The Wolf Of All Streets - He Came For The Money But Stayed For The Technology | Jean-Marie Mognetti, CoinShares

Episode Date: April 18, 2023

Jean-Marie Mognetti is the Co-Founder & CEO of CoinShares, one of the leading digital assets investment firms with over $5bn AUM. In this episode Jean-Marie talks about his way into crypto, which started 10 years ago, his views on crypto regulation, DeFi, and his forecast for 2023.  https://twitter.com/jmmognetti  ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

The narrative of institutional adoption is nothing new in the crypto space, but arguably no company has been there since the beginning driving that narrative more than CoinShares, who has ETPs, electronically traded products, and has been servicing institutions from the very beginning. I talked to Jean-Marie Magnetti, the CEO of CoinShares, about what they're seeing now from institutions, what they're excited about moving forward, and of course, how much damage we saw in 2022 and what that means for regulation moving forward. CoinShares was started in Europe, correct?

CoinShares was born in Europe, yeah. But the funny stuff is like Coinshare, the company was called Global Advisors. And Global Advisors was a community hedge fund with my two business partners, Danny Masters and Russell Newton. And it was originated from New York and London. So we were on the NYMEX floor in New York, and then we were in London. And in 2008, we moved to Jersey, the old one, not the new one. Yeah. And so how have you found the difference between operating in the United States and operating in Europe, especially in context of everything that's happening now, this massive sort of

uptick in rhetoric and regulation by enforcement? You know, it's funny because the U.S. has always this kind of massive tech-driven, forward-looking kind of ethos in general. And in crypto, you have a lot of innovation which happened in the very early days in the US. Then the whole mining moved out of the US and was based in Asia mainly. And everybody was like, oh, the US are dead. Everything is happening in Asia. And overnight, the US re-qualified this kind of massive champion in mining. And nobody sees that coming at all.

And yeah, right now there's a bit of a, I would say, riff-roff in the US around who is regulating what with the CFTC and the SEC. And you can see Europe kind of almost getting the act together with Mika. The Swiss doing it pretty well. You can see Hong Kong doing some advanced stuff as well. And say, okay, well, maybe the US lost their mojo when it comes to being the innovator. But even if they're a bit like the underdog at the moment on this regulatory framework, you may see them kind of requalify themselves very quick because traditionally they have this capacity to move extremely fast and to turn the table at the speed people are not used to see. So I wouldn't sell the US too quickly.

Yeah. But you talk about moving very fast. It seems that the only thing moving very fast is everyone in crypto out of the United States. Yeah it's a it's it's a fair point uh at the same time what is very different than different uh innovation and uh or generation of innovator uh is like the crypto crowd is very i would say digital nomad like and they just don't have any possession or very little i would say say, possession in the world, physical form. So taking a laptop and move away is a very simple form of expression and voting with your feet become a reality. Everybody's much younger as well, not being ages.

So there is no real string attached through family, school and all this kind of stuff. So everything is much more transient and can move from one continent to another uh at a very heavy pace right and with regulation we're seeing a lot of that right this sort of concept of regulatory arbitrage you hinted at the fact that uh mika is likely coming soon switzerland is somewhat friendly hong kong was a bit surprising to me right and i guess that does show how fast you can pivot because China was left for dead. Yeah, you're right. But Hong Kong is very surprising. I was in the SFC office in Hong Kong in 2018, and they were already thinking about it and how to think about it from a security perspective. They were not thinking about it as a digital asset regulation framework. They were

really looking at it as how do we make it fit within our security framework? And companies like OSL, who were there very, very early on, kind of plays a game to go through the whole hoops of securities and they have now built a lovely, I would say, market advantage in this town. Yeah, I love Dave Chapman. We were in Dubai not long ago from OSL and it is incredible what they've done. I just think there was that narrative that China was finished with crypto, right? I think if you looked under the hood, maybe that wasn't the case. There was still plenty of mining, but... There is a few stuff to look at in China.

