time we had two well we still have two um Ethereum ETPs in Europe for a long time one has been staking the other one has not been staking and the one that's not staking has a much lower TR so you would have thought the one with lower TR would grow more significantly but the reality is it just doesn't it didn't for a very long period of time and as soon as we started staking for the lower TR products um the EU surpassed 100 million very quickly so we do see we do believe the same trend will be replicated in the US once more um Ethereum ETF started um to to do staking. But of course, some of them are still stuck with um the queue at the moment. So, you don't see the effect that quickly, but I do believe in the near future you will start that your serum ETF start to catch up. That's a a really good point that like um Oh, I guess I'll get two points. I I think I'll play slight devil's advocate on ETHPs started off slow relative to Bitcoin, but if you look at like USAum, it's roughly it's a market cap weighted proportion of Bitcoin now. Uh it certainly wasn't at the start. I think it had certainly a catch-up trade around Genius. Um but I think the other one that's really important there is you mentioned uh unstaking cues and that is a challenging thing to manage right now. If anybody's familiar with um where we're at and how Ethereum validator exits work, uh we're at record we're at historically unprecedented times to exit a validator as a function of a you know a vulnerability at a staking service provider that had to rotate their keys. And now when you're talking about um daily liquidity ETPs and uh a process that may take 60 days to get your money back, it it is an operationally difficult thing to manage and think about. Um and so that definitely adds some complications to these products in general. Yeah. And and I guess you you've touched on a little bit um but in terms of the demand for when all of these new products hit the US markets um maybe maybe lessons from the European market of people seeking out altcoin exposures. Um and and then Matt, I know you mentioned a lot of people are focused on Bitcoin right now. Um so I is there going to be demand for all of these products that hit the market uh whether it's salon XRP Litecoin and further down um are we should we expect kind of a market cap weighted flows or or how do you kind of see that? I think only the market can tell. Um on our side uh we've like I said we always supported um allcoin and we do believe the other tokens have um a lot of user cases that investor will be interested in um and uh it like I said it's hard to tell um but if we think about the um the market u the aum of of um crypto ETFs in US at the moment it's only about 6% of the total crypto market cap. Um let's just draw a comparison. US equity ETFs it's 20% of the US equity market size right and I'm not saying it will reach 20% anytime soon. Um but it's definitely moving towards that direction and there's still a huge pocket of of investors who have not get in have not got in yet and they might got in you know they might get in um with cryp um with um Bitcoin and Ethereum. Yes. But I do think that once they get more familiar they will go down the rank and start to think well actually are we experience Solana? how we experiment other maybe hyperl liquid as well. Um I think the first step is important. I think um you mentioned earlier about education. I do think there's still a lot to do. Um we're probably speaking to each other in a sort of echo um echo room right now. Um but outside of this event venue, most of people are still really uncomfortable about crypto. Um I I I went to a lot of Trfy events and people still ask like, "Are you guys scammers?" All right. So, so there's still a bunch of people who need we need to bring them over the line um to start to understand the impact especially I would say regulators as well. What was your answer to that question? Are we scammers? I I didn't answer the question because time was running out. Yeah. And and bringing in David again with with debts. Um you know is it we see these popping up every day. You guys are one of the only ones doing hyperlid but we've seen multiple Bitcoin, multiple ETH, multiple Salana. Um, so how do you kind of view the broader debt landscape and and just how many winners there are going to be over time? Um, it's a great question. I I I personally think there will be a few winners for each of the of the major coins. Uh, obviously Micro Strategy like this whole this whole thing started, they were already one of the winners, right? Um and I think that you know the two ways you'll be able to to you know declare yourself a winner or whatever is either in but these things are obviously highly correlated with each other is either in size or in you know your ability to grow book value either through generating earnings one way the other or obviously issuing equity at premiums to grow book value one way the other. So I think there will be you know a few per token. there won't be 30 per token. I think it's hard to imagine. I think we can even see a world in the future, you know, and you know, again, long run when you're talking about crypto is like three to six months from now. Uh but you can see in the long run, you know, some consolidation among these different DATs over time because maybe the world doesn't really need 101 Bitcoin DATs. Uh but there's definitely room for more than more than a few in each of the tokens. And again, you know, it's an interesting question for me almost as an outsider, even though I've become a DAT guy. Um you know, we're by, you know, the the the second largest hype uh DAT right now is, you know, 120th the size of us. Uh and the one the the third largest is like onetenth the size of the of the second largest one. So there just aren't that many of them and it's obviously a lot smaller, right? Yeah. Yeah, and we saw uh last month Strive uh agree to acquire Similar Scientific. Um so consolidation has started there. Um wanted to step back because obviously we're talking about the this next wave of of crypto ETFs in the US. Um but wanted to kind of go back to Black Rockck and u IBIT's success a little bit and just um the amount of room that you think a fund like that has to grow uh considering there still are certain uh inhibitors to pockets of capital uh whether it's you know your um arrival in Vanguard not allowing those to trade on their brokerage platform or things like that. So yeah. Yeah. Yeah, I mean it it's hard hard to know how how big uh the industry can evolve in sort of the ETF landscape, but I I don't think we're anywhere. I guess I'll answer that by saying there definitively are pockets of capital that are meaningfully large trillions of dollars that still have barriers in place. Most notably, it it's the big warehouse banks and you know they they'll in most cases allow their clients um if they come to them saying, "Hey, I want to buy Bitcoin." They'll allow them to execute it. they won't allow the adviserss in general sense to go say hey I think you should have bitcoin at 2% in a portfolio and that is a very big limitation but I would say that's changing and accelerating in real time uh I mean even today today's this I mean this public information that Morgan Stanley allows uh allow now allows discretionary access to bitcoin ETPs and that's a multi- trillion dollar pool of capital in aggregate and so that's just one wirehouse bank we're talking about Like as those start to accelerate, those barriers start to be lifted. Discretionary portfolio managers can start to think about it in the context of a portfolio allocation. Visors can start to solicit it. I think um you easily, you know, f five years down the road can be