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Speaker A: Yeah, yeah, let's be. I'll be very blunt. If you look at all the things that they have said and written over the last three years, this will be denied. But really a lot, there's a lot of circumstantial evidence that suggests that it will be approved. It goes back to what I said. They can back into whatever decision they want to.

Speaker B: Okay, well, you said two things there, James. I want to be clear. When I. Bitcoin ETF. That is the question on our mind today. Is the bitcoin ETF actually happening or not? Will it happen this year or not? Blackrock fidelity, some of the largest ETF issuers in the world, have now submitted filings for ETF's with the SEC. Is Gary Gensler going to let them through? And at this point, can he even say no? That's the question we raise with James Seyffert. He's a Bloomberg analyst who's tracking this thing closer than anyone I've ever meth. He's on the episode today, and he gives us a date by which we should have a clean answer from the SEC on the bitcoin ETF. So is he over or under on the probability of the SEC approving a bitcoin ETF this year? You have to listen to the entire conversation to find out. I'm psyched about this episode. And before we begin, I want to address a question that some of you might have, which is, why is bankless even covering the bitcoin ETF? That's not very bankless of you, you might say. I disagree with that. And here's why. I think when people buy crypto assets, they buy into crypto values not all the way, not all at once, but a little bit at a time. This is just another step forward. Crypto ETF's, in my mind, are a gateway drug, a type of gateway drug. I don't think people will stop with just the bitcoin ETF in their retirement account. I think that's the gateway to them setting up an exchange account, for instance, and buying spot bitcoin or spot ether that way, which is the gateway to going full bankless and taking custody of their own keys. In order for people to care about crypto, they actually have to own crypto. And this is an easy way for people to own crypto in their retirement accounts. When we get more crypto ownership, we get more economic security, and we get more people who care about crypto issues in their respective jurisdictions. We need a lot more people to care about crypto in the United States in order to turn the regulatory tide. There's one other thing I think we get from this episode, which is learning more about traditional finance. How is crypto supposed to eat traditional finance and disrupt it if we don't even understand how it works? Like, do you understand how ETF's work today? What backs them? Why people love them, why they're popular? I didn't. And that's where we start this episode with James. This is a college level course on ETF's from their birth in the early nineties to the bitcoin spot ETF and the possibility of that today, I'm doing this episode solo. Today, David is off climbing mountains, but he'll be back soon, and he'll certainly be back in time for an event that you should pay attention to. It's called permissionless. This is the crypto conference to go to in 2023. If you only pick one, and I think you should pick one, the bear market conferences are the best conferences. You got to come with David, myself, the rest of the bankless nation to permissionless. It's happening in Austin, Texas, September 11 through the 13th. So that's Texas, Austin, September 11 through the 13th. And we have an absolutely stacked agenda. We've got Eric Voorhees, who's talking. We've got Hester Pierce from the SEC commission. We've got Stani from Ave. Go click the link in the show notes, get a ticket and come with us to permissionless this year. All right, guys, it's time to go find out about this bitcoin ETF. We'll be right back with James, but before we do, I want to thank the sponsors that made this episode possible, bankless nation. The question on our mind today is a bitcoin ETF happening? We have an expert who can weigh in on this. James Safford is a research analyst at Bloomberg. He's got 1ft in crypto and the other foot in ETF's. He's currently a Bloomberg intelligence ETF analyst, and he's here to drop some insight on the question I just opened with, when are we going to get that bitcoin ETF? James, welcome to bankless.

Speaker A: Thanks for having me, Ryan. Happy to be here.

Speaker B: You know, we talk a lot about crypto in on bankless, of course. And so I think it's in some people, some listeners, they got their first exposure to finance by way of crypto. Actually, my co host David Hoffman's very much like this. So I don't know if David's ever purchased an ETF in his life. And I think there's probably some bankless listeners that fall into that camp too. Could we start by going through some of the basics? What is an ETF? I think I know the acronym. Does that stand for exchange traded fund? Is that correct? Correct. And what is this thing that we're.

Speaker A: Talking about today that is 100% correct. So it's exchange traded fund. It's basically people, a lot of people have 401 ks, 403 bs, these types of plans, at least in the US. And usually what you're investing in is a mutual fund. And those have much longer tickers with an x at the end, typically. But essentially what that means is those funds are not traded. So you give money and at the end of the day they put that money to work the next day for when your money comes in and for mutual funds for four hundred one s and plans like that, it makes complete sense. It's easy. You're not usually super time commitment because you're just contributing on a regular basis. But an ETF is a traded vehicle. And basically the real story here is that ETF's were invented. After the SEC wrote a report in 1987, there was this big crash. A lot of it had to do with futures and derivatives. And the SEC said basically they wish they had something that was more physically backed rather than derivatives or derivative of different assets. Basically this guy Nate, most came up with the idea for what is now an ETF. And it comes off the idea of these things called commodity warehouse receipts. Those have been around forever. The idea of commodity warehouse receipts, if you think about it this way, is say you had a bunch of gold or a bunch of barrels of oil, or I, whatever, wheat, corn, you name it, right? And one thing that you used to be able to do is you would store that somewhere and then the warehouse would charge some sort of fee and in return they'd give you pieces of paper that say you have this much exposure or it was a vault or gold, you would say you have this much gold. And rather than moving that physical gold, those physical commodities around, you trade those pieces of paper. So those pieces of paper were a right to those things held in that warehouse. And that's where the idea of an ETF came about. And basically the first one in the US was the S and P 500. And it basically those instead of commodities being held in that warehouse, it's stocks or the S and P 500, the stocks that make up the S and P 500 held in by a custodian. So those stocks are held by somebody. And what that means is at all times, the key thing that makes an ETF work and why it's super efficient is because you can always access those underlying stocks, or in the example, the commodities, you can always those access those underlying commodities. So basically, those shares are a right to your ownership of the underlying asset. So in the S and P 500 ETF, you can always trade in shares of the ETF and get back the underlying stocks in a potential bitcoin ETF. It would be the same way you could always trade in the shares of the ETF and get back bitcoin, or vice versa. You can always trade in bitcoin and get back shares. And what that means is we can get into this more. But one thing that I'm sure a lot of your viewers have heard about is GBTC, the grayscale bitcoin trust. That operates more like what in our world, we would call a closed end fund. It's technically not one, but it means ETF's have that mechanism where you can create shares and redeem shares, because always the underlying can be exchanged for the shares of the product, right? So in Grayscale's case, there's no way to access the underlying bitcoin. I can't hand over GBTC shares and get back bitcoin, which is what Grayscale is suing to do, to try and get access to that mechanism so that you don't have a situation where the price of those shares is very different from the value of the underlying assets they hold. So when you have an ETF, that problem doesn't happen, because you can always, at some point, if somebody thinks the price of the ETF is not in line with the underlying asset, you can buy those shares of the ETF or buy up the underlying asset and exchange them. It's called arbitrage. They're always the same thing. So basically, there's some trading costs, so there's minute differences there. But for the most part, you can always exchange shares for assets, and that's what's causing a lot of the problems in different parts of the market. So the way to think about an ETF is, if you're used to looking at stocks or even cryptos, really, you know, the supply. So for the most part, bitcoin's a bad example, since its supply is ever increasing. But if you look at a stock, typically the supply of shares is relatively stable, right? You know what it is. And what drives the price is that change in demand. So if you think about like two bars in a graph, basically what drives the price of most assets is the change in demand, right? Obviously supply impacts it as well. The benefit of ETF's is as demand changes, you can change supply, so you can add more shares to meet demand. And if demand drops, you can destroy shares to meet demand. So that way the price and the value of the underlying assets, so the price of the fund, the value of the underlying assets are always going to be very close. So that's the background of an ETF and why so many people view this as like the key to the holy grail for crypto and bridge to tradfi.

Speaker B: You just opened up probably a thousand questions in my mind and you want to get to them. That last point that you mentioned, I want to draw an analogy for bankless listeners. So as the demand changes, you can increase the supply. USDC, a stablecoin kind of works like that as well. Think of that, right? So how much USDC can be minted? Well, kind of. Pretty much. As long as the US continues to give access to Coinbase and circle to us bank accounts and kind of an unlimited supply, it's as much as the market will demand. And it sounds like ETF's work that way too. So a few things just to recap. So this is a newish product, I guess, in the full scope of financial products. You said, it sounds like it was invented maybe in the late 1980s. So it kind of took off.

Speaker A: 93 was the first one. So technically 93. I told you about that guy Nate most. He actually went. The first ETF ever launched was technically in Canada a few years because the SEC took like three years to get comfortable with the idea.

Speaker B: Nobody done this before.

Speaker A: Yeah. So Canada did it first in like 91 after talking with Nate most and these guys. So they got it done in like a year and then we came along afterwards in the US and finally figured it out. But yeah, so 93 was the first time. And along the whole way there's been people questioning the structure, saying it was going to cause issues and they've done nothing but prove themselves as an efficient. The way to think about it is it's a wrapper and it's a technology in a way. It's a democratizing technology in the way it's been used in the traditional world.

Speaker B: It's interesting that people would say that this would cause issues because it actually seems much simpler than the other price exposure mechanisms based on derivatives and that sort of thing. Because it's pretty simple. It's just a wrapper for underlying assets. What can go wrong.

Speaker A: Yeah, we don't need to get too far into the weeds here. But essentially, a lot of the people say if you're looking at bonds, there's bond ETF's. They hold other assets that are less liquid than typical stocks. So people think you're adding liquidity. There's a lot of nuance here. But essentially what it comes down to is in the good times, an ETF can be way more liquid than the underlying because people don't have to go and access the underlying market to trade it, right? They can just use the ETF shares, and sometimes it just trades back and forth. There's a lot of market makers that can handle that. But in times of stress, that excess liquidity the ETF offers is not going to be there. It's not magic. So basically, if the underlying market freezes up, like happened in March of 2020 during COVID they basically, the ETF's, they're not magic. So if the underlying market is locked up, there's going to be issues with the ETF. But with an ETF, you can always trade. So basically, like, yes, in the good times, there's more liquidity because the ETF is there. It's operating on exchange. There's market makers, there's always bids and ask. So if you think about a bond market, it's mostly over the counter traded. Like, literally, some of it's like phone calls still, like, that's the way things are traded. But basically what happens is, like, the ETF will look like it's dislocated, but what really ends up happening is just the underlying market is out of act. There's not enough liquidity. Nobody's willing to buy or sell, or there's just mismatch of what's going on. So there's plenty of examples of things like that that happened in March 2020. But all the ETF's in the US and around the world have held up extremely well and were perfect beacons of efficiency during that time. They really proved their mettle. Even some of their most ardent critics even had to come step back and admit, like, they did extremely well in handling the issues.

Speaker B: You sound like an ETF bull, my friend. Are you like, do you like this asset?

Speaker A: One of the things we've always said is like, we're going to get into a lot of this. But if the SEC had approved this thing, honestly, all the people and these markets, these market makers that operate in this market, they're not going to let some of the fishy stuff that has been going on in crypto, they're going to go to the exchanges that are operating cleanly, they're not going to get involved in a lot of the other things that plenty of people have been involved in, in this space. So if we do get one, it's going to clean things up. It's going to drive down trading costs. ETF's trade like penny wide, very, very tight. So there's no transaction fees on most brokerage platforms. And then if you look at most brokerage platforms, they don't really tell you what the bid ask spread is. You can kind of back into it by looking at like what the trading looks like on Coinbase or finance or any of those things. Right? But there is a spread. So, you know, you're paying a fee typically to do the trade, and then there's also a spread between what the bid and the ask is. And like, usually market makers are making that money. So there's a lot of money to be made in offering markets in the crypto markets. And when an ETF comes about, it's going to get way tighter. So you'll see a lot of people who trade bitcoin specifically in crypto markets learn to start to use the ETF and vice versa. People from the ETF world will probably go to the underlying crypto markets and make things more efficient and more liquid because you'll have the behemoths of the us trading and financial system come in.

Speaker B: I think I was first exposed to the ETF concept just earlier in my adulthood and early investing career through Vanguard Group and John Bogle. The idea that, hey, you know what, you don't have to like outperform the market. You just buy, buy an index fund, buy a low cost index fund of some sort and you'll outperform, you know, like 80% of active traders out there. And so it's always been a good concept. And of course, you want to keep your management fees low. And my understanding is a lot of ETF's can, can somewhat provide that. So that's. Why is that a reason? And I want to ask you, who are the holders of these ETF's? Is it, is it large pension funds? Is it big money capital pools? Or is it mainly individual Americans, like retail investors with a fidelity account or a Schwab account with their 400k money, as you alluded to earlier, who are the net buyers of these things, really?

