The Pomp Podcast - #1212 Eric Balchunas & James Seyffart On BlackRock Going ALL-IN On Bitcoin

Episode Date: June 16, 2023

Eric Balchunas & James Seyffart are two ETF experts at Bloomberg. In this conversation, we break down BlackRock's announcement that they are filing for a publicly traded bitcoin trust, that essentially will give investors all of the benefits and exposure to a spot bitcoin ETF. Eric & James explain what the difference between this fund vs Grayscale's fund, potential market implications, how the regulatory environment could change, and predictions on if it will get approved & how much capital will flow into this fund if approved. ======================= Pomp writes a daily letter to over 235,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Eric Balchunas and James Seifert is the two ETF experts over at Bloomberg. Anytime anything happens with ETFs, I get them on this podcast. And so today is no different. BlackRock

announcing that they are filing for a publicly traded Bitcoin trust that essentially will give investors all of the benefits and exposures to a spot Bitcoin ETF that they have long been hoping for. Eric and James sit down and explain what is the difference between this fund and grayscales fund what are the potential market implications how is the regulatory environment possibly going to change and then at the end we all make predictions will it get approved or will it not and how much capital will flow into this fund if approved in the first 24 hours i always enjoy talking to these two and today is no different so here's my conversation with eric and james this episode is brought to you by accenture when your advertising operations fall out of sync

Everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result, less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his

personal opinion. This podcast is for informational purposes only. All right, guys. Bang, bang. I've got Eric and James here with me. Let's just jump right into the news from yesterday. So BlackRock announced a Bitcoin trust that will be publicly traded. They filed for it, still has to be approved and eventually start trading. But one of the big questions that everyone has is what are the differences between BlackRock's fund and the Grayscale Bitcoin Trust that is currently trading out in the market? Okay. I mean, I'll give the broad strokes and then James can give the fine tuning. The bottom line is this, the Grayscale fund is essentially almost like a private fund with limited shares. Those shares trade over the counter. And so it's very easy for those

limited shares to have a price that deviates from the underlying price of Bitcoin because you cannot arbitrage the two. An ETF allows for continuous creation redemptions. Thus, if the ETF price starts to deviate from the price of Bitcoin, some will arbitrate because they can only sell short the underlying and buy the ETF or vice versa. That's the beauty of ETFs. That creation redemption mechanism, as I've frequently compared it to, is the flux capacitor to use back to the future of the ETF. It's the magic sauce. GBTC does not have that magic sauce. It's essentially a closed-end fund. And that's why people do not like closed-end funds or something like GBTC, because people are okay if something goes down, up or down or whatever volatile, they just want

it to track the price. And this fund would do that, structured as it is. So that's my broad stroke on that. I don't know if James wants to dive a little deeper. Yeah. I mean, the real thing with the ETFs is that you can change the supply to meet demand, which is basically what Eric was saying. So if you imagine like a stock, right? The demand is what changes it because for the most part, obviously there's stock-based competition and other things, but for the most part, demand is what drives the price. But what you really want in a fund is you want the underlying values to be driving the price of the fund. And with GBTC, that just isn't happening. And to be clear, that's not happening with GBTC, but Grayscale is obviously they're suing the SEC

in court because they want to be able to launch an ETF. So from the base level, these trusts will be like this BlackRock trust would be extremely similar to the Grayscale trust, except they're going after the ETF approval in the same way that Grayscale is, except this trust wouldn't start off as like Eric mentioned. The way GBT started off, it was basically a private trust. There was a PPM, a private placement memorandum. It was basically private investing. You needed to be an accredited investor, a qualified purchaser, which I'm sure you know all about, Pomp. But basically, not anyone could just invest in it. And then they went through a bunch of different processes to get it listed on an exchange. BlackRock is just trying to go right from the

gun and launch an ETF. And to be clear, Grayscale has tried in the past, and even before they launched GBTC, were interested in launching an ETF, and they knew they couldn't. So they settled on this process of what they're currently doing with their trust in GBTC, because they couldn't an etf approved from the sec so both of you have used interchangeably trust an etf and i think that one of the questions that people have is uh grayscale's bitcoin trust right the word is in there is trying to convert to this kind of spot bitcoin etf and that was blocked their uh complaint is that will you approve the futures-based etf we think that there should be a spot etf and it should be kind of evenly uh the rule should be evenly applied across the market explain for