multiples of where you are now. I don't think we're anywhere like I think like one of the best examples too is just go to a traditional financial advisory event and ask what percentage of people own crypto in their models uh or in their client portfolios and you'll see a pretty small number of hands go up. certainly nowhere close to a market that's overbought by the traditional market. Yeah, we definitely observe the same thing as well. So, um I I'll separate US and um and Europe. So, in the US, I guess proportionally um if you look at the 13 filing um large proportion of that is still self-directed retail investors, which is not normal because in US the largest port should be wealth managers, intermediaries and raas. um that just signifies how much untapped assets still there right um and so so that's definitely something we observe um in Europe I think um elephant in the room here but us right crypto is still blocked from us uh funds and you know appreciate not everyone knows much about us but it's 13 trillion markets um and even you know we're not talking about everyone investing in crypto but even have been investing investment in general is a huge market potentially um to to go into the crypto market and and that typically is again in Europe you typically have more sort of professional investors and institutional investors for ETFs um very little for retail but if you look at the trading um patterns within the crypto ETPS you see mostly retail trading right right so similar to us um so there's still a group of professional investors in intermedi media is not yet realizing those potentials. Well, the median institutional crypto allocation right now is zero. That's a pretty low number. It's zero. Uh that can only go in one direction from there. And I and look, we we are all of us sitting at these conferences are saying the same things to each other. So, it's a bit of an echo chamber, but um zero is not the right number. You know, five years ago, we could all debated whether crypto is real, whether it's going to, you know, going to last. Bitcoin has a$2 and half trillion dollar market cap right now. It's real. It's going to last. And zero is not the right median institutional allocation. Yeah. And so I guess just pushing a little further into that, you know, we're told constantly that it takes time. The warehouses need time. They want to see track record. They different types of investors want to get comfortable. Do you have any sense of sort of like the timeline to when some of those um pockets of capital will be will come into crypto? Obviously, you don't know exactly maybe, but I mean, I give one example of Morgan Stanley publicly came today, like the 15th. Um, and so I think I think conversations are accelerating. I would say mainly I mainly leave it at that. I would say months, not years. Um, conversations are accelerating and also like when these launch you you pretty much knew that the playbook that was going to happen of like it was going to be retail and then it would take a little longer with wealth and it would take a lot longer with institutions. And so there are institutions that own these assets across all categories, but it's still few and far between. There's not many of them, but as you have those bellweathers come in, those big names, their peers start to ask questions. I say like you're certainly seeing an acceleration of interest and it's just a longer sales cycle there, right? And I guess Bitcoin will be first before ETH and then um Yeah. Yeah. There's definitely a higher uh retail presence in ETH compared to Bitcoin. I think it's going to take a long time. They're they're both high though. I I think months is is is a huge under understatement. I think it's going to take a lot longer. You know, it's sort of like had you waited till 1985 to start investing in US equities, there was plenty of room to go still. And and I'm not even sure we're at 1985 yet uh in the crypto world. Yeah. Um, actually I do want to ask too, you know, uh, does Black Rockck have any sort of conversation with Vanguard in regard to I'm Yeah, I'm sure you're limited on what you can say, but um, that is a kind of an interesting situation where um, you know, they've chosen not to launch their own Bitcoin ETF, but they don't even allow access on their brokerage platform. Um, are there conversations between the two of you? I won't I won't comment on that explicitly. Um, I think I think though that wasn't terribly surprising if you think like they they they the ethos of that platform historically has been very much one of income and uh productive assets. They don't have a gold product. And so if they think of this as something similar, it was it wasn't terribly surprising, but it's uh very constructive that at least it seems from sort of the news articles that they're like likely going to expand access and it's a humongous platform. Yeah. Yeah. And on the hyperlquid side, you know, what what goes into the education when you are speaking to investors, um, as you know, less people know about hyperlquid than Bitcoin, I'm sure. No, we we have a ton of work ahead of us on the hyperlquid side. There there are, you know, I would go so far as to say most cry crypto experts, which are obviously a small percentage of the general general investing population. Most crypto experts are at best aware and you know maybe even not not at all aware about hyperlquid. So we just have a tre a lot of work to do that. When we were raising this capital over the summer, I spoke to someone who I know well. I'm not going to mention his name, but I I believe him to be one of the largest probably a top 10 Bitcoin owner like in the world. This is a a multi multi, you know, deca billionaire individual and he never heard of Hyperlid. And that's not an insult to him. It's just, you know, he's made Deck of Billions on on Bitcoin and this just, you know, the next exchange that looks interesting, exciting, uh, with a whatever it was, a 15 billion of of circulation, less than he probably owns in Bitcoin himself, just not on his radar screen. So, there's a tremendous amount of education we have among the crypto community, which I'm doing as we speak, but also to the general population on places like Bloomberg and CNBC, which we're doing also. Yeah. And I also wanted to ask you guys, you know, despite all of the single asset um ETF filings in the US, we, you know, there are crypto firms that are very bullish on index funds in this space. Um those might be a little more complicated at the moment, but curious of how you think about the demand over the short and long term for crypto basket products as opposed to just uh you know people picking trying to pick winners. Yeah. So, uh, 21 shares was the first one to launch basket, um, ETP back in the year 2018. Um, and I think that was probably the first time most investors knew there was more cryptocurrencies than Bitcoin. Um, and over the years, I would say the the AUM gathering has not matched up to our expectations. It's been, I would say AUM wise is probably 6% of the total AUM in Europe at the moment. And there are several reasons going behind that. Um, at the moment the investors we're seeing, they're in two ends of spectrum. One is retail self-directed. They just want to pick the winner, right? Um, and the other one is more risk averse and they just want Bitcoin and at best Ethereum. The thought of basket is just not something they're interested in. Not in these two groups of investors. But we're seeing more and more investors getting interested and as the self-directed trades start to understand that the winner this year becomes big loser next year and is really hard to actually pick. Um there's more talks about okay maybe I should diversify