Mining is one thing. The other stuff is also what is a CNY eCNY kind of innovation framework. And we saw all the innovation in Shenzhen, all the, I would say, initiative around the Red Envelope Day, where they just airdropped effectively eCNY through different shops in different wallets. That worked extremely well. And then you get the extension of that to Silk Road. Not the old Silk Road, but the Chinese Silk Road of the influence project. And Hong Kong will remain the lab. Hong Kong is a fabulous lab to be able to push projects out.

So I think what you see, on the contrary, is the SFC moving forward and the government in Hong Kong moving forward, I think is moving forward with some form of blessing or at least I would say unsaid blessing from the central government in China. So it's quite interesting to see that something is happening there. I think you have a more optimistic view of the United States than I do, or certainly than most of my guests do, that they're likely to pivot. Do you think that-

Because I'm just a tourist. Yeah. I'm just a tourist in the U.S. It's like when you guys come to France, you have a very optimistic view of France. It's a lovely place to live. And I'm saying, I can't wait to leave. Yeah. And then you round the corner and the torches are in the BlackRock offices, right?

So, yeah, I do understand that. I just think that there's a lot of lot of i guess fear that this particular regime is not going to give us sensible regulation or guidance even the i i think this everyone wants some sort of regulation but i think more than anything they just want clarity what can we do what can't we do what are these assets right and we don't have that at all here. No, but it's going to come. And I think the CFTC taking over and trying to push this narrative is going in the right direction because if the CFTC win the argument, then it will make it very difficult to spoil the CFTC regime and then they can almost unroll the agenda. You know, to some degree, you already have this little kind of fight between agencies. If you go back to the days where they launched ETF on oil and gold,

the question was like the underlying is the community, the product is the security, so who is overseeing that? And this kind of battle already happened in the past. So I'm quite interested to see what's going to happen with this whole CFTC action right now, because that might be the start of the CFTC taking over, actually. Do you have any major concerns that they're going after so many exchanges and platforms in the United States that it could actually be debilitating for the industry? Or do you think that people will just vote with their

feet, as you said? I think two things. I think, A, people vote with their feet and that's kind of a long established principle. But more importantly, I think a lot of... When the whole debacle happened last time, I was in the US. And people were talking more about it outside of the US, not knowing what was happening, than people in the US. And the people who are operating big operations in the US, they just see it as a part of an operating expense. And they're like, okay, we're going to have to deal with that and we're going to deal with it. And it's something, the relationship to that kind of problem from an American point of view is like, okay, well, that's another business item we have to deal with, and we're going to deal with it. And it's a very different approach, I think.

You've obviously been on top of this for quite a while, right? You guys pivoted to crypto in 2013, exceptionally early. Yeah, it makes us feel very old now. Yeah, you're 10 years old in this industry, and there's like a thousand. It's like golden retriever age. You know, it's like 10 years in golden retriever. It's like that, but it's pretty much the same thing in crypto where you get old very quickly. Absolutely. So first of all, I guess let's talk about the history and why you identified this opportunity and were actually willing to go,

you know, wholesale into crypto. But then I want to know what's vastly different, if any of that premise or the reasons that you did it has changed or if it's only sort of advanced and become more amplified. I think originally we were running out of the commodity cycle. The commodity super cycle was finishing and our clients at the time were like, okay, glad, can you do fixing gun? Can you do equity?

And you know, our knowledge was in commodity and it was probably a short summary for us to think who our knowledge was in commodity. Well, we end up discovering once we returned the capital and doing a bit of work on ourselves and, you know, a bit of introspection that the reality was that we were really deep value investors and, investors and really deep, deep value investors. We invested in silver before it's even a rally. We invested in oil when it was $8 saying it would worth $100. So there was plenty of thematic we did in the past,

which was kind of this deep value thematic. And we were like, okay, well, we're going to do something which is in the same vein. And we were proposed plenty of business opportