ETF Edge - Cannabis Craze & Coinbase IPO

Episode Date: April 12, 2021

CNBC's Bob Pisani spoke with Tim Seymour of Seymour Asset Management, Christian Magoon of Amplify ETFs and Matt Hougan of Bitwise Asset Management about Coinbase’s impending IPO and its impact on ETFs and 2021′s cannabis craze. In the 'markets 102' portion of the podcast Bob continues the conversation with Matt Hougan of Bitwise Asset Management. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQ, Supporting the Innovators Changing the World, Investco Distributors, Inc. Welcome to ETF Edge, the podcast. If you're looking to learn the latest insights on all things, exchange-traded funds, you are in the right place. Every week we bring you interviews, market analysis, and we break now what it all means for investors. I'm your host, Bob Pisani. This coin-based gears up for its direct listing this week. Today we're doing a deep dive on what it means for the crypto investors and the ETF community. Plus, we'll discuss what's driving the surge in the best-performing ETF asset class of the year.

You know what it is? Yeah, it's pot, cannabis. Who would have thought? Here's my conversation with Matt Hogan, CIO of Bitwise Asset Management. Christian Magoon is the CEO of Amplify ETFs and Tim Seymour of Seymour Asset Management. Matt, you have told me several times, Coinbase is the asset the crypto community has been waiting for, but it seems like it might be one that other communities, the broader community, are waiting for. Why is this such a big deal?

Can you explain it to us? Sure. It's such a big deal because it's the first large-cap, pure play crypto equity in the U.S. markets or in any markets. I mean, we're talking about a company with a valuation between $50 and $100 billion. You and I have talked about this, Bob. That makes it bigger than NASDAQ. It makes it bigger than the parent company. of the New York Stock Exchange, and the growth is so phenomenal that you can't ignore it. This is a company that 10xed earnings on a year-over-year basis. You just don't see this kind of growth from large-cap equities, and every investor,

not just crypto investors, are going to have to reckon with that growth, think about where it's going and decide if it belongs in a portfolio, and that just makes it a game changer for where crypto exists in the total capital market spectrum. Yeah, you know, Christian, what about you? about you, you've got the, probably the one, I consider it, the one crypto, ETF that actually tries to be really crypto. You actually own assets that appear to be, you know, crypto-reladio, Novagrances, Galaxy Holdings Fund. But Block, are you going to be at a buyer immediately of Coinbase? Explain how this is going to impact the ETF community. Yeah, so Block is an active

ETF, so we'll be able to own Coinbase on Wednesday. And I expect we, we'll expect, we we will, about 27% of the portfolio right now of Block, owns companies that are involved in blockchain and cryptocurrency infrastructure. So these are payment companies, custodians, exchanges. And to Matt Hogan's point, yeah, we own a variety of companies like Voyer Digital, Silvergate, Digitex, but these are small to mid-cap companies. Coinbase would be the first kind of large-cap company. So it's pretty exciting. We also think there's going to be other ETS that will own this, own coin base, Kathy Wood and Arc are likely to own it in their fintech ETF as well as their innovation ETF. There's some IPO out there. There's some other blockchain ETFs and a variety

of filings of new funds coming to market in the next month or two. That'll be crypto sensitive. So it'll be a big deal in the ETF space. You know, Tim, I just don't not understand the valuations here. I've never seen a nine-times valuation spread here. I've seen numbers at $23 billion to value Coinbase. I saw 50. I saw 100. I saw somebody at two. How is it possible that we can't even get within nine times of the valuation of the company? And as Matt pointed out, NASDAQ's $25 billion. If it goes at 50, it's twice NASDA. The ICE, which owns NYC, is $65 billion. I mean, come on. This is like mind-blowing numbers here. Try to make sense of this for us. They are. Well, I'm not sure I can.

But I think if you look at the profitability, first of all, Coinbase and where they've come in, even on the estimates on their first quarter numbers relative to where they were all of last year. I mean, you're talking about two and a half times in the first quarter on profitability at a time when we've seen IPOs that have been far from profitable tech companies. So obviously, this is a frontier that the multiples on what people are willing to pay don't make sense. What is the imputed multiple on Square or other companies that have talked about being able to do, you know, do Bitcoin transactions and crypto transactions. We can name all the companies that have had significant market cap increases here. So it's exciting. It's exciting to have that pure play. I think that really is the point. And where it settles in is going to be, you know, also another issue. I mean, think about the move we've had in the underlying currencies, especially, you know, outside of Bitcoin and even in the broader digital token landscape, all of the focus on NFTs. and you get the perfect storm here for this valuation, which is all over the map. A good analogy here to an IPO that some of us may remember from 2012, which is the Facebook

IPO. That came to market at a $100 billion valuation. People said the valuation was absurd. People didn't trust it because it was kids dressed in hoodies serving a new audience that they weren't familiar with. That's the same thing here. This is a giant company that's churning out real revenue and real profits, right? $800 million in profits in the first quarter alone, is the estimate. So I think those valuations may not be as absurd as people think. It's just people aren't comfortable with this corner of the economy in the same way they weren't comfortable with Facebook back in 2012. And Bob, one thing to keep an eye on, too, is ICE. Ice has kind of some phantom, the NYC has some phantom participation in this area. VPC Impact Acquisition Holdings,

ticker V-I-H. That's a SPAC that's going to merge with BACT holdings, B-A-K-T holdings. and that is essentially ICE's digital asset marketplace. So that's going to happen this quarter. So the NYC, via their ICE ownership and founding of backed, will be in this game as well. So look for some of these other companies that maybe haven't gotten the attention to maybe get some follow-on benefits from the Coinbase listing.

Well, that's going to be good news, isn't it? I mean, first of all, there's really an exchange. They make their money by acting like exchange and charging a VIG for it. The VIG is pretty high as far as I can. see, it's pretty amazing. I think the NYC would love to have this kind of VIG. As they get competition, Matt, isn't it reasonable to assume the Vig is going to go down, or am I kidding myself? No, it's definitely going to go down, Bob. No question it's going to go down. But the thing that's

going to go up is the size of the audience that it's serving. Look, most traditional investors are still on the sidelines of crypto. They're still afraid of it. The first place, one of the first places they're going to turn as they start to reckon with this is Coinbase. It's the most trusted brand. It's the largest company. It's the most established. It's been running for nearly a decade. So yes, the profit margins are going to go down. The costs are going to go down significantly, particularly for Bitcoin, maybe not for the other assets, but particularly for Bitcoin. But people are underselling how much broader the audience could be. And I think that's the flip side, the yin and the yang to this equation. Right. So will this

create new companies, new ETFs? I mean, the problem in the past, with crypto, has had the same problem with pot, and the same problem with space. There's been a lack of investable assets, particularly a lack of reasonably large investable assets. Now you have a company with a valuation, pick evaluation, $50 billion that comes in. That's huge. It's magnitudes of order bigger than anything else. And Kristen, describe what that's going to do for the ecosystem. Will we see new ETFs built around it? Will we see a rush of new smaller cryptocurrencies come in as a result of this. Obviously it depends on how successful it is.

We're assuming it's going to be successful. But what's the knock-on effect here? Yeah, so I think for capital markets, we're going to see more private companies go public because they see the path, hopefully that Coinbase takes, that recognizes the value in the public marketplace. On the ETF side, I think there's at least four other ETS that have been filed in the last month and a half

that are going to focus on crypto and blockchain sensitive companies. That's what we do at Block, third best performing ETF of the year, over a billion dollars in five-star rated. So, you know, we've been there, but there will be others that will take this approach. And there'll be different methodologies, weighting schemes, active index. So I think this will be a new asset class in the ETF space that will be built out beyond the two or three funds that exist today. Yeah, and I just want to point out, folks. Go ahead. Well, I was just going to simply say, because you also referenced this institutional dynamic.

and the investability of an asset class that both Matt and Christian have really emphasized, you know, the wall of money that's going to come in behind this, or the institutional investability is really the issue. And you mentioned other asset class. I know we're going to talk about cannabis in a bit. But that's really the dynamic here. Think of the institutions. And I know there's been a lot of discussion about if, you know, corporate treasury put, you know, 2% of their assets into digital tokens and digital assets, what that would mean. But, you know, that is really, I think, the dynamic and why so much attention and so much, you know, I think intrinsic value is being applied to Coinbase. Yeah.

Christian, I just want to point out to make sure the viewers understand how big this is. If we could put back up your main holdings. So, for example, I mean, and I laudgeoner, you made an effort to really go out and buy true companies, not companies that are very peripherally related to it. But Voyager Digital, for example, you own 5% of your holdings. Holdings, Galaxy Digital, that's Michael Novagrads' company, micro strategy, that's a software company, but it's essentially becoming a Bitcoin company. My point is there's not, and there's Voyager 2, Marathon Digital,

high blockchain, there's not a lot to buy. I mean, Novagrats' company, Galaxy Digital, Christian, is what, $3 billion? It's tiny compared to Coinbase that may be, again, picking a number here, $50 billion. So I laud you for your efforts to own stuff. there's just not a lot to own. That's why this thing is so extraordinary, right? Yeah, we think so. I mean, we thought there could be a pure play when we started this about three and a half years ago.

It's gotten purer and purer, and now really the opportunity, I think, could be with a Coinbase direct listing and then really the analysis of Coinbase valuation. There could be a revaluation for this whole segment higher when you see some of the numbers that come from Coinbase. You know, if Coinbase is valued between $50 and $100 million, what are some of these other? other exchanges, whether that's a DigenX or a Voyage or digital worth, should they be revalued? And I think that's the opportunity beyond just a larger group of investors adopting cryptocurrency and blockchain technology in general. Matt, I got to ask you the eternal question. Does this improve at all the chances for a Bitcoin ETF this year? And what, if anything, will? You and I have talked in the past,

there's a little bit of a political change in Washington. We have Gary Gensler now. I'm going to ask do Gensler being there improve the chances of a Bitcoin ETF, number one? And number two, the SEC laid out a very clear set of problems they had in rejecting prior Bitcoins, including the Vingalvo's applications twice. They rejected it. And they basically came out and made it very clear. We are concerned with fraud. We are concerned with custody issues.

We are concerned about the fact that a lot of it trades overseas, where we can't control any of it. Has there been any move towards curing those defects? Aside from the political change, are we any closer in addressing the SEC's issues? Yeah, we're absolutely closer, Bob. Whether we're all the way there or not, I don't know, but we're absolutely closer. Look, when the Winklevoss first filed for a Bitcoin ETF back in like 2013, there were no institutional regulated custodians. Arbitrash spreads were all over the place.

The CME Bitcoin futures market didn't exist. There weren't crypto funds that had gone through audit. The crypto industry, and we've been talking about this on the show, has gone through this massive institutional maturation. Every aspect of it has improved significantly over the past five years, over the past three years, and over the past year. Coinbase going public is just another part of that narrative. So absolutely, we're getting closer to a Bitcoin ETF.

I continue to think it's a matter of when and not if, but we're not all the way there yet. the SEC has been asking good questions, and companies like BitWise and others have been working to address those. But I do think we're getting closer, Bob. I really do. So just to highlight this, I believe the SEC acknowledged the Vanek application a couple of weeks ago. They've acknowledged, I think, wisdom trees as well, just the other day. So I think they have 45 days to accept, reject, or kick the ball down the road. My understanding is they've always had up to 240. days once they acknowledge it. Is that correct, Matt? So potentially they could kick the can down the road for a while now. But your point is regardless, you think it's much more likely this year. What about

Gensler? You didn't answer that question. Everybody seems to think Gensler is more sympathetic. Are you in that camp, too? And that... Well, what we know about Gensler is we know he's an expert on the space, right? He's taught a class at MIT on Bitcoin and blockchain. And all Bitcoin and crypto companies like Bitwise are looking for is a fair evaluation on the exact facts and circumstances of the market that exists today. So it's great that he's an expert, but really the questions that the SEC has asked over the last handful of years have been fair questions, and it's been the responsibility of companies to answer those. Like I said, fortunately, the market has matured rapidly that I think we have much better answers today than we did in the past. Does Gensler coming in help? I think it helps

in that it's a new administration, a new fresh set. of priorities and that he's an expert on the space. But I don't think there's any magic sauce. The market has to be good enough, has to be institutional enough, has to be mature enough to support an ETF before the SEC Green Lights won. But the good news is I do think we're closer to that point today than we were in the past. And I really think we're getting there. Yeah. I want to move on and talk a little bit about pot ETS because we got Tim here. Tim passed me the ETFs, dude. I was quite impressed.

I look at the rankings of ETFs and how they're doing for the year. You know, I looked at the end of the first quarter. I do the usual thing. I go and open my file and look at the best-performing ETFs. And they're all pot ETS. Those of you don't know, by the way, Tim Seymour is all in on this space.

He's long a number of names. He's the portfolio manager of a cannabis ETF. It also sits on advisory boards for cannabis. companies and for all Tim disclosures. Go to fast.c.c.com. I had to say that, Tim. They're telling me to say that about the whole thing. There's a lot to say there. There's a lot to say, Bob. Thank you.

I know. Tim's an expert on this space, so we wanted to get him in. And I was, honestly, I was quite surprised that not just your CNBS, but the, the, number of your competitors were among the most, the best performing. 50, 60% on the year so far. Can you sort of bring us up to date? Assume we're not experts on the pot business. And you see that spike in February, by the way. I want you to explain that of what happened with all the cannabis.

So bring us up to date on where we are on this. Yeah. So again, you just hit it. We'll call it cannabis. I don't mean to be pedantic here. But no, the point is that the cannabis industry, as we talked about crypto and we talked about the digital token world and the evolution of an asset class, very similar dynamics in very different asset

classes. But you're talking about dynamics that have a lot to do with a macro-legislative pathway for an asset class that allows it to be investable by traditional institutional investors and maybe in some cases well owned by retail in advance of that. So that's been the dynamic for cannabis investing for the last five years. And as you pointed out, I've been investing in the space for a long time. And I'm an emerging markets guy. My past investment history. So this is similar stuff. You know, you asked about what happened in February that really led to this spike that's put a lot of the assets higher this year. And I think it's really two things. And a lot of this actually started in early January, and some of those

maybe the seeds were sown in the November elections in Washington. But ultimately, the legislative path on Jan 6th, when we woke up in the Georgia runoff, essentially designated a blue majority in the Senate, and that was a signal for significant asset flows into the space just because the sense was that the legislative pathway for cannabis legalization would happen quickly. What does it really mean? Ultimately, again, institutions being able to invest in the sector, exchanges being able to list companies. And so while the north of the border trade five years ago or four years ago or three years ago was seemingly more interesting, investing in U.S. companies And investing in the U.S. marketplaces, it's the biggest marketplace in the world.

So, you know, that was really the movement in the asset class. And then you've had earnings profiles from companies all around the space that really, in the first quarter, you started to see those announced, and they were based upon fourth quarter numbers and 2020 numbers for cannabis coming out of COVID. Again, the profitability for the sector is the other dynamic here. So our ETF is, it's active. And again, I think that's critical in a sector that's constantly moving. And I think that, you know, the performance is a function of being active and be able to open and own all sides of the industry.

You've got a home run here, Christian. Not only are we talking about the Amplify Transformational Data sharing ETF, BLOK, but we're talking about the Amplify Seymour Cannabis ETF. You're doing pretty darn well for yourself. And your I buy, your retail ETF as a thematic tech ETF has done so. spectacular this year. You got anything else up your sleeve for 2021? Yeah, well, you know, people like Tim and frankly the Toroso team and Block performing well. We've been really pleased to partner with them. Tim's been able to produce some unbelievable alpha versus the competition this year and even last year. And we, you know, I will say we just filed on Friday for the

Amplified Cleaner Living ETF, ticker detox, ETOX. So that'll be a product we'll launch later this year. But we're really pleased to see cannabis, CNBS by Tim, be the number two best performing ETF coming into the market today. And Block is the number three best performing ETF year to date. So really blessed to have those and exciting opportunities. We think there's some great possibilities for both funds going forward. Well, hold on here. A clean living? What exactly is going to be in the clean? I love the detox. I love that. Yeah, so what exactly is going to be an index-based ETF that focuses on companies in the building and infrastructure, health, beauty, food, dining, energy, and transportation area that are producing products that are better for the either environment or better for the human body.

So companies that are focused there, they have to have about 80% of their revenue in those spaces. So it's really kind of capitalizing on this trend that people want to live more cleanly. in terms of their footprint, in terms of their health, in terms of the environment. So we think that's a trend that's going to be here to stay for quite a while. We think companies that are pivoting to that and have the majority of their revenue from that have a chance to produce an alpha. Can't you just go the other way? I want to just see the Amplified Go to Hell ETF, the symbol, die now. How about let's just go the other way.

Come on. Tim knows what I'm talking about. He's thinking exactly the same thing that I'm thinking for crying out, aren't you, Tim? Well, look, I mean, the clean living, detox, you know, lifestyle. I'm not getting involved in this. I'm a supporter. I'm buying in. I need it all. Okay.

You're not taking the bait. All right. I try to drag you in, Tim, there. You're getting to be very professional about this. It's very annoying. Now it's time to round out the conversation with some analysis and perspective to help you better understand the ETF business. This is our Markets 102 portion of the podcast. Today we'll be continuing the conversation with Matt Hogan.

from Bitwise asset management. Matt, thanks for sticking around with us. I think the most interesting thing about this Coinbase thing is what could happen as a result of the whole asset class building out a little bit. I want to focus more on sort of like, maybe you call the capital markets business side of this, the building a business to create and trade digital asset securities.

I'm talking about the whole ecosystem, the trading system, the custody system, the prime brokerage, that still can be built out to a very significant extent, it seems to me. And it seems like Coinbase can be a part of that as well. Can you address that? Yeah, Coinbase is a huge part of that, but it's just the tip of the iceberg, Bob. Right behind Coinbase, there are a whole slew of other crypto-specific pureplay companies that I think you'll see going public in the next year. And at the same time, I think you'll see traditional financial players moving into the crypto space aggressively. We saw Bank of New York

move toward the Bitcoin space. It's now providing services to a number of Bitcoin funds looking at Bitcoin custody and other services. You know, the oldest bank in America moving into crypto. So we're both going to get more pure play crypto companies

going public at multi-billion dollar valuations and traditional financial companies moving into this space. It's part of the maturation of the asset class. It's going to be good for crypto prices. It's going to be good for investors. And I'm really excited about it. It's a little confusing, though,

because we've got a lot of digital coins and digital assets, but if they're a security, they come under the securities laws here. And that's where I'm trying to figure out where does this kind of come down on either side of it. So maybe you want to sell a piece of a company, I don't know, with rewards associated with it or something like that. This has been an issue with coins in the past.

What's a security and what's not? Can you sort that out for us and where that's going to go? Yeah, it's still an issue, Bob. I mean, we know a few coins that the SES. has made relatively clear based on their current understanding are not securities, things like Bitcoin and Ethereum, some of the largest coins in the market. But as you go further down the chain in the cryptocurrency space, there are real questions about a number of smaller coins. And if they get deemed to be securities, there's a lawsuit around Ripple, for instance, that will severely