my portfolio and investors who got more comfortable with Bitcoin Ethereum that started they start to think well actually I should go beyond maybe top five or top 10. So it's an investment investor journey um that's going to take time and the other reason driving that was also um I guess the performance was mostly driven by bitcoin for a long period of time. So you don't need to buy a basket you just buy bitcoin and it probably outperforms most basket for most of the time. Um but that is changing as well this year. So I do think over time basket will grow. Um and even though it's not as as quickly as as we've expected I think the market will be ready for that. um in the next few months to be honest. Yeah, my personal views that that is probably true that baskets will grow. I do think diversification when you're so topheavy to Bitcoin and like if you look at a top 10 product and you cut out the tail and then you gross up your top 10, you have 90% Bitcoin underneath. And so I think it's a trade-off of like you're adding complexity for something that doesn't look that different. And then there's in in the US specifically, you're looking at a partnership with like more complicated tax reporting and that then for the most part is kind of a nogo from like the wealth platforms. So then it becomes more of a retailbased product. Um that's not necessarily something that can't be overcome, but I think the benefit to diversification isn't quite as large when you're so topheavy as a starting point unless you're going to go to um you know an equal weighted product or something more unique. Um, but I I still do think that like as the crypto market progresses, as it evolves, as there's more use cases and more applications, like you'll probably have a more diversified market and then maybe um you you might see share expansion and that's fair. You just draw the experience from commodities for example, you might have precious precious metal baskets, but the biggest uh funds or ETFs are still gold and silver. This is still the single ones. So, I don't think basket will be bigger than singles in total. Um but to Matt's point, you know, I think will be more user cases uh when investors start to look into diversification and when the the dominance start to come down. Yeah. So just a couple minutes left. So maybe each of you just looking forward, maybe take a minute each to sort of just anything you want to comment on in the future in terms of the white space you see in the crypto ETF landscape with DATs. you know, how many are we going to see um a landscape of more more debts, less DATs in three to five years from now? Um obviously you're bullish on Hyperlquid, but um you know what what do you expect from that going forward and Yeah. Yeah. Look, I think on the DATs in general, um I think we will probably see less, you know, five years from now or three years from now, whatever, there'll be less of them than there are today, but the total AUM or the total assets in the ones that exist will be more than the total today. So you'll see just a tremendous consolidation around the around the winners. But because we're all in markets that we all expect to be expanding quite a bit and as we as I said before the media institutional investor is zero in crypto like that's going to change over time. There'll be there'll be people moving into lots of different places where they feel comfortable being. Yeah. And then on the ETF side are there going to be hundreds thousands of crypto US ETFs or um so crypto is a ever evolving industry. You have new rising stars come in all the time. It's not like precious metal where you know where the rare earth's metals and and you own all of them already. So there will be some newcomers of course. Um but it's very expensive to run an ETF. So you can't just turn out all those ETFs. Um you do eventually they do need to work for investors. So yes, we'll see more come into the market but at some point I think some of them will probably face out. Um and I think the other probably wise space um I think we talked about baskets um and I think in a few years time we'll probably see more traditional finance approach coming into that. I think the data is still not not enough historical data for us to run something that's really s factor based kind of model. Um but we're starting to see some people trying that out. um so or thematics um I think over time we'll see more of that but I think this is not widespace comment but I still think um education is something really key and you need to look beyond this room um and bring more people on board and maybe the final word Matt yeah yeah know I mean I would just echo that I I the earlier question I don't I don't think we're at saturation these are scarce assets with a lot of capital that still has barriers inhibiting that and those barriers are slowly eroding and I think that's a pretty compelling backdrop Awesome. Well, really appreciate it everyone. Hope you enjoyed the conference and give uh the panelists one more round of applause. I have to say, by the way, anyone in the room right now for the last panel hearing about regulatory barrows and ETFs, like give yourself a hand. You guys are hardcore. This is these are the group. Thanks. Well said.
Navigating the Cambrian Explosion of Digital Asset ETPs & Structured Products | DAS London 2025
Summary
Transcript
Hello everyone. As Felix said, the last panel, Digital Asset Summit. Thanks for sticking it out with us. Uh it's going to be a good conversation with about ETPs and DATs. Um so yeah, I'm I'm Ben Stra. I'm a reporter at Blockworks and author of the Forward Guidance newsletter. U I'm just going to ask my uh panelists to briefly introduce themselves and then we'll get started. Thanks. Uh David Sheamus. I am one of the co-founders of the private equity firm Atlas Merchant Capital. We focus on financial services, banks, insurance companies, broker dealers, New York and Londonbased. Um we have done two things in crypto over the years. We were the guys that were trying to take circle public with our spa. We were not successful unfortunately, but happily along the way we um we did a couple round couple private rounds through our funds which obviously worked out real well. Um, and then, uh, last s over the over this past summer, we announced a DAT for Hyperlid. Uh, by far the largest DAT so far for Hyperlid. Uh, close to $900 million raised. Um, that's what we do. Mendy Cho, head of financial product development at 21 Shares. Um, 21 Shares, we manage about 12 billion assets, many in crypto assets. Um and that's u over 50 um ETF ETPs and and public trust uh globally mainly in the US and Europe. We've been in the market for about seven years and um we were one of the first to bring the spot bitcoin and spot ethereum ETF to the US um last year and myself um I spent most my career in ETF before this uh before this role. um pretty much a trout five person. Um and uh I've been to you know several startups and um asset management companies. Um this is actually my third startup now. Um the first one was ETF securities focusing on commodity um ETFs and ETPs um which was sold obviously to wisdom tree. Um and when I was in stere global advisors I was heading up the ETF team ETF product team not ETF team. Um and uh at the time I was really sold on blockchain technology. Um and uh then a lot of my ex-colagues were working in in crypto. So after the FTX collapse, I decided that if that didn't kill crypto, then nothing will. So I joined the industry after that. So hi everyone, I'm Matt Kunky. Uh I'm a crypto product strategist at Black Rockck. So that means I do all the hand-to-hand combat uh with clients across the spectrum from wealth to institutional uh for about $120 