Speaker A: That's the beauty of the ETF. It's everyone in the old mutual fund world, what you're used to looking at in your 401k or whatever it might be. If you're a us listener, there are multiple share classes. So you need to invest a certain amount of money to get access to this lower fee because you get these other things, right, economies of scale, whatever. So they have all these different share classes, a, b, c, I. For institutional, there's different things, right? But what the ETF did is it democratized it all. So everyone's playing in the same pool. So if your grandma wants to buy an ETF, she's buying the same ETF as Citadel. If they're looking to trade that or some other big hedge fund or pension or PE fund. So really everyone is involved in this. And that's the beauty of the ETF ecosystem, because it incorporates everyone. So you have all the liquidity from the big tradfi players who are looking to make short term trades alongside the mom and pops. You were talking about who some of them might be looking to do short term trades. A lot of them are just looking to buy and hold, like you were talking about low cost ETF's and hold them for a very long time. They can get exposure. And part of the reason they can be so cheap is because so many people are using them. So many different types of people are using them.

Speaker B: How big is the ETF market, James, in terms of assets inside of ETF's, are we talking hundreds of billions? Are we getting into the trillions here?

Speaker A: Yeah, we're definitely a trillion. So we're right around 10 trillion globally. But most of that is in the US. I believe we have. I'm looking it up right now. I think we have seven. I think we're right around 7 trillion in the US alone. I'll tell you the exact number, 7.25 trillion.

Speaker B: Where do you find that info? Is that like a Bloomberg terminal?

Speaker A: Yeah, that's a Bloomberg function, but I don't probably vetify eTf.com. things like that will probably have that type of information. But the global markets like over ten as well. But that, you got to remember that includes like, it holds stocks, that's going to hold bonds, it'll hold treasuries, commodities. Everything you can think of has basically been thrown into an ETF wrapper. Even crypto is just not in the US.

Speaker B: Right, right. We'll get there to crypto. You know, we're building here, building our understanding here. So $10 trillion worldwide, how much of that would you guess is retail? Mom and pops versus the big guys?

Speaker A: It's hard. So if you look at the way the us market works, for the most part, a lot of the money is via advisors and platforms. So we can't see exactly how much is retail, but a lot of people will use advisors. So roughly, we estimate right now that us advisors, the people that are helping, if you went to somebody to help you manage your money, right, they control about 30 trillion in assets and they love ETF's, specifically independent advisors. So the way the old mutual funds I keep talking about used to be sold is there was basically kickback. So if you put your client into this fund, you got some money out of it and possibly into perpetuity and different things like that. So basically mutual funds were sold by people that were wholesalers and trying to get advisors to put their clients in those funds because they get more money. Everyone, basically, the money is kicked back all over the place. ETF's, it's nothing. Some of that kind of happens, but it's not directly the case. It's more that ETF's are bought. So advisors are huge owners of this. Hedge funds like to use these things. Institutions are using these things to park money for the most part because they're super low cost. So retail, we don't have a clear breakdown on that front, but it's a decent chunk. I would say at least 30%, probably more, just because a lot of it is buy and hold. But there's also plenty of ETF's that are not built to be bought and held. Some of them are built to be traded. And like I said, SEC came about this because they wanted an alternative to futures and different things that were happening. So they wanted people to be able to use these in trade. There are some ETF's out there like the S and P 500 from spy and plenty of others that we refer to as pseudo futures where institutions are using them for liquidity. So they got a certain amount of money. They can't put it to work fully in exactly what they want to, so they're going to throw it into an ETF. Or you even have mutual funds, some of those guys that are talking about, that are picking bonds, picking stocks. And what they'll do is they'll pick, they'll hold an ETF in like 3% of their portfolio or 4% of their portfolio. If they're a large cap manager, they'll hold a large cap equity ETF. If they're a high yield bond manager, they'll hold a high yield corporate bond ETF. And basically they just use that like sleeve almost, if you think about it as a moat around their portfolio. They're picking the bonds. They think are going to outperform the most, give them the best, whatever characteristics they're looking for. And then rather than holding cash, which is what they did historically, which doesn't give them exposure to market, it's called cash drag. Actually, in the last couple of years, it might not have been that bad with the way rates have gone, but essentially what they do is they want to have exposure to the market, but they know that ETF's are super liquid. So I keep going back like, everyone uses this. People across the traditional financial ecosystem are using ETF's in many different ways. Yeah.

Speaker B: And I'm looking at kind of a list of different ETF's. And you probably have a better list in your head, but you basically buy any collection, any set of assets in an ETF. So we mentioned the spy, it's S and P 500 index. If you want general stock index in the US, there's a Nasdaq, we've got equity, precious metals. So you can buy a gold ETF. I'm sure you could buy silver. I'm sure there's all sorts of other commodities you can buy.

Speaker A: Platinum, palladium, you name it.

Speaker B: Yeah, I've seen certainly oil ETF's as well, if you want to go down the commodity stack. Real estate ETF's of various types. I don't know if it gets as specific as, let's say I want to bet on the real estate market in California. California, maybe that's a bit too specific, but maybe they have something like that.

Speaker A: Actually, they do have some stuff. They have muni bonds that focus on. They have muni bonds that hold. Focus on that. So you could bet on the California muni market, but also basically there are those real estate ones. They don't own physical real estate, they own reits. The real estate investment trusts, which have been all of the news lately because public reits are trading very different from private reits. But ets will wrap those things as well and hold them, so give you exposure. So like maybe one REIT specializes in like the southwest United States. So they'll have California, Arizona, whatever. And so if that's what you're after, you could just buy the rEIt that's kind of similar to like buying a stock. And these will give you like here's the us market, or here's a reit for like multifamily homes or stuff like that. It's becoming sliced and diced in different ways. There are reits out there that focus specifically on like retail warehouses or data warehouses that hold all these servers. So, like, they own the real estate and people rent those warehouses to put all their servers in them. And that, that has been one of the best performing areas of the reed market. So, like, there's ETF's that specifically target that? So, yeah, there's ETF's.

Speaker B: Can you buy money markets? Can you just buy like dollars in an ETF or something? Could you buy.

Speaker A: Yeah, there's actually. Yeah, so there's some dollar ETF's that like, basically they. The way those work, though, isn't like they're just holding dollars. There are money market fund ETF's elsewhere. There's money market funds, obviously, that aren't ETF's. For the most part. People just use, like, Treasury ETF's if they're looking for that type of exposure, because it just holds treasuries. The treasury bills specifically, you can look at t bill ETF's. But yeah, there are some money market ETF's in Canada, just not in the US yet. But again, you get those t bill type ETF's and they give you a very similar exposure. Otherwise there's ones that basically you can bet on the direction of the us dollar. So it'll go like long us dollar futures and then shorts a basket of other currency futures. So it'll short the great british pound, the Japanese yen, the euro brazilian, real, like you name it. So it'll tell you what it's going long and what it's going short. And that's how you could bet, like, tactically on where the dollars going.

Speaker B: All right. For crypto natives. Chris, crypto listeners, tradfi, you thought of this idea of tokenization before crypto did. This looks a lot like tokenization of different assets, doesn't it? Okay, so this other point that you raised, which is like, the thing that's different about ETF's is you can always access the underlying assets. I think that will come into play when we talk a little bit about crypto. Again, we're still building to the crypto conversation, James. But this idea of you can always access the underlying assets. I want to get into the details of that. Right. For something like stocks, it's weird. It's interesting because when we say the underlying assets, what are we talking about actually? Piece of paper or legal documents somewhere. I want to contrast that from a commodity like gold or like oil, for example, where the underlying asset at the root of it is much more clear. The underlying asset is like a barrel of oil somewhere in a warehouse, you.

Speaker A: Hope, at least so actually. So for oil, I was debating saying this before, but oil, one of the we like to call some ETF's or like Wolf's in sheep's clothing, because they look like they're simple. There are no ETF's that hold physical oil because you can't really store it. It costs too much money. There's a multitude of reasons. There are some people, like, I know some people who are thinking they want to give it a try, but really, all the oil warehouse oil warehouse oil they want. But the only way to really get the oil ETF's work is they invest in futures, they invest in derivatives, which is how a lot of commodity ETF's also work, except for those precious metal ones you were talking about. And there are some others.

Speaker B: All right, well, so let's talk about those. So first let's talk about maybe the precious metal ones. So if I buy a gold ETF of some sort, where is the actual gold bar stored? And can I actually, like, can I actually redeem that for gold? And you said, you said it's always able to access the underlying assets. I want to convert my gold ETF into, like, you know, a physical bar of gold. Am I actually able to do that? Or there's some intermediaries in between here.

Speaker A: Yeah. So this is going to get in the weeds of, like, market mechanics of ETF's a little bit. So I'll do my best to keep it simple. But essentially, the way to think about it is there are. There's a few people involved in a creation redemption process. So usually it's what we refer to as a market maker. Think of those as the big trading firms, the Citadels. If people out there have heard of, obviously people have heard of Jane street. If you're listening to your show, Virtu, they are big ETF market makers. They're pairing trades, and they will access the underlying if they have to make a trade happen, or it's more efficient to do it that way than just sourcing the actual shares on the exchange. So I keep saying at any point you can access the underlying market to create a redeem shares. These market makers know that, and they know what's more efficient. Is it more efficient to just source the actual ETF shares, or is it more efficient to go to the underlying market and make this happen? Sometimes the buy is so big that there's not enough shares to be demand, so they have to go to the underlying market to make it. That might be a little more costly, or it could be more efficient than buying that many shares in the market, it's the same thing as a big whale comes to a crypto market and buys a ton of bitcoin, you're going to blow through the price. But if you could theoretically figure out a way to buy bitcoin more efficiently, that's how you would do it. But the way this works is those are the market makers. There's also something called an authorized participant, which has been in the grayscale situation as well. The AP's are the people that facilitate that creation. These are the huge banks with massive balance sheets. Bank of America, Goldman. There's a whole bunch of AP's out there. Merrill lynch. They'll basically like. They are the people that facilitate that creation of shares and redemption of shares that work with the issuers that own these ETF's. Now, for the most part, it's these market makers and these AP's that are making sure that the market is efficient in the underlying. If you need to tap the underlying market, whether it's to create ETF shares or destroy ETF shares, they're the ones doing it. So the market makers are constantly trading every day. They're dealing with the AP's, the AP's are dealing with the issuers. In some instances. Not to get too wonky, the market makers can be an AP as well. But essentially it's these people, these institutions that have specific licenses to operate in whatever markets that can operate in those markets and make the creations and redemptions. That said, that's the way most things work. Because for the most part, you need like 100,000 shares of the ETF to do a creation or redemption, right? So these are big. So like if you. If you. That was what make like, like you or I, or actually, I don't know, maybe you're a whale. But like if you wanted to buy an ETF, it's these people on the back end that are batching the entire market together to make sure it's operating efficiently. There's very low cost to trade all of those things. They're making sure that the ETF's are created or destroyed for demand to meet supply. Now that said, there are ETF's out there like ounz for gold ETF's. This is a gold ETF. And basically the creation and redemptions are way lower, the minimum. So like there is going to be a cost. If you owned enough, you could get gold delivered to your house. But that's like a special exemption that they went through to get to happen. But also like most ETF's hold their gold in vaults in London, there is one that holds it in Switzerland. There is an ETF that used to hold it at the Perth mint in Australia. So there's like all these different ways you can do it. Everyone has different custodians, but gold is like a unique subset of. So some people, like, the true gold bugs are like, I don't trust anyone to hold my gold. There's a lot of issues where people are worried about paper, paper gold with futures. But for the most part, the gold has to be stored in the vault, and every share of the ETF should be backed by physical gold. Now, sometimes the trading is literally like some guy in London goes into the vault for the Spider GLD and takes gold out and moves it to the vault down the street for like some other trading firm or gold trading firm or whatever what may have you. But like, on to our view, like, that's gold leaving the trust that we were interested in or the one we were looking at and going into a different one. Right? That's a creation of redemption.

Speaker B: So hopefully they're using a brink's truck or some security apparatus for that transfer.

Speaker A: No. And literally, sometimes it's the same building. It's just literally a different. Like, it's moving it from one vault to another.

Speaker B: And if they didn't. If they didn't move it, would we really know?

Speaker A: Yeah. Okay. There is like auditing and stuff. And more than the. I'd like to think it's better than the auditing we've seen in the. Well, it couldn't.

Speaker B: It couldn't get worse with respect to FTX and the custody. But what's interesting is, like, we have, you know, as with crypto, we have, like, with the gold example, we have an actual bear asset, which is like, when you have it, like it's kind of valuable. Like, that's the thing. Possession is the asset itself. It's not like equity. It's not a legal agreement or something like that. That's enforced by some sort of, you know, legal code. It is actual physical possession. But there's a clean separation of responsibilities in kind of ETF's. You mentioned the AP's, you mentioned the kind of the market makers. And then a third group, you said is kind of the custody providers. Whether that's somewhere in Perth, in Australia, or that's some vault in London. These are not the same entities. Right? Like, the vault is not. The AP is not the market maker generally. These are. There's some clear division of responsibilities. Is that approximately. Right?

Speaker A: That is correct. Which is one of the things that the SEC is going after Coinbase for in this lawsuit. They want them to break up their brokerage, their custody, all those things into separate legal entities. Cool.

Speaker B: You know, I appreciate Coinbase or, sorry, the SEC is like asking for these things, but it's also not providing a clear way to actually do that, which is this weird scenario we're in. Okay, but so if I own a gold ETF, it's pretty much like, it's pretty rare to own an ETF where I could actually get the gold bar delivered to my house. Maybe there's kind of one of those.

Speaker A: Well, so for the average person, if you had millions of dollars in there, you could absolutely get the gold, right? It would not be a problem. But for the average person, who's not going to have millions of dollars in this ETF, I don't even know with gold.

Speaker B: It's so weird, though. It's like, let's say I had millions of dollars of golden. What do I just show up with my minivan or something like load.

Speaker A: Yes. So Canada specifically, they have ETF's that do this as well. The canadian royal Mint has. They're actually, I don't even think they're technically ETF's, but they operate like ETF's. You can do the same thing, right? You can get it delivered to your house, essentially. I don't know exactly what it looks like, but I imagine basically a brink truck would show up. But I'm sure if you're a moving enough money, you're not going to have it delivered to your house. But bitcoin obviously is different because of the way it's transmitted and stored, and we can get into that.

Speaker B: And to be clear, who is responsible for approving ETF's, who is kind of the gatekeeper? Is this somebody in government? Is this always the SEC? You have to. You have to register.

Speaker A: There are different divisions in the SEC that make these decisions on different ETF's, but it's always the SEC. The one that we're specifically these issuers are dealing with right now. And the one that has been the traditional holdup is a place called the division of markets and trading. But it's really the SEC. And it comes down to Gary Gensler. He's the overarching head if basically they do what he says for the most part.

Speaker B: So Gary Gensler, or whoever, the current chair of the SEC, is basically emperor king of giving this final sign off for an ETF. It.

Speaker A: Yeah, pretty much. But the thing is here, like, the way that you might have seen notice about some of these republican senators who are pro crypto trying to change the way the SEC is set up. But basically there's four commissioners and then also a chairman, and usually it's two Republicans, two Democrats. That's the way it works. So then the chairman is the one that has the overriding power because typically it's two versus two. So theoretically, if you were, if somebody was able to swing, which I wrote about in one of my notes, one of these commissioners, basically, that that could change things as well because Gary would be outvoted. But hester purse, which I'm sure anyone listening knows who that is. Cryptomom. She has dissented on multiple ETF denials in the past. The most recent dissent came this year, and for the first time, the new commissioner joined her in a dissent of the SEC's decision to deny Vanek. And I think it was Vanek, this most recent one. But whoever it was, they wrote a dissent letter, kind of like you would see from, like, the Supreme Court dissent from judges that disagree. So if they get one of those other commissioners to agree with them, one of those two dems against Gary, then all of a sudden this thing is likely to get approved. So it's not as cut and dry as, like, Gensler is fully in charge, but, like, 95% chance that Gensler is the one making decisions here, because, and you got to remember, he reports to the Democratic Party, right? Think Elizabeth Warren. There's a lot of jokes about her, like, getting orders from Elizabeth Warren, but there really is a lot of ties to that side of the Democratic Party and what's going on here, but let's.

Speaker B: Draw that out because shouldn't the ETF process, or maybe I'm asking a question of historically, how has it been? So who are the issuers of ETF's who are filing and asking for the SEC's permission to do this? Is this a small collection of very large companies, or is it pretty distributed and diverse? And what's the process? I would assume that we've had a process in place for regulators to be somewhat neutral and to have kind of guidelines and rules, but they can't, I would assume they can't necessarily pick winners or losers. Right? Like, I have friends at Blackrock versus, like, you know, I hate Goldman or whatever, and I'm going to choose one issuer over the other. What's this approval process been like historically for traditional finance?

Speaker A: So let's just say that they can do that and they do do that and I'll go into why they do that, but they basically can make the decision and back into it legally. But wait, wait, wait.

Speaker B: They can be biased however they want?

Speaker A: Technically, they shouldn't be, but they can are. You would have to prove it, and I. That grayscale is trying to prove that in court right now. Right. But for the most part, they have been biased in some of the things that they're doing. And it's definitely coming down from what the democratic side of the, the ticket wants to have happen.

Speaker B: So it's already been criticized. Prior to crypto, you would say, is this like, kind of like a part of it on the inside?

Speaker A: Yeah. So I would say, like, the Winklevals twins tried to do this first in 2013. Right? They were small. They got denied. They tried again. They ended up getting denied again in 2018. That was the first time that Hester Peirce dissented on a decision. I would argue that the denial then actually kind of made sense because the way that the Winklevoss application was constructed, we don't need to get into the weeds on that. But it's a lot of different issuers. So I'm looking now, I have 40 different filings for spot ETF's and 37 different filings for futures ETF's.

Speaker B: What do you mean you have them? You're just seeing them in some.

Speaker A: I just looked at a list. Yeah, I have a list of, like, it's literally an excel spreadsheet of where I track them and I can look at the links and see what the SEC is saying about them and all the above. I try to track everything that's going on. It's basically. So when I first came to bi, I was covering commodities and we added crypto, and I had already owned crypto personally and was interested in it personally. And I reported to Mike McGlone, who's our commodities analyst who covers crypto heavily as a strategist. And then I reported to Eric Baltunis, who is my boss, who covers ETF's. And eventually I got moved up, and I'm specifically in the ETF side. But that experience of, my personal experience covering crypto from a strategy side of point of view and having all my ETF knowledge made this, like, ETF potential fund crypto stuff was like my squarely in my wheelhouse. So that's why I was tracking this stuff already on my own. And it was made a complete no brainer to start writing about it.

Speaker B: So how many on those lists are crypto related in your queue? Do you say it was like 40 or so.

Speaker A: A lot of them have been denied. There's only eight that are currently active on the spot side. But if you look at all the filings, you're at. Let me see. Yeah, you're at 40 plus 37. You're at 77 total filings and 30 ish issuers.

Speaker B: How many, how many filings so far? If you include the ones that have been denied and are active, and these are bitcoin ETF filings, to be clear.

Speaker A: Not just bitcoin, their crypto. Some of them eat futures ETF. A couple of them are ETH spot, which had no shot of ever getting approved, but I guess people figured they'd try. But, yeah, 77 different filings. And there's some others that you could argue that are kind of like crypto ETF's, but they're a little. They might hold a little bit of futures, but they also hold some other stuff, so. But yes, 77 different ETF's are. Have either been approved, denied, or are kind of, like in limbo right now waiting to see if they get approved.

Speaker B: Well, jumping back to that question about the neutrality of kind of a regulator, like, how are they supposed to go through the process of approving an issuer? And then also contrast that with how it happens practically for requests outside of crypto.

Speaker A: Yeah. So the SEC is supposed to be a disclosure regulator. They are not just merit regulators. So there are some countries that have merit regulators that decide whether an investment has any merit and should be allowed. The SEC is job is to do, basically. Have they disclosed all the risk? They're not saying whether or not something is a good or bad investment, and.

Speaker B: That'S stated in the law.

Speaker A: That's a long time. Yeah, exactly. So Hester has written dissent, saying we're getting dangerously close to being a merit regulator, which is a key term that I think a lot of people don't realize how strong that statement is, but they're really doing a really good job of toeing that line. And I would argue they've kind of crossed it, but it's more of a gray zone than black and white. They're saying this is a bad investment, which is not something they should do.

Speaker B: Okay, so they're supposed to be basically a neutral regulator. They're not supposed to make merit based decisions. And what that means, effectively, is they may personally think that gold is just a shitcoin asset or whatever. It's, like, completely useless. They might hate it, but they cannot have that determination in their rulings. They have to be neutral with respect to what they decide to allow. Retail ETF investor, not all ETF investors exposure to or not. And that's different than some other regulatory apparatuses outside of the United States. Is that approximately correct?

Speaker A: Yeah. So the way to think about it is their job is to prevent fraud, manipulation. Anybody getting taken in advantage of, that's what they're there to do. They want to make sure that's not happening. And honestly, some of the stuff that they've done that has been questionable has probably saved some people from getting rugged. That's happened in crypto space. But I would also make the argument that they should have been going after these actors before anything ever happened. But that's a whole different discussion. But the way that the process works. So there's two ways that this works. So basically, this all goes back to the 1933 act and the 1940 act, which are just laws about the us financial markets, securities markets. We don't need to get too in the weeds there.

Speaker B: This is where the SEC was formed. There wasn't an SEC previous to this, right?

Speaker A: Yeah. Yes. So essentially, the way that it initially worked was like everyone had to go through this 19 b four process, which is essentially where what we're doing right now with these spot applications and what that means is it's exchanges that apply to the SEC for a proposal for a rule change. And at the end of the day, the rule change is to be able to list the spot. Bitcoin, ETf, those are specifically for ETF's that are under the 1933 act. In 2019, they made this rule called an ETF rule for anything that's under the 1940 Act. 1940 act thing. Things that hold securities that are diversified. There's more requirements on those types of products. They made the rule because before this, everyone had to file a 19 before to launch an ETF if it was remotely new. Now, under the 40 act, it's just a more simple process. You apply and you have after 75 days, the prospectus or the application to launch a fund goes live and you can start trading it. In those 75 days. The SEC can say, no, no good, you can't launch, and then it's bounced. But it's not the same process. Of the 19 b four process, futures ETF's, the first one that came out, were launched under that process because the SEC didn't have to trading and markets didn't have to okay anything that happens with those applications because they're 1940 x products, because the futures ETF's, they hold treasuries. And you can argue that that holding treasuries and futures is a diversified portfolio and therefore they can fit under the 40 act, which is the same reason that all these futures ETF's, they actually all got denied in June because they applied. And the SEC, within a week was like, no, take them back. The 19 before process is the process that we're going to spend most of the time talking about, which is what spot bitcoin ETF's have to go through. And that process, like I said, is for the proposal of a rule change.

Speaker B: Can you define that term? Spot bitcoin ETF? Spot bitcoin. What's the significance of saying spot bitcoin versus just bitcoin etfeminal?

Speaker A: Yeah, so we have bitcoin futures ETF's, which like a futures ETF, typically the way it works is most of them hold like the front month futures contract. So a futures contract basically means you enter an agreement to either buy or sell bitcoin at the end of a month on a given date, and you can trade that right to do that, or the ability to do that via futures contracts. But the problem with that is that, like I said, it's every month. So right now, if you're holding a front month futures contract for bitcoin, you're going to have to sell it towards the end of July and then buy the August contract. Typically, the way these markets work, they work in where they're in Contango. So the July contract is maybe priced here, and then the August contract might be priced just a little bit above. Sometimes that can get steeper or not, but that means you're selling low and buying high, and it eats away at your return. So this is constant churning of holding things, of holding these futures can be bad, detrimental, long term returns. These bitcoin futures ETF's that have been in the market have done very well historically. If they had launched a few years ago, they would have vastly underperformed the spot market, or physical market, as you can also call it. But it's really just the futures market versus the spot market. And the holy grail here would be to have a physically backed spot bitcoin ETF, meaning the bitcoin is stored in cold storage somewhere and the shares of the ETF are a right to the underlying asset, in this case, spot bitcoin. Whereas in the futures ETF's that the SEC has approved, you have a right to those futures contracts.

Speaker B: So we want spot bitcoin because it's just a much better user experience. Right. I can't imagine if I was purchasing sort of a bitcoin ETF in my fidelity account as a retail user. And I'm trying to deal with like selling at the end of the month to buy the kind of the next month and just what terrible user experience.

Speaker A: Compare all the ETF you don't have. The ETF does that for you. So it does that for you. So you can just hold it. But that rolling is the problem right? And it's not actually holding holding spot bitcoin. It's paper exposure. It's derivative exposure. So a lot of people prefer not to handle that. So we talked about oil ETF's before. Sometimes those things can go into massive contango where the next contract is super expensive, or backwardation which is where the current contract is more expensive than the next one. So I don't know if some of you guys probably remember when oil went negative in 2020. That caused a lot of problem for these oil ETF's. But because like I said, they all hold futures to get their exposure.

Speaker B: So if Im recalling correctly and you might remember the full history. So correct me if Im wrong here James, but I think when Gensler took over, that was when maybe the bitcoin futures ETF was approved somewhere around there, or am I wrong with that?

Speaker A: Yeah so he was already in charge. He took over after the ripple lawsuit had been filed. So thats what most people associate with him. And after Coinbase was approved to go public. But he is the reason that we have futures ETF's. He gave a speech in late July, Gensler was 2021 and this is not verbatim, but he essentially said they had denied all futures ETF's up to his point. And at the end of the speech he was talking about a little bit of crypto and he said we look forward to applications for bitcoin Futures ETF's, filed under the 1940 act, that one line in like a relatively longish speech. And then like everyone filed for spot for a futures bitcoin Etfemen. And sure enough, we got one approved in November.

Speaker B: We also have eth one too, right? An ether one?

Speaker A: No, we don't have any.

Speaker B: We don't.

Speaker A: Yes. Yeah. So they've applied, but they haven't been approved. So the SEC will not approve Ethereum futures ETF's largely we gensler. The one thing he will admit is the security is not a security, is bitcoin. And he won't say the same now for Ethereum, which has been covered extensively. So I don't think he's going to allow those things anytime soon. Okay. But because of that statement and because of us talking to other people is why in September or October of 2021, why we were so bullish on the fact that we were going to get a launch. And we actually were very different from a lot of our counterparts at the trad five space saying that this launch was going to happen. And most people were just banking on history and what the SEC has typically done and saying, no shot that this thing gets approved. And that's where we made a name for ourselves, I guess, honestly, on that front.

Speaker B: So why is Gensler in favor of the futures bitcoin ETF style and not the spot bitcoin etfeminal?

Speaker A: I can tell you his argument.

Speaker B: What's the difference?

Speaker A: Yeah, his argument is that they're CME futures, so they are covered by the CFTC. It's a regulated market. There is not going to be any manipulation of those futures contracts. That's what they would say. But the real fact of the matter is the pricing of those futures markets are dictated by something called the bitcoin reference rate. And the bitcoin reference rate is based off of a bunch of spot markets, including Coinbase, Kraken and a few other Gemini, some others. So it's literally the price of those futures contracts determined by an aggregate of the spot market value of bitcoin.

Speaker B: Okay, well, Gary's a smart guy. I mean, he surely knows what you just said, right? So that's what he said. What do you think the real reason is? Do you care to speculate?

Speaker A: I don't know why he. I think the problem is they couldn't deny they realized they were going to run into issues with the fact that the CFTC had approved these things and let them list. They are not making argument that bitcoin is security, basically saying that you can't launch these ETF's. First of all, like I said, it goes under a different process. So it didn't go through division of trading in markets. So these things kind of got a little bit of a green light because they didn't have to go through the same process, the 19 B four. So, yeah, Gensler kind of gave that to the crypto community and it's what's biting him now. So ironically, there were other ETF's that were filed before Gensler made that speech. And this 19 before process takes 240 days. Basically, you file, the SEC can bounce it back to you for changes and then you can refile. But essentially it starts a clock, and the clock goes 45 days and you have to approve, delay, deny, 45 days, 90 days, and then at the end of 60 days after that, you either have to approve or deny. There is no more delaying. And there was an application from a company that is a commodity, CTF provider tucrium, that had filed before Gensler gave that speech for a 33 act, one that goes through this 19 before process. And I wrote about this six months before it happened. But I said, this is putting the SEC in an absurd place to be like, they approved these futures ETF's under the 40 act, and now we have 33 act applications that are fundamentally very, there's very little difference between the two of them. And the SEC is going to have to decide how hard they're going to stay on this 19 b four process in approving them versus not approving them. And what they did is they approved this ETF and the argument they made. So one of the reasons why all ETF's have been denied is because there is no surveillance of an underlying market. And they specifically say they want surveillance of surveillance sharing agreements, or they want a regulated spot market of significant size. And the two keywords there are regulated market and significant size. And the way that they got around those, this is where I said they can kind of back into what they want, the way they got around those requirements for the CME futures market, because we talked to somebody in crypto, they would tell you theres billions of dollars trading in futures markets in Europe and on these exchanges and what have you. But specifically regulated futures markets, the SEC basically said that it was a regulated market of significant size with respect to itself. The CME futures market is a regulated market of significant size because its market of significant size because the entire market they were looking at was nothing but the CME futures market. They can make, they can kind of back into whatever reasoning. That's what I kind of hinted at before. So that's a good example of like what the SEC will do just to make sure they can do things the way that they want to. And in that application, they spent pages upon pages explaining why they were going to prove that futures ETF and still not allow spot ETF's. And then a couple months later, we got the grayscale denial, which we also fully expected, and Grayscale has sued. And now that's where we are.

Speaker B: Guys, I think we're going to get to the crypto part of this conversation, all in on whether we're going to get a bitcoin ETF anytime soon. I've got a lot more questions for James but before we do, I want to thank the sponsors that made this episode possible, including Metamask and their portfolio application. If you haven't looked at your metamask portfolio, go check out your crypto wallet right now, download metamask and load it up. Here they are. Okay. You mentioned that the SEC can basically back into whatever they want, and it seems like they're having trouble maybe keeping their story straight with all the different things they've said and actions they've taken. Is there, like, a real reason that the SEC and Gensler is not just approving a bitcoin ETF? Okay, surveillance, all of this type of thing, is it? I mean, crypto will just tell you. I mean, there's definitely a lot of conspiracy theories here, of course, but the simple explanation seems to be Gary Gensler and some political body within the government does not want to propagate crypto any further. And so they're just trying to hold the line for as long as possible and delay things for as long as possible because they don't like crypto. Is it as simple as that, James, or. Or have you seen anything in your journey here to bring up kind of an alternative explanation for all of this?

Speaker A: I would say that's a huge part of it. But you also part of it. The other side of that is one that sounds very wrong, but at the same time, look what's happened with FTX. Look what's happened with Celsius. Those are the ones that seem to be ones that committed really bad acts. Then you have prime trust also, and then you have the companies that went down with them, whether or not they committed bad acts. And Blockfi and Voyager, I mean, we can name all of them, right? And this kind of gives credence to the SEC's argument, as far as I'm concerned. Right. There is some. Well, definitely.

Speaker B: Let me ask you this, though. But, like, if they. To your point earlier, I think you made this point that if we do get an ETF, it'll clean things up. Right? I mean, like, the reason that people had to trust an FTX or felt like they did wanted to trust a Celsius or something else is because our regulator, our gatekeeper, wouldn't go through the process of approving a regular spot bitcoin ETF. Do you think that argument has any merits? People in crypto don't want to get ripped off either. So how about the regulators create some alternatives rather than just setting up blockers all the time? Do you lend any credibility to that argument?

Speaker A: I lend a lot of credibility to that argument. So I find that when I'm on tradfi type, we'll say podcast, but it's really anything if it's a client call. I find that I talk about that side a lot more than the side I spoke about earlier because they focus on that side. So basically the whole thing is like, there's two sides of the coin here. But I agree with everything you said. The problem is that also, I would say some of it wasn't people had never bought the ETF because they were chasing Celsius and those other actors because they were promising whatever unimaginable returns and people didn't do their research, didn't understand how it was actually working.

Speaker B: It feels like the Spider man meme of all the Spider man, like, just pointing at each other and blaming each other here. All right, so something new it feels like has happened this year, but I want you to tell us if there really is anything new here. Of course. You said there were 77 different applications for bitcoin, ETF's or crypto ETF's over the years. But this year, some new participants have thrown their hat in the ring, one of which is Blackrock. It was very interesting earlier this week as well. We had Larry Fink doing, that's the Blackrock CEO, doing kind of a mainstream media tour and talking good things about bitcoin and about crypto in general, which is very interesting because six years earlier he had called it, I think, the direct quote, as an index. Bitcoin is an index for money laundering. So definitely a change. Maybe some education that happened. Maybe he changed his mind. Maybe he has a product to sell. I don't know. Believe what you want to about that, but Blackrock entering a $9 trillion asset manager, the largest in the world, is that different. There's also a stat here where they've done over 500 different ETF applications and they only missed once. They don't often miss once they file applications. That feels new. Is there something new here, or is this more of the same one?

Speaker A: When we, we basically coindesk broke the news that they were going to file and we saw it, and me and Eric and other people were like, whoa. And the industry were like, can this be true? Sure enough, a few hours later, we got the filing hit and we were like, my eyes were wide open.

Speaker B: You were not expecting this.

Speaker A: So let me explain what we were expecting. So, like, one Blackrock is the only new entrant. Everybody else has already tried this this year. So the only new entrance to this space to try and launch one of these is Blackrock.

Speaker B: Like even fidelity they had tried previously?

Speaker A: Yes, yes, multiple times. So there's been multiple people that everyone else who's doing this has already done it in the past, aside from Blackrock. That said, we always expected Blackrock, no matter. At one point they were going to launch bitcoin, ETF, particularly after they partnered with Coinbase last year for different things. They use Coinbase for their institutional clients. They use them for pricing into their Aladdin, some technology that Blackrock sells, which we don't get into. But they've had a partnership with Coinbase. We knew they weren't shying away, but Blackrock is so big. They have so much distribution, they have so much marketing power. We didn't think they were going to waste time just fighting with the SEC to get this thing launched. We figured it would get approved and then Blackrock would file and they would be ready to go. So this caught us by surprise. Not that Blackrock filed at all, but that they were filing to fight with the SEC to get this thing out the door first.

Speaker B: You just thought they'd be a fast follow after somebody else gets it approved. Then, of course, Blackrock's going to throw their hat in the ring, like, why be, you know, machete ing your way through the jungle and be kind of a lead here.

Speaker A: Yeah, exactly. And honestly, you mentioned that fink interview. That was like, way stronger than I expected him to. Like we always. So, one thing we also knew, once they filed this, we knew Larry signed it off on this. Right. Larry is one of the biggest figures in traditional finance, and we knew that if Blackrock filed this, they knew they were going to start a race. Right? They knew they were going to, if they filed, that everyone else was going to file after them, because it's just the way, the way things have worked historically. The key difference here with what Blackrock offered in their filing is they said they were entering into a surveillance sharing agreement with a spot bitcoin et trading provider. We guessed at the time that it was Coinbase. Subsequently, we learned it was definitively Coinbase after the SEC made them name it, before they could fully file. So that's the big difference. They entered into a surveillance sharing agreement. I mentioned those earlier. That's what the SEC has said when they denied all of these. They want a surveillance sharing agreement with a regulated market of significant size. A lot of people initially said, no way. Coinbase is not a market of significant size. I've written notes that debate the opposite, because it is the largest bitcoin trading pair with us dollars. They are the largest US exchange. They are the largest exchange that accepts uS dollars as an on ramp. So in our mind, it is a market of significant size. The biggest market is obviously binance, but binance, all that is done on stable coins like tether and TrueusD, and things that the government really doesn't like as it is anyway. So I think it is a market distinctive in size. And then everyone else jumped on board to try and get this. Now, one thing I said that I want to correct is I said BlackRock filed. Technically, these 19 b, four filings are filings from the exchanges that they're partnered with. So in this case, it was Nasdaq that filed this in partnership with BlackRock, but it's a Nasdaq application. And then we have other nice New York Stock Exchange, and CBoE has partnered with other issuers to also file them.

Speaker B: Well, that seems to lend a bit more credibility to. I don't know how this works. But when you say Nasdaq plus Blackrock is filing rather than just Blackrock, that's very interesting. Or Nasdaq on their behalf. But is this also with kind of the comments this week from Larry Fink, is this also a signal from Blackrock? Or like, are they trying to broadcast something? Are they trying to say, hold on, us regulators, you've gone a little bit too far. We actually want to lean into this asset class, and if you're not going to let us do it in the US, then we're going to fall behind all of the other jurisdictions. Is this kind of a coordinated pushback? Is there a signal, or should we, should I not read that into the messages that are going on here? Here.

Speaker A: So I would say that's putting your tinfoil hat on a little bit. That might be the case, honestly. We also thought that it's because of Blackrock. Let's be clear. Blackrock is the gorilla in the room, right? Blackrock is 31, 33% of US ETF assets. Vanguard is 28%. And then everybody else is nowhere close. Right? So it's Blackrock and Vanguard. Vanguard is never will never file for a bitcoin ETF. If I had to guess, maybe very far down the line. But why?

Speaker B: They're more conservative.

Speaker A: They don't even have a gold ETF. It's not something they believe in. It's not something they do. Their low cost index, equity and bonds, that's what they do. Right? Like, that's what they specialize in. They don't even have a gold ETF. Jack Boldle didn't believe. John Bogle didn't believe in investing in gold to be. And he hated crypto or bitcoin, but he's not there anymore. They've changed a lot of things that he didn't like. He also didn't like ETF's. He thought they promoted too much trading. He much preferred the old mutual fund index fund. Cheap. Yeah. The hotel.

Speaker B: He was g for stocks.

Speaker A: Yeah, he was a. Yeah, exactly. Eric Baltunis, my boss, has written a note, basically says, like, defi, people can learn a thing from, like, from Jack Bogle, from Lloyd patience.

Speaker B: Crypto natives. You learn that.