people what the difference for grayscale would be between the trust structure and the etf and then when you think of what blackrock is doing are they trying to become more like the trust or is it actually something closer to that etf structure that grayscale wants to be uh they're one of the same uh grayscale would have to convert to the same thing um let me read a quote from my first book here i'm gonna i'm just gonna do a shameless promotion on your podcast the institutional etf toolbox, I'd work my ass off on this book. If you want to not sell books, put the word institutional in the title too. But it really could just be the ETF toolbox. It's written for retail as well. Here's a quote from Will Rind, who ran the World Gold Council GLD ETF. This is

one of my books where I'm talking about grantor trust versus open-end funds. When you want to put commodities into a fund-like structure, you can't use a 40X structure, which is an open-end fund structure. You have to adopt a different structure. And the one that works for commodities is this grantor trust. It can hold a single asset and doesn't need to be diversified in a way that a 40-act mutual fund has to be. So this is the gold council guy talking. This is exactly the same scenario that this fund is going to be structured as. And just to give you some perspective, like 95% of ETF assets are in funds. They're 40-act funds. Only a small slicer in these other type of structures. That's why when we communicate to people, we try not to bring this up too much

because people can start to get worried. Like an ETN, in fact, exchange traded note, grantor trust, there's partnerships for commodities pools. There's a couple of just weird things that people just got creative in order to have like oil futures or gold and ETF. They couldn't use the 40 act. So they found these other ways, but to the person who's the end user, it's going to feel, smell, and you're going to have an experience exactly like an ETF. That's why we don't get too wonky with this, because it's unnecessary. And in our traffic light system, GLD is a green light. We're okay with this. It gets one ding for the taxation, because it's taxed as a collectible, because it's actually gold. Whereas this Bitcoin ETF,

we think might be green with zero, because I think the taxation would be even more traditional. And so, again, GLD has been around for, what, 20 years at this point. It's fine. It does the job. We think the same thing would happen with this. And that's why we're trying to make sure everybody's clear on this without getting in the weeds. But I get it. The word trust, everybody is attached to GBTC.

But it's like there are, like the word token, remember how token got a bad name after FTX? But there are good tokens. Like there's certain words that maybe get tainted, but they actually are used in other areas, and it's a completely different meaning or purpose. So, James, maybe you could help people understand. I do agree that the investor experience is very similar, right, in kind of these things. One of the questions that I had people DMing me last night about was, okay, then why is Grayscale trying to convert from the trust to the ETF? What are the advantages for Grayscale? And can now, given what BlackRock is doing, can they stay in the trust structure and just add in redemptions to kind of compete here? Or what are some of the implications of BlackRock entering the market and this idea of Grayscale trying to convert?

Yeah. So, I mean, the whole thing is like what Grayscale is really trying to do. The way to think about it is the ETF is a wrapper. So it goes around all these other structures that Eric was talking about. Some are even filed as C-corps, like companies, to invest in MLPs. There's a lot of different ways that you can do this. But I mean, at the end of the day, what Grayscale is trying to do is they need to get around the Regulation M. They need Reg M exemption. And when you file for an ETF, part of the process of getting approval to launch an ETF

is you get exempted from Regulation M. So you can do continuous creations and redemptions at the same time for a vehicle that's trading on an exchange or the over-the-counter. So basically, what Grayscale is trying to do is get Reg M exemption and launch an ETF. And that's the same thing that BlackRock is trying to do. Now, what does BlackRock mean for Grayscale? It doesn't change anything right now, right? There's nothing that's going to happen currently with Grayscale because BlackRock filed for this.