disrupt their ability to trade on places like Coinbase. So that's something the crypto industry is working through. On the other side of it, as you mentioned, there's this movement to take traditional financial assets and allow them to trade and settle in a more efficient manner on blockchain-enabled solutions, right? And so there is a merging of these two together. Look, it's ridiculous. Stocks take two days to settle. That's absurd. One of the things that blockchain can do and is enable stocks and other assets to settle almost instantaneously. So there's the crypto industry dealing with the security question. There's the traditional financial industry wrestling with the fact that blockchains are so much faster than legacy solutions and something interesting is going

to happen in the middle. And I think it's going to significantly disrupt the finance industry in ways that people aren't yet fully anticipating. Yeah, just the value for settlement to go to an instantaneous settlement potentially. I also see it in real estate where we've had these intermediaries for years, not just brokers, but people who provide insurance. or confirm that you've actually made a transaction, that could be disruptive rather easily on top of that. And, of course, just sending money anywhere. Those are like three obvious things. Settlement, real estate transactions, and sending money seem very obvious to me.

Is there progress being made and are there other obvious applications? There's so much progress being made. I think people don't wrestle with it enough, Bob. Money is the slowest moving thing in today's economy. The fastest way to get $10,000 to London is to hop on a plane with a suitcase of $100 bills. That's ridiculous. People ask all these questions, and they're surprised.

Bitcoin is up, you know, 5,000% over the last couple of years. It's up 72 million percent. People wonder how that's possible. And the reason it's possible is not because it's this new internet money that fell from the sky. The reason it's possible is because blockchain and, crypto acid-enabled blockchains allows money to exist on the internet and to move like data or move like voice or move like sound. As an example, you can send a billion dollars on the Bitcoin blockchain and it'll settle in 10 minutes. I think it's inevitable that all financial goods

are going to move into blockchain-enabled systems to facilitate settlement. I think it's absurd in today's day and age that we accept that it takes two days for stocks to settle, that we accept that when we pay our internet bill, it takes five days to get to Comcast. Blockchain, distributed ledger technology is going to change all of that. Crypto is one example. But I think people are underestimating how fast that can shift and how important that shift and that acceleration is. But it's really coming, Bob.

It's coming at an incredible pace. Yeah. It confuses me about why there is such a fight about these digital coins and whether security or not. Without getting too in the wheeze, can you, explain why there is an issue, for example, with Ripple is potentially a security while Bitcoin is is not a security? What's what are the issues with the way these coins are set up? Sure. Federal securities law is date to a debate over an Orange Grove in Florida in the 1920s,

and now they're applying that to the crypto ecosystem. So perhaps it's not surprising that it doesn't fit exactly. Look, the key question on whether it's a security or whether it's a commodity is whether it's a sort of centrally organized good designed to gauge profit, mostly by the work of others. And the issue with these new cryptocurrencies that aren't like Bitcoin is many of them aren't decentralized enough. There's still significant centralized holdings. And if there's significant centralized holdings and centralized control, it's more like a stock than it is a commodity. Bitcoin is decentralized. There's no single person or entity that's controlling it. So it's unlikely to be deemed a security. But you take a crypto asset where the founders still hold

70, 80, 90%, where they're still making most of the decisions, where they're still processing most of the transactions, that starts looking more like a security than Bitcoin does. And so the question is where all crypto assets lie on this spectrum, we're getting more and more regulatory clarity around it, but it would help the industry grow if we got even better new, you know, sort of bespoke rules for identifying this. And I think we're going to get there. We're making progress. But that's the, that's the core to be. But there will be digital assets doing security trading. I mean, overstock has a digital asset security trading on, they haven't, they have an automated trading system, don't they,

an ATS that trades? Absolutely. All this is already happening. It's just that that security asset, security tokens is a small market right now compared to the sort of the commodity tokens like Bitcoin and Ethereum. But there's already more than proof of concept that you can move securities over a blockchain and they settle much quicker than traditional securities. And there's a huge part of the market and significant venture capital funding and real technological progress to make that a reality. And like I said, I think that shift is going to happen quickly. Look, you have companies like Paxos that are already settling stocks using blockchain. in about half the speed or half the time of DTCC.

I don't think we have to assume that the current way of doing things will persist forever. You're already seeing crypto-enabled blockchains and other blockchains show that they can do this faster, cheaper, better. And I think that wave is going to develop over the next couple of years. I know you don't want to wait into the valuation of Bitcoin debate, but I get asked this question all the time about the valuation of Bitcoin. So let me ask you anyhow. So money can be a means of payment, number one, or can be a store of value?

It seems difficult to call Bitcoin a means of payment right now, given its fluctuation. But do you think we're making the progress as a store of value for Bitcoin? Is it becoming more adapted as money? Oh, it's absolutely becoming adapted as a store of value. look, mass mutual put $100 million of Bitcoin on its balance sheet. Tesla bought one and a half billion. The reason they did that is because they were concerned about fiat currency and they wanted a non-sovereign store of value. And Bitcoin is better than gold at serving that purpose. Now, your point about it being used as a payment token, look, the way money evolves historically,

it always starts as a store of value and it always has high volatility over time that volatility constricts. And you see more use in day-to-day activity. And I think that's what you'll see with Bitcoin. Volatility has come down a lot over the last 10 years. I know it's still very volatile, but it's a lot less volatile than it was five years ago or 10 years ago. By the time my kids are older, it's going to be boring as dirt. And at that point, it might be a good tool to use. Until that point, we'll start seeing it being used as a payment vehicle in edge cases, right, in niche areas where it's particularly useful. But those niches will gradually expand over time. It's been remarkable.

I absolutely think it's got a lock or near lock on being a digital version of gold. And that market alone is really significant. So I think we'll get to the money use case eventually. It's not there yet. Okay. And last question here. I got to let you weigh in on the whole debate about China, the development of the digital yuan over there. will, first off, how do you feel about a tethered dollar, tethered euro?

I've been in favor for years, and I'm surprised there hasn't been more progress on it. Number one. And number two, did you make anything of Peter Thiel's comments about, you know, Bitcoin somehow being vaguely tied to China? I didn't quite understand the reasoning there that he was using on that particular point of view, but I don't know if you want to weigh in on that. Peter Thiel's a genius, but he takes absolute stands on issues that are nuanced. Bitcoin has a lot of mining activity in China, but it's not a Chinese-controlled entity. It's decentralized around the world. It's sort of the people's money.

So I don't think there's any validity to that. I think there's a lot of validity to being concerned about a digital yuan. I'm frustrated as an American citizen that the Fed has been slow to move on this, because I think there is a real risk that digital-enabled sovereignty. currencies could threaten the dollar's role in the global economy. Look, if China or Europe gets to a digital currency first, that currency is going to be faster, it's going to settle faster, it's going to be better in most aspects than traditional currencies. And I just don't see why the U.S. would lag behind. Let's dominate this. Let's be first. Let's make our currency more

faster. What's holding the U.S. back? I think it's headline risk. I think it's people not willing to sort of scared off by an anchored view on where Bitcoin came from. Look, Bitcoin and crypto and blockchain came from this sort of anarchic past. We remember Silk Road.

We remember Mount Cox. And people dismiss it and put it in that bucket. And it's just, it's evolved so much. I think regulators are just afraid of tackling and endorsing it. I'm not quite sure why we're willing to be second in this race.

It just seems like a strategic mistake as a country. Hopefully, we're going to speed up. There's a big paper coming out of the Boston Fed this summer about a digital dollar. It's going to sort of set the agenda for where a digital dollar could go and how it could work. But I struggle to understand why we're being so slow. Well, let me know when that, as soon as you hear that coming out, we'll make sure we give a lot of press to that. It's about time, and I thoroughly agree with you that the U.S. should be a little more aggressive about this. Matt, I've taken up enough of your time.

Always appreciate you're a big thinker in this space, so it's always great to get your thoughts. Matt Hogan, everybody, from Bitwise Asset Management. And thank you for joining us on the ETF Edge podcast. InvescoQQQQQ believes new innovations create new opportunities. Here's to greater possibilities together. Learn more at Invesco.com slash QQQ. Invesco Distributors, Inc.