billion of AUM in uh Bitcoin and Ethereum ETPs. Um and then here in EMIA with our locally listed Swiss SPV. Um nice to see you all. Yeah. So I wanted to start because we're in London um news last week that uh UK UK retail investors would now have access to uh Bitcoin and Ether ETNs. Um just want to kind of wanted to get your reaction to that um the FCA kind of saying that uh the market has evolved and so that's why they're kind of allowing this access now. Um but just curious of how significant you think this is and and what you thought of that restriction in the first place. Yeah. So reactions, excitement, confusion, and excitement. Um so you're right. After four years of retail ban, um the FCS finally lifted the ban. Um it was on the 8th of October, but you'll probably find that super quiet at the moment. Um because actually none of the ETPs have been um approved by the FCA or LSC for listing yet for retail. Um and it's almost like you open the shop, but the shelves are all empty, right? Um and we we brought Bitcoin Ethereum ETPs to London last year um for professional investors only. That means people like you and me opening a retail brokerage account is not going to give you the access to those CTPs. Um and I guess to your question um I think the audience here will probably what be one of the first to to to hear that um on Monday you will find 21 shares Bitcoin and Ethereum ETPs traded on London Stock Exchange and this time for retail. So you can call your brokers now and see when they're going to on board those ETPs. But this is really the first step. Unfortunately, I would say um because there's still a lot of restrictions in place above and beyond the general um um uh ETPs in London and um a lot of the leading brokers have literally said that um they do not encourage or they were not planning to put those ETPs on their platform. So if you have a UK retail broker account, I would really encourage you to contact them and ask them to on board those products um onto um those uh those platforms. So still a lot of uphill battle uh battle, but we will celebrate the small wins on Monday first. Yeah. Yeah. Um and in terms of I guess the the explosion of ETFs that we're kind of referring to in this panel is is probably going to be in the US. Um the US had lagged uh Europe uh with the the way the SEC had been posturing for a while. Then we saw Bitcoin ETFs and Ether ETFs last year. And then um the generic listing standards that the SEC recently approved which kind of streamline the process as long as ETPs fit a certain um certain requirements. So just kind of curious of yeah how you think about generic listing standards and and Yeah. Yes. So, I guess just as a starting point for context, the process for getting Bitcoin and ETH approved in the US effectively relied on I mean there was a 10-year process and effectively relied on a lawsuit and the SEC kind of putting themselves in a very tough position, but it really only applied to these ETs that already had futures in them on those assets. And so, there wasn't really a clear playbook uh until recently of like what it took for other single asset crypto ETPs to become approved. Um and now uh you know new administration, new SEC, they they've come out with what are known as generic listing standards. Effectively it says again I mean this is US but effectively it says any underlying asset that has a CFTC regulated futures contract that's been trading for six months is an eligible to be in one of these ETPs. And so what that means is you have a very clear playbook on which products you can launch. I think you're going to see a whole host. I mean, they'll probably be an asset manager uh that will launch e everything that you can imagine that falls within this scope. Uh and so you're going to have absolutely a Cambrian explosion of of products across anything that really meets these criteria. I guess our event team uh named this panel correctly then. Um, so I guess and I I do want to get into debts, but um, so Mandy, you know, 21 shares, like you said, has a bunch of crypto ETPs in the in Europe. Um, you've filed for a bunch in the US. Uh, so if you could just kind of take me through what goes into the decision making. um into what to file for, what assets these products are going to hold and yeah, I think I'll start with the this disclaimer that um obviously we have filings in the in place and we're in quite period so I can't really comment too much about that but that just makes it even more tempting to comment, isn't it? So, so um there's like a dozen I believe that 21. Yes, we have 13 filings in place right now and hoping to add more. Obviously the U US government shutdown hasn't really helped. Um but um you will see more coming to the markets. Um we like you said we've been a supporter of of um old coins in in Europe. So you will see similar sort of approaches will be taking in the US because that's what we are really strong at. And in terms of what goes into the decision really I would really simplify by saying there's no difference between crypto versus other asset classes. It's about whether or not you have the investment case and are we ready to get behind it as an asset manager. Right? This is not about predicting the price but is about whether there's a real investment case or user case for the technology. So you wouldn't be surprised that we do token due diligence for example right is the onchain activities um the the tokconomics um uh the the risk assessments and the governance which are also very important. All those factors goes into whether or not we feel that this is something that we should bring to to the investors. And the last but not least, we we do have a very strong client base who are always very keen to give us feedback. So those feedback would validate our research and also a lot of time that leads to anchor investors and and and some early investment as well. So a lot go into the decision- making process. Right. I was just going to say I have to say that it is amazing when you see the level of scrutiny the regulators particularly in the US and the UK are giving some of these things in crypto on the in the in the ETF world when in fact you have you know triple long triple short Tesla ETFs as an example that seem perfectly fine to everybody like that that that you know where where they rebalance every day like that is that is very risky business um that again I don't these These guys might know better than I would. I don't think there was a lot of drama in getting those things approved. Yet, Bitcoin, which is a whole lot less volatile than 3x Tesla leverage, um, you know, sells right through. It's pretty amazing. Yeah. And I do want to get into your bet on Hyperlid. Um, but because we have an executive from Black Rockck on the stage, it it would be weird not to mention IBIT was the the Bitcoin ETF from Black Rockck was the most successful ETF launch in history. um it's approaching 100 billion in aumumumumumumumumumumumumumumumumumumumumum um and then the ether launch uh six months later or so. So with the overwhelming expectation that the SEC is going to be okay with Salana XRP, Litecoin ETFs and others u we haven't seen any other filings from Black Rockck just was wondering if you could share a little bit about um you know how you think about some of those altcoins and if we might thinking about it if and when we might see something there. Yeah, I mean I I would echo that we do actually have two outstanding filings currently, so I can't speak about those. They are not on altcoins though. Um, from our perspective, I think first and foremost, it's it's a client it's a client demand question and as a person at least for Black Rockck that does the majority of face-to-face client um combat, if you will. Um, it's overwhelmingly skewed towards Bitcoin in terms of demand. I would say this past year with the passage of Genius and sort of this narrative of ETH being the institutional smart contract chain, I would say that kind of accelerated demand for ETH pretty meaningfully. But then beyond that, we're still seeing I mean we'll certainly get the Salana and XRP question. It's just a very small fraction compared to and and and maybe there's big pockets of investors I don't speak to because again I'm mainly speaking to professional investors. Um but we've we've publicly come out at this point and said we don't have plans for a Salana or XRP or other spot uh single asset crypto products for now. Uh our focus is we just see such a big skew and interest um in the the two majors while education levels still quite frankly just need to be elevated. A lot of these firms we're speaking to still have blockers in place. A lot of people we're speaking to are coming with the most um 101 level line of questioning. And given the relative size of those two markets compared to some of the smaller ones, I think commercially um we're probably better off prioritizing and elevating um those two main products from an education perspective and a marketing perspective. Yeah, please take your time uh with the hyperlquid ETF. No rush. Take your time. That's fine. Yeah, we'll get into that. I I So, so David, yeah, with with the digital asset treasury company, DAT.co, co, whatever you want to call it, um that you guys are launching. Just first would be interested to know why you're focusing on Hyperlid and kind of the opportunities you saw there. Yeah, I would say that um we started getting very serious about this last spring and I will tell you last spring I wasn't sitting around my office thinking about how we could be the 101st Michael Sailor knockoff. Um, by the way, it's pretty good business being the 101st Michael Sailor knockoff, but that wasn't high on our list of things to do. But the more we got to know Hyperlquid and the more we understood uh certainly when it comes to the United States and weirdly enough Ontario where you're not even allowed to access the hyperlquid exchange and the only place even to this day where you can actually trade hype in any serious volume is on the hyperlquid exchange. there's an actual scarcity value that our debt and maybe uh Mandy's uh ETF is actually solving which is um for a regular way retail investor or even a number of large institutional investors we talked to um who want to get that exposure you know hype is a top 10 coin now if you take out the stable coins um if you want to get that exposure you just there there's just no good way to do it and even even if you're not in the US or Ontario um you know, getting money onto Hyperlid, like it's it it is a system really designed for very professional traders. Um, you know, there's nothing wrong with being a casual investor. I'm a casual investor in lots of lots of equities and lots of things. Uh, doesn't mean I'm I'm I'm a I'm a uh, you know, trading 247. So, it's just very hard to be a casual passive long-term investor in what I think I'm biased, but what I think is by far the most interesting and exciting thing in crypto in the last three years, which is hyper. Yeah, I'll echo that as well because obviously we have a hyperl and I would really echo what you just said about just that I think some of things were taken for granted when they become available. Um but when we identify from from the time when we identify hyperlquid to actually we're able to deliver this product it took quite a few months just to get the custody on boarding and imagine how difficult that would be for other investors who don't really have that sort of that sort of access um and behind the scene the result I'm pretty sure um Dave is the same it might look very easy on the surface because just placing a trades um but we always say index investing and I'm sure with that as well it looks It's like a duck paddling on a pool, right? It looks very smooth on the surface, but actually underneath there was a lot of paddling, a lot of hard work um to make it so smooth um above the water. Can I just add one comment on that because I've made a I've made a lot of skeptical comments about DATs historically and I think I I think this is an interesting example. Not to say I wouldn't interpret this as positive or negative. I just want to point out uh a unique aspect of this. Like that's when you're talking about the 20th iteration of Bitcoin, they remind me a lot of that closed in fun like grayscale premium discount trade where you're betting on two things. You're betting on like price of the underlying and you're betting on markets perceptions. Like at least in this scenario, it's it's actually just bridge. It's just like an access problem. And so it's it's kind of in some ways more attuned to an ETF. Like there's no way to easily get access. And so it is definitely a lot more unique than say the hundth iteration of a Bitcoin DAT or the 20th iteration of Ethereum DAT where in my mind you're just taking excess risk when you already have a really good isolated exposure to the underlying. It is kind of a unique scenario here. Yeah. And and before we saw Bitcoin ETFs, you know, Micro Strategy was a way that a lot of people got exposure to Bitcoin. Um you know, you joke about don't don't launch a hyperlquid ETF too quickly. I we saw I think we saw Bitwise file for one a few weeks ago uh in the US. Um so yeah, just kind of curious how you kind of think about the the differences in in a way that an investor can get exposure via an ETP versus a DAT and yeah, having both on the stage is kind of interesting here. Yeah, look, obviously they're different. Um there are things that that ETFs do that DATs can't and vice versa. Um I think, you know, I'll speak for our own. Um obviously we plan on I shouldn't say obviously we plan on staking the hype we have um which earns you a yield but also beyond that that's sort of the base case. So like if you're an investor in our DAT at the very least you should be assuming we're going to earn whatever it is two and a quarter percent whatever the staking rate is today. Um but particular hyperlquid is a particular ecosystem where there's a lot of things that people want to do in the ecosystem where you actually need the tokens to do the sort of a you know if you want to be a hip 3 um um you know builder you need a half a million tokens and half a million tokens is 20 million bucks. It's not it's not nothing. Um we are going to investigate whether there are thoughtful lowrisk ways we can earn even more yield um uh by doing things like that. whether it's lending tokens or or partnering with people in different ways to to get that yield even higher. Um that I think these two people on my left could correct me if I'm wrong, but doing creative things like that where we're actually locking up our tokens for a period of time um for more yield, I think are things that DATs can do that I think ETFs and other whatever the other acronyms are, I think would have a hard time. Now, the flip side is, you know, when you get into an ETF, you're getting in more or less at par. uh whereas DATs you know certainly often trade above above par you know positive have more than one MNAV and you have to weigh those two things off um I think definitely there's a I think the market is big enough for both um and I think ultimately is really this decision should be relying should be relying really the quality right and the investment objectives um we are a bit more our hands are a bit more tied in terms of staking for sure because we need to provide the liquidity for ETFs um but I think and I'm I'm personally I'm I'm very biased because I've been doing ETF for so long. Um, and I wouldn't be doing this for so long if I didn't believe in it. I think that transparency and the simplicity and predictive uh is predictable as well because it's all about tracking. Um, and that in itself is still a very attractive feature because you know what you're getting. Um, and with that I feel like you do get the benefit of some experts who do the hard work for you. Um, because they can. Um but I guess the result is slightly more less predictable than ETFs. But you know to the earlier point um ETPs are not always accessible to everybody UK especially and when that happens if you have a quality DAT I think the market is is is there for both. So I I would agree with that. It's a liquidity trade-off if you think you can um make some sort of yield off that active management. I I I just think uh c certainly that that should be like a reasonable premium. There shouldn't be like a 200% premium and you've seen the market correct, right? We've seen the market certainly correct already in that sphere. So yeah and and another development has been right you mentioned staking um Gayscale recently uh got the green light to add staking to they are staking their underlying ETH now and their their ETF. Uh curious of how you think that will impact demand if at all. Um because I guess one of the thoughts by a lot of people was that ETH ETFs didn't see the type of demand uh that maybe was expected at first. Can I just add 21 shares also started staking as well? Okay. Yes. And um so yeah, how do you think that will affect demand and make it more attractive for ETF investors that maybe were waiting for staking? You go ahead. I I can't comment too much. We have an outstanding filing so I'm a little bit landlocked here. I think they have a they have stricter compliance rules than us, but we've started. So that's definitely true. Yes. Um so we're definitely very positive about the developments because you can see the the growth of the Ethereum ETFs in the US just nothing compared to Bitcoin ETFs, but they are know equally very um strong um tokens. Um we if we look at the numbers for example the the bitcoin ETFs in the US is probably 20 times of the aum of the European bitcoin etc and etc's whereas if you look at ethereum the the the multiplier is only 12 and there must be a very significant reason behind that and we do have experience with staking and product non-staking in Europe. So we for a period of time we had two well we still have two um Ethereum ETPs in Europe for a long time one has been staking the other one has not been staking and the one that's not staking has a much lower TR so you would have thought the one with lower TR would grow more significantly but the reality is it just doesn't it didn't for a very long period of time and as soon as we started staking for the lower TR products um the EU surpassed 100 million very quickly so we do see we do believe the same trend will be replicated in the US once more um Ethereum ETF started um to to do staking. But of course, some of them are still stuck with um the queue at the moment. So, you don't see the effect that quickly, but I do believe in the near future you will start that your serum ETF start to catch up. That's a a really good point that like um Oh, I guess I'll get two points. I I think I'll play slight devil's advocate on ETHPs started off slow relative to Bitcoin, but if you look at like USAum, it's roughly it's a market cap weighted proportion of Bitcoin now. Uh it certainly wasn't at the start. I think it had certainly a catch-up trade around Genius. Um but I think the other one that's really important there is you mentioned uh unstaking cues and that is a challenging thing to manage right now. If anybody's familiar with um where we're at and how Ethereum validator exits work, uh we're at record we're at historically unprecedented times to exit a validator as a function of a you know a vulnerability at a staking service provider that had to rotate their keys. And now when you're talking about um daily liquidity ETPs and uh a process that may take 60 days to get your money back, it it is an operationally difficult thing to manage and think about. Um and so that definitely adds some complications to these products in general. Yeah. And and I guess you you've touched on a little bit um but in terms of the demand for when all of these new products hit the US markets um maybe maybe lessons from the European market of people seeking out altcoin exposures. Um and and then Matt, I know you mentioned a lot of people are focused on Bitcoin right now. Um so I is there going to be demand for all of these products that hit the market uh whether it's salon XRP Litecoin and further down um are we should we expect kind of a market cap weighted flows or or how do you kind of see that? I think only the market can tell. Um on our side uh we've like I said we always supported um allcoin and we do believe the other tokens have um a lot of user cases that investor will be interested in um and uh it like I said it's hard to tell um but if we think about the um the market u the aum of of um crypto ETFs in US at the moment it's only about 6% of the total crypto market cap. Um let's just draw a comparison. US equity ETFs it's 20% of the US equity market size right and I'm not saying it will reach 20% anytime soon. Um but it's definitely moving towards that direction and there's still a huge pocket of of investors who have not get in have not got in yet and they might got in you know they might get in um with cryp um with um Bitcoin and Ethereum. Yes. But I do think that once they get more familiar they will go down the rank and start to think well actually are we experience Solana? how we experiment other maybe hyperl liquid as well. Um I think the first step is important. I think um you mentioned earlier about education. I do think there's still a lot to do. Um we're probably speaking to each other in a sort of echo um echo room right now. Um but outside of this event venue, most of people are still really uncomfortable about crypto. Um I I I went to a lot of Trfy events and people still ask like, "Are you guys scammers?" All right. So, so there's still a bunch of people who need we need to bring them over the line um to start to understand the impact especially I would say regulators as well. What was your answer to that question? Are we scammers? I I didn't answer the question because time was running out. Yeah. And and bringing in David again with with debts. Um you know is it we see these popping up every day. You guys are one of the only ones doing hyperlid but we've seen multiple Bitcoin, multiple ETH, multiple Salana. Um, so how do you kind of view the broader debt landscape and and just how many winners there are going to be over time? Um, it's a great question. I I I personally think there will be a few winners for each of the of the major coins. Uh, obviously Micro Strategy like this whole this whole thing started, they were already one of the winners, right? Um and I think that you know the two ways you'll be able to to you know declare yourself a winner or whatever is either in but these things are obviously highly correlated with each other is either in size or in you know your ability to grow book value either through generating earnings one way the other or obviously issuing equity at premiums to grow book value one way the other. So I think there will be you know a few per token. there won't be 30 per token. I think it's hard to imagine. I think we can even see a world in the future, you know, and you know, again, long run when you're talking about crypto is like three to six months from now. Uh but you can see in the long run, you know, some consolidation among these different DATs over time because maybe the world doesn't really need 101 Bitcoin DATs. Uh but there's definitely room for more than more than a few in each of the tokens. And again, you know, it's an interesting question for me almost as an outsider, even though I've become a DAT guy. Um you know, we're by, you know, the the the second largest hype uh DAT right now is, you know, 120th the size of us. Uh and the one the the third largest is like onetenth the size of the of the second largest one. So there just aren't that many of them and it's obviously a lot smaller, right? Yeah. Yeah, and we saw uh last month Strive uh agree to acquire Similar Scientific. Um so consolidation has started there. Um wanted to step back because obviously we're talking about the this next wave of of crypto ETFs in the US. Um but wanted to kind of go back to Black Rockck and u IBIT's success a little bit and just um the amount of room that you think a fund like that has to grow uh considering there still are certain uh inhibitors to pockets of capital uh whether it's you know your um arrival in Vanguard not allowing those to trade on their brokerage platform or things like that. So yeah. Yeah. Yeah, I mean it it's hard hard to know how how big uh the industry can evolve in sort of the ETF landscape, but I I don't think we're anywhere. I guess I'll answer that by saying there definitively are pockets of capital that are meaningfully large trillions of dollars that still have barriers in place. Most notably, it it's the big warehouse banks and you know they they'll in most cases allow their clients um if they come to them saying, "Hey, I want to buy Bitcoin." They'll allow them to execute it. they won't allow the adviserss in general sense to go say hey I think you should have bitcoin at 2% in a portfolio and that is a very big limitation but I would say that's changing and accelerating in real time uh I mean even today today's this I mean this public information that Morgan Stanley allows uh allow now allows discretionary access to bitcoin ETPs and that's a multi- trillion dollar pool of capital in aggregate and so that's just one wirehouse bank we're talking about Like as those start to accelerate, those barriers start to be lifted. Discretionary portfolio managers can start to think about it in the context of a portfolio allocation. Visors can start to solicit it. I think um you easily, you know, f five years down the road can be multiples of where you are now. I don't think we're anywhere like I think like one of the best examples too is just go to a traditional financial advisory event and ask what percentage of people own crypto in their models uh or in their client portfolios and you'll see a pretty small number of hands go up. certainly nowhere close to a market that's overbought by the traditional market. Yeah, we definitely observe the same thing as well. So, um I I'll separate US and um and Europe. So, in the US, I guess proportionally um if you look at the 13 filing um large proportion of that is still self-directed retail investors, which is not normal because in US the largest port should be wealth managers, intermediaries and raas. um that just signifies how much untapped assets still there right um and so so that's definitely something we observe um in Europe I think um elephant in the room here but us right crypto is still blocked from us uh funds and you know appreciate not everyone knows much about us but it's 13 trillion markets um and even you know we're not talking about everyone investing in crypto but even have been investing investment in general is a huge market potentially um to to go into the crypto market and and that typically is again in Europe you typically have more sort of professional investors and institutional investors for ETFs um very little for retail but if you look at the trading um patterns within the crypto ETPS you see mostly retail trading right right so similar to us um so there's still a group of professional investors in intermedi media is not yet realizing those potentials. Well, the median institutional crypto allocation right now is zero. That's a pretty low number. It's zero. Uh that can only go in one direction from there. And I and look, we we are all of us sitting at these conferences are saying the same things to each other. So, it's a bit of an echo chamber, but um zero is not the right number. You know, five years ago, we could all debated whether crypto is real, whether it's going to, you know, going to last. Bitcoin has a$2 and half trillion dollar market cap right now. It's real. It's going to last. And zero is not the right median institutional allocation. Yeah. And so I guess just pushing a little further into that, you know, we're told constantly that it takes time. The warehouses need time. They want to see track record. They different types of investors want to get comfortable. Do you have any sense of sort of like the timeline to when some of those um pockets of capital will be will come into crypto? Obviously, you don't know exactly maybe, but I mean, I give one example of Morgan Stanley publicly came today, like the 15th. Um, and so I think I think conversations are accelerating. I would say mainly I mainly leave it at that. I would say months, not years. Um, conversations are accelerating and also like when these launch you you pretty much knew that the playbook that was going to happen of like it was going to be retail and then it would take a little longer with wealth and it would take a lot longer with institutions. And so there are institutions that own these assets across all categories, but it's still few and far between. There's not many of them, but as you have those bellweathers come in, those big names, their peers start to ask questions. I say like you're certainly seeing an acceleration of interest and it's just a longer sales cycle there, right? And I guess Bitcoin will be first before ETH and then um Yeah. Yeah. There's definitely a higher uh retail presence in ETH compared to Bitcoin. I think it's going to take a long time. They're they're both high though. I I think months is is is a huge under understatement. I think it's going to take a lot longer. You know, it's sort of like had you waited till 1985 to start investing in US equities, there was plenty of room to go still. And and I'm not even sure we're at 1985 yet uh in the crypto world. Yeah. Um, actually I do want to ask too, you know, uh, does Black Rockck have any sort of conversation with Vanguard in regard to I'm Yeah, I'm sure you're limited on what you can say, but um, that is a kind of an interesting situation where um, you know, they've chosen not to launch their own Bitcoin ETF, but they don't even allow access on their brokerage platform. Um, are there conversations between the two of you? I won't I won't comment on that explicitly. Um, I think I think though that wasn't terribly surprising if you think like they they they the ethos of that platform historically has been very much one of income and uh productive assets. They don't have a gold product. And so if they think of this as something similar, it was it wasn't terribly surprising, but it's uh very constructive that at least it seems from sort of the news articles that they're like likely going to expand access and it's a humongous platform. Yeah. Yeah. And on the hyperlquid side, you know, what what goes into the education when you are speaking to investors, um, as you know, less people know about hyperlquid than Bitcoin, I'm sure. No, we we have a ton of work ahead of us on the hyperlquid side. There there are, you know, I would go so far as to say most cry crypto experts, which are obviously a small percentage of the general general investing population. Most crypto experts are at best aware and you know maybe even not not at all aware about hyperlquid. So we just have a tre a lot of work to do that. When we were raising this capital over the summer, I spoke to someone who I know well. I'm not going to mention his name, but I I believe him to be one of the largest probably a top 10 Bitcoin owner like in the world. This is a a multi multi, you know, deca billionaire individual and he never heard of Hyperlid. And that's not an insult to him. It's just, you know, he's made Deck of Billions on on Bitcoin and this just, you know, the next exchange that looks interesting, exciting, uh, with a whatever it was, a 15 billion of of circulation, less than he probably owns in Bitcoin himself, just not on his radar screen. So, there's a tremendous amount of education we have among the crypto community, which I'm doing as we speak, but also to the general population on places like Bloomberg and CNBC, which we're doing also. Yeah. And I also wanted to ask you guys, you know, despite all of the single asset um ETF filings in the US, we, you know, there are crypto firms that are very bullish on index funds in this space. Um those might be a little more complicated at the moment, but curious of how you think about the demand over the short and long term for crypto basket products as opposed to just uh you know people picking trying to pick winners. Yeah. So, uh, 21 shares was the first one to launch basket, um, ETP back in the year 2018. Um, and I think that was probably the first time most investors knew there was more cryptocurrencies than Bitcoin. Um, and over the years, I would say the the AUM gathering has not matched up to our expectations. It's been, I would say AUM wise is probably 6% of the total AUM in Europe at the moment. And there are several reasons going behind that. Um, at the moment the investors we're seeing, they're in two ends of spectrum. One is retail self-directed. They just want to pick the winner, right? Um, and the other one is more risk averse and they just want Bitcoin and at best Ethereum. The thought of basket is just not something they're interested in. Not in these two groups of investors. But we're seeing more and more investors getting interested and as the self-directed trades start to understand that the winner this year becomes big loser next year and is really hard to actually pick. Um there's more talks about okay maybe I should diversify my portfolio and investors who got more comfortable with Bitcoin Ethereum that started they start to think well actually I should go beyond maybe top five or top 10. So it's an investment investor journey um that's going to take time and the other reason driving that was also um I guess the performance was mostly driven by bitcoin for a long period of time. So you don't need to buy a basket you just buy bitcoin and it probably outperforms most basket for most of the time. Um but that is changing as well this year. So I do think over time basket will grow. Um and even though it's not as as quickly as as we've expected I think the market will be ready for that. um in the next few months to be honest. Yeah, my personal views that that is probably true that baskets will grow. I do think diversification when you're so topheavy to Bitcoin and like if you look at a top 10 product and you cut out the tail and then you gross up your top 10, you have 90% Bitcoin underneath. And so I think it's a trade-off of like you're adding complexity for something that doesn't look that different. And then there's in in the US specifically, you're looking at a partnership with like more complicated tax reporting and that then for the most part is kind of a nogo from like the wealth platforms. So then it becomes more of a retailbased product. Um that's not necessarily something that can't be overcome, but I think the benefit to diversification isn't quite as large when you're so topheavy as a starting point unless you're going to go to um you know an equal weighted product or something more unique. Um, but I I still do think that like as the crypto market progresses, as it evolves, as there's more use cases and more applications, like you'll probably have a more diversified market and then maybe um you you might see share expansion and that's fair. You just draw the experience from commodities for example, you might have precious precious metal baskets, but the biggest uh funds or ETFs are still gold and silver. This is still the single ones. So, I don't think basket will be bigger than singles in total. Um but to Matt's point, you know, I think will be more user cases uh when investors start to look into diversification and when the the dominance start to come down. Yeah. So just a couple minutes left. So maybe each of you just looking forward, maybe take a minute each to sort of just anything you want to comment on in the future in terms of the white space you see in the crypto ETF landscape with DATs. you know, how many are we going to see um a landscape of more more debts, less DATs in three to five years from now? Um obviously you're bullish on Hyperlquid, but um you know what what do you expect from that going forward and Yeah. Yeah. Look, I think on the DATs in general, um I think we will probably see less, you know, five years from now or three years from now, whatever, there'll be less of them than there are today, but the total AUM or the total assets in the ones that exist will be more than the total today. So you'll see just a tremendous consolidation around the around the winners. But because we're all in markets that we all expect to be expanding quite a bit and as we as I said before the media institutional investor is zero in crypto like that's going to change over time. There'll be there'll be people moving into lots of different places where they feel comfortable being. Yeah. And then on the ETF side are there going to be hundreds thousands of crypto US ETFs or um so crypto is a ever evolving industry. You have new rising stars come in all the time. It's not like precious metal where you know where the rare earth's metals and and you own all of them already. So there will be some newcomers of course. Um but it's very expensive to run an ETF. So you can't just turn out all those ETFs. Um you do eventually they do need to work for investors. So yes, we'll see more come into the market but at some point I think some of them will probably face out. Um and I think the other probably wise space um I think we talked about baskets um and I think in a few years time we'll probably see more traditional finance approach coming into that. I think the data is still not not enough historical data for us to run something that's really s factor based kind of model. Um but we're starting to see some people trying that out. um so or thematics um I think over time we'll see more of that but I think this is not widespace comment but I still think um education is something really key and you need to look beyond this room um and bring more people on board and maybe the final word Matt yeah yeah know I mean I would just echo that I I the earlier question I don't I don't think we're at saturation these are scarce assets with a lot of capital that still has barriers inhibiting that and those barriers are slowly eroding and I think that's a pretty compelling backdrop Awesome. Well, really appreciate it everyone. Hope you enjoyed the conference and give uh the panelists one more round of applause. I have to say, by the way, anyone in the room right now for the last panel hearing about regulatory barrows and ETFs, like give yourself a hand. You guys are hardcore. This is these are the group. Thanks. Well said.