Now, what we think is BlackRock is, I mean, they are the gorilla in the room for the investment industry for ETFs. They own, they're 33% of the U.S. ETF market, right? Vanguard second at 30. So those two are the huge gorillas in the room. And when those two make moves, like they often don't miss. Right. They're very well connected. They can read regulatory tea leaves very well. So obviously they're launching for a reason. Right. They're filing. Sorry, I shouldn't say launching. They're filed for this for a very specific reason. We think so. We're on our team. I work with a few of us cover the crypto world from multiple different angles. And one of us, one of our guys, Elliot Stein, is a litigation analyst. Initially, before the Grayscale hearing started, he said Grayscale's odds of winning were 40%. After the oral arguments we heard, he umphed Grayscale's chances of winning to 70%. We think part of the reason that BlackRock is now filing for this product is because they think Grayscale is going to win their lawsuit against the SEC.

So they think it's only a matter of time. So even if let's say it's still only a 25% chance that this thing gets approved, right, or 30% chance, But BlackRock is attributing getting it out first or very, very much in line when GBC converts or whoever is able to launch an ETF that the money that they could potentially get from being first or in line with the first launches is probably worth it, even if the odds of it being approved are 30%. We haven't really figured out what the odds are. Eric and I need to discuss it because all this just happened yesterday. But I'm not saying it's greater than 50% or 70% that BlackRock is going to get this thing approved. But the fact that they're doing it means that they think the odds of approval are enough. And the benefits of being in line first are worth it for them to put this filing out there.

Are there downsides for BlackRock putting in this filing? And if it gets denied or kind of just sits there for a while, sure, maybe there's some reputation stuff. But are there any other potential downsides? So, I would say one thing is this, it's just irking the government. BlackRock, let's just be honest, some of the bigger asset managers have people who worked at the SEC who work there, and then they work there, they go to the SEC. It's a little bit of a two-way street. So it would be weird, I think, if BlackRock filed this, because what's going to happen now is everybody and their mother who was in line is going to rush back to get in line. So I already called the over-under for files by the end of the day at 6. We could have 12, 15 by the end of next week. Who knows?

If I'm an issuer, I wouldn't wait. I would get right in there. So if BlackRock launches to this day, I want to be right with them, because why wouldn't I? So the SEC is going to be really annoyed if BlackRock does this and all these filings come in. They have to go through this whole process again. It's just – it's a bad – it's an administrative burden. It's a bad look PR-wise. So why would BlackRock do that if they have so many connections and intelligence about what regulators might be thinking?

They could probably just call – some of the higher-ups there could probably just call somebody higher up there and just get – and feel them out. So that's the one question mark here. There is a downside for them, and it's to really irritate the regulators because this is going to spark a whole wave of filings. When you all look at things like fees and this redemption process, are there areas where Grayscale now has to respond in terms of not necessarily on the regulatory front, but in terms of the structure of the fund? I'm assuming BlackRock is not going to come out with a 2% fee as Grayscale has. maybe they will. And they're just like, hey, let's all just stay at 2% and no one go below that. But are there other implications here to this filing if it is approved where Grayscale will have to change some of the structuring of the fund and the experience for investors?

So based on the filing, no. There are futures ETFs that exist that charge like 60 to 80 bps or 0.8%. But Grayscale is probably not going to change anything until there's an ETF approved, right? They're they're not going to have to worry about anything changing or although I say I personally think they should have lowered the fee by now after they got so much economies of scale. But their argument would be, well, we're fighting the SEC with the money that we're earning off the trust. Right. So they're not going to have to change anything right now. It's going to everything will change when or if one of these things gets approved or they win their lawsuit. I just want to say I did talk about the lawsuit, but there's like them winning the lawsuit doesn't necessarily guarantee that the SEC is going to approve this to launch. So it completely depends on the court's language, right? So if the court says you have to approve these ETFs

because you approved the futures ETFs or what have you, then yeah, there's going to be spot Bitcoin ETFs. But we don't think that's very likely. What's more likely is that the court will basically say, like you kind of talked about in the beginning, you didn't treat like situations alike. You allowed futures and not spot. So go back, like you have to go back to the drawing board

and give a different reason for denying the spot Bitcoin ETFs or approve it basically. So it'll leave it up to the SEC. And the SEC could theoretically then just go back and give a denial or what they call a disapproval letter for different reasons. So that's that's a distinct possibility. Obviously, my guess is that BlackRock or some people at BlackRock probably don't think that's going to happen. And the other thing I would say is like on the relationships, Gensler, for the most part around the industry, even with some people around the SEC, is not well liked. So he does not have a good reputation, even in the traditional finance community. So that's another thing I would say as far as like the relationships go between TradFi companies and the SEC.

Let me just talk about the fee real quick. This is a very important point that one of the interesting facets here is that Coinbase will be the custodian and they're going to get a little slice of that expense ratio and that's good for them. But they could lose business. the whole crypto exchange world should fear this because this ETF will trade at one basis point a day or like you could trade it for one basis point, right? Some are 40, 50, some are even high as 100 basis points to do a trade. The fee, the expense ratio, in my opinion, if I had to guess, BlackRock would probably price this at 65. That's my guess. That would be like one-fourth the cost almost of Grayscale or one-third of the cost. That's compelling. But then the other ones

are going to come in and very soon there'll be one at 20. There's going to be an instant fee war over this space. So over time, over the first year of these on the market, I say you get down to under 30. So you have something that's under 30 basis points a year and it only charges one basis point to trade. It's going to actually, I think, produce a lot of cost pressure on the crypto exchanges and it will steal some business. But that's okay. This is a capitalist market. It's competition. But ETFs have a habit of peeling away customers from other places, be it individual stock traders, mutual funds, derivatives. They're a very compelling value proposition. So that's why this is such a big deal. This is almost like an alternative to using an exchange.

Talk a little bit as to what you all believe would happen when it does get approved, right? We've seen some of these other Bitcoin related ETFs go out. I think they were some of the fastest growing to a billion dollars in assets. We've obviously seen GBTC at one point, I think it was like 40, 50, 60 billion dollars worth of assets, you know, some huge kind of tens of billions of dollars. Is the thought process like BlackRock launches this thing and it goes to 100 billion in assets and everyone's like, duh, of course that was going to happen? Or is it something where we've seen other ETFs that have gotten launched in maybe other jurisdictions and, you know, they've kind of floundered a little bit. They've gotten maybe tens of millions, hundreds of millions of dollars, but they haven't really broken through like GBTC.

What do you all think would happen here? This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify.

Yeah. So one thing I would say is that like first mover advantage here is definitely critical. So like when we saw the first spot Bitcoin ETF launch in Canada, it beat the others by one day and it is by far, by far and away blew away its competitors and it still does in volume. Some others have caught up in assets, but the volume and trading metrics on the BTCC, I think, is the Purpose Trust in Canada, Purpose ETF. It blows it away, right? And then we also saw the same thing with BITO, which is the Bitcoin Futures ETF that you were referencing. It launched first from ProShares, and it blew everything else away despite others launching right after, which is why Eric was talking about we're going to see a ton of other people file immediately on the back of this. So Grayscale, a few weeks ago, May 9th, filed for three ETFs.

one of them was uh it would invest in international spot bitcoin etfs and other things which we can talk about if you want but the other one of the main ones was an ethereum futures etf and literally the next day in a 13-minute window right after the market closed we saw three issuers file for an ethereum futures etf because they don't want to be late if they're going to be late we're going we want to keep it at only a day because they don't want to lose that first move of energy they want to be competitive so that's why we think a lot of people are are going to file to to get into this to get into this race and get one out and the other thing i i do want to point out is there's only one active uh spot bitcoin etf filing and that's from 21 shares in partnership with arc

investment so that's the only etf spot bitcoin etf that has been filed right now so um that that technically would be in front of line of of blackrock and then you also have the situation with grayscale and suing the sec but the traditional 19b4 process for approving spot Bitcoin ETF, only one issuer right now is active, and that's 21 shares in ARK. And now BlackRock, when they filed their 19 before filing, which typically comes a week or two after the prospectus that we saw, we'll get more information there too. Let me add to that real quick. This is an important point because let's say, I don't know, VanEck, Bitwise, let's say one of these was out first. I don't know how much assets it would get right off the bat because Bitcoin has

come back this year and the crypto miners stocks have come back, but no one's kind of bought back into that in terms of the ETFs. There hasn't been, there's been a lack of FOMO like there was a few years ago. And if you look at the Canadian Bitcoin ETFs, they haven't really taken any money this year. I think there's a little fatigue from after what happened with FTX and the downturn. I think the local hardcore people are still owning their Bitcoin, but I think the ETF people who you might call more touristy, they're not biting this time around. That said, if Bitcoin continues to hang around like it normally does, goes up, has a nice run, and you have a BlackRock label, this is important because we just wrote a note comparing BlackRock and Vanguard ETFs to the IBM

stock in the 80s. For a broker, it used to be you could never get fired for buying IBM for your client. It's just an unfireable way to invest. Now, I think you buy BlackRock or Vanguard ETFs, it's just hard for your client to have a problem with you. And so the advisor community is going to feel much more comfortable having with that iShares label on it. It's huge. I can't understate how important that is for a lot of advisors who fear career risk. So a BlackRock one is in a different league than just a spot one. I think that actually elevates it. And I think an iShares one would even move the needle to creating some FOMO. Whereas if, I don't know, a VanEck or, like I said, one of the smaller issuers launched a spot today, I'm not sure it would crush it right

the bat i think because of this lack of fomo would take a while i think blackrock has more of an immediate effect and for those i don't know james you agree with that no i i agree with that i wouldn't disagree with any of it i do think though like there's been a lack of fomo but i think the crypto crowd specifically seeing um a bitcoin etf launch in the us that would be a very big deal like it's not like any other market where the largest market by far so i think there might be some biting but i don't you're right i don't think it would be the same like we saw with bitto which which was in the, literally, that was at the peak of the Bitcoin and crypto rally in 2021. So that coincided with the rally and part of the reason why it saw so much money come in.

When you all think about this approval process, there's going to be a lot of people who don't understand kind of this line that you're talking about. Is it literally like one in, one out? Hey, the first person in line, they get approved first, second person in line, they get approved second. And if I put my application in and then you put one in the next day, there's a one day delay in terms of the approval process? Or like, how does this work in terms of this line? And how much of a advantage does ARK or others have even over the BlackRock's given kind of this line? Yeah. So essentially, yeah, you file first, you get to launch first for the most part. So there's two ways to file. The futures ETFs go under the 1940 Act and like they have a different

process. And typically after file, I believe it's just 75 days. Eric can correct me if I'm wrong. but the way that these have to go is an older school way that has always been around for very long time. It's called the 19 before process. And this is where it comes about. You've probably seen a bunch of like articles and things where it says, oh, they, the SEC has delayed their decision on like spot Bitcoin ETFs, right? So basically the way it is, you file 45 days and the SEC has to prove, deny or delay. And it goes 45 days, 45 days, 90 days, 60 days. And at the end of those, that final 60 day period, they either have to prove or deny. They can't delay anymore so like it's that 240 day period so it's basically it is a timeline right because once you

file that 19 before application which we're expecting blackrock to do very soon like i said there's literally a ticking clock of when the sec needs to reply now theoretically if grayscale wins their lawsuit or there's something going the sec where they've basically decided we're not going to fight bitcoin anymore i mean i then theoretically it could be after that 45 day period that they approve. I would argue that's unlikely because they've waited 240 days and denied everything so far. But like they could do at any time in those periods, the 45 days and then 90 days after that and 45 days after that, things like that, they can theoretically approve it. But yes, there's literally a timeline. Theoretically, the SEC can move things up. They've denied earlier than the

final decision date. So they have to make a decision and officially delay or approve or an eye over that time period. But yeah, it's literally just like waiting in a conga line, which we've written in the past, we disagree with. Like if you're going to approve a spot Bitcoin ETF, just let a whole bunch launch at once, like a race, like just giving someone a first mover manager is literally like a multi hundred million dollar benefit potentially over the long run. And the other thing I do want to point out is I mentioned how futures are filed on the 40 Act. There is one ETF that's under the 1933 Act, which is what the spot Bitcoin ETFs would launch under. It's from Hashtex, which is another crypto company.

They're based out of Brazil for the most part, but they have a futures ETF in the US. And because it's a 33-act product, the possibility that if a futures ETF, I mean, a spot Bitcoin ETF gets approved, I think in their language of their document and the way that they're structured, they could theoretically immediately start investing in Bitcoin. So while it wouldn't be the first to get approved and be a full-blown futures, I mean, spot Bitcoin ETF. The ticker from the ETF from Hashtex, which is tickered DeFi, I think has the potential to be the first ETF in the US holding spot Bitcoin, because as soon as that approval comes out, theoretically, they can submit a change to their prospectus and then start investing in spot

Bitcoin. But that's just a pet theory of mine. Yeah, this is fascinating. Before I let you guys go, I need predictions. Does it get approved or does it not? And if it gets approved, what is the 24-hour capital inflow. Remitly knows if you live a long-distance lifestyle, you've probably developed a few unexpected strengths, like instantly converting time zones. So when a text says, let's talk after dinner in Mumbai, you know they really mean during breakfast in Toronto.

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You can go first, Eric. I feel like you're much better at guesses. Good question. So I've already bet a steak dinner with Todd Rosenbluth. It will get approved. Now, my record with him is three and two. So do with that what you will. I'm not betting on the SEC changing.

I'm just betting on BlackRock knowing something. That's what I'm betting on. I'm betting on BlackRock is not a firm that plays around. and they are, they have a lot of intelligence knowledge and I just, they don't want to get rejected. I mean, that's just not what they do. Like I said, I've just tweeted out their record of getting ETF filings approved is 575 and one. Um, that's a pretty good record. So I'm going to bet on that record and bet on BlackRock. And I think there'll be approval by the end of the year. Um, what was that record? You said it's 570 and one they've had. Yeah. They've had 575 ETFs

approved and only one rejected and why did they have that one rejected do we know it it was an active non-transparent structure and at the time the sec was still wrestling with these this new structure that would hide the holdings and they weren't quite ready for it um but they exist now they they yeah they do exist now so it wasn't but at the time they did they did get rejected on that so like i said it's possible if i had to give you a percentage i'd probably go 50 50 but i decided to take the bet with todd just because i like having dinner with him anyway and i like to see him squirm if there's news i like to troll him and so we'll have a good time over the next six months but i'd say 50 50 um i think blackrock just changes so many dynamics of this i was stunned

shocked i still am and this will be this has sort of taken over my brain um i had so many other things going on i'm actually going on vacation next week too but this is a huge deal um so that that's where and the amount of money would take in i don't see it breaking gld's record of a billion in three days. Well, it's Biddo's record. Biddo did it in two days. That's right. Biddo did it. By the way, Biddo tracks the futures. It actually tracks spot really well. People were all worried the futures wouldn't do a good job, but I got to be honest, it's very good. If you want Bitcoin exposure and ETF, Biddo is pretty, it's fine. I get it though. People like the physical thing. They want the stuff stored. They want to know where it is and they want it to track perfectly.

But Biddo is underrated, I thought. I thought it did a fine job over the past two years or so doing it. I'd say maybe in the first day, a couple hundred million, and then a billion by the end of the week, and then maybe 10 billion in six months or so. Something like that would make sense to me, just because there is going to be a bunch of unmet demand of people who are just waiting for an ETF. They'll move over quickly. We'll call those already waiting people. The question is beyond that, how much organic interest is there? It might not be as much as there was two, three years ago when we predicted this would be such a big deal simply because in the meantime, we've had a bear market and FTX. James? Yeah. So I also think it's going to be

approved. So that I talked about those 240 days, depending on when BlackRock submits their 19B4 application, the earliest it probably could happen is sometime in late February, probably very late February, early March, where it would be the ultimate end deadline. But I do think it's, I think it's going to be approved. I can't, BlackRock, I can't think of any other issuer that if they filed, that it would change my thesis on whether or not we're going to get a spot Bitcoin ETF. BlackRock is like as strong as it gets for an indicator on where the SEC is leaning. The other thing I'm going to say is obviously kind of unrelated to the ETF side of things,

Coinbase is being sued by the SEC for operating unlicensed securities exchange, all of these things, right? But one thing that's not up for question here is Bitcoin. And I kind of wonder if Gary and the SEC are like, we already said that Bitcoin is not a security. We know it's a commodity. We're not even arguing that while they're arguing Ether, which I think is also ridiculous. But that's a different story. They might just be like, we'll just let this ETF, the Bitcoin ETF thing go because we need to go after all these other situations with these other level ones like Solana and what have you.

Like, so they're going after Coinbase for those other things and they're not really worried about Bitcoin. So I wouldn't be surprised if there might be some changing of their of the tune within the SEC, because I really don't understand the reasoning behind like continuing to not deny these things. So, yeah. And then as far as money goes, I don't know if it would break the biddo's record of a billion in two days. I don't think it would potentially. But I mean, it's not a crazy thing to think. I this thing will get billions of dollars within the first six months, I would guess, assuming Bitcoin doesn't half in price again. but uh that's a that's a different situation i'm i'm going to uh join you guys and as we know predictions are stupid and we're never right but i think yeah i think it gets a billion dollars in the first day all right and it's just because they just have to if anything i shares yeah yeah

you're right distribution right like like i i think it's just uh given my very limited knowledge of the etf world if you said to me like what is the thing that could do it in 24 hours it kind of feels like it's got to be something that isn't traditional asset right so you get bitcoin it's got to be with a large issuer like a black rock and then it's got to be something that uh people are uh talking about in the media and you need that media attention and you know just given yesterday just the uh prospectus alone uh everyone is yelling and screaming about it on the internet and um it just feels like if something was going to do it why not this yeah i tend to agree especially if Bitcoin is going on a run or in a bull market like we saw in late 2021. I think that

the billion in 24 hours is easily doable. But obviously, in the current environment right now with how people are looking at crypto and the way flows are going into ETFs like this, I would say it's kind of unlikely. But again, the earliest this thing would get approved is likely in like 45 days, the absolute earliest from when it files the 19B4, I believe. So you're likely waiting longer than that. So there's plenty of time period between now and the beginning of 2024 that things could change in the underlying Bitcoin market. Also, a billion dollars isn't like when GLD did it. That was in 2004 when a billion dollars was like a billion dollars. It's a little less impressive. So yeah, I hear you. A billion

dollars wouldn't surprise me at all. Let's just say this. It's going to be a big, liquid, low cost to trade and likely over time low cost area etfs are one of the most disruptive forces out there so if i'm in the crypto world and i see this especially if i work in exchange i am starting to think of plans to compete with the etf eric james you guys are the etf experts whenever something with an etf happens there's only two people in the world that i say hey what the hell is going on i appreciate both of you jumping out so quickly and talking through this it's going to be fascinating to watch. And I think part of what has everyone intellectually curious about it

is not just the fund structure and kind of grayscale, but also there's the regulatory kind of environment. Then you get this game between the exchanges and the ETFs and kind of where's Wall Street going to actually enter into the market. The macro investors, I think, is one of the really interesting things. If we could go back and we had the spot Bitcoin ETFs in the market where they've been buying on exchanges or OTC or they've just been buying the ETF,

Like there's a lot of implications here that I think will play out over the next couple of months. So I appreciate you guys and I'll definitely have you back as some of that develops. Yeah. Anytime. Always fun chatting with you. Where can we send people to find all your great work? I would say our Twitter is where you get a lot of our quick takes for free. We also have a podcast called trillions and we have,

there's a TV show ETF IQ on Bloomberg TV. All those are free ways to get us. If you have a terminal Bloomberg terminal, You can find us on B-I-E-T-F-Go. James, watch this. Hey, Eric, you want to hold up your book one more time just for the people's sake? Sure. Actually, hold up both books. He has two.

I'm going to hold both. Look at that. Yeah, there you go. This is great for ETF knowledge. This is great for how we got here, the whole passive thing. So anyway, please, Amazon.com. All right, guys. Thank you very much.

We'll talk soon. All right, see you. Bye. We'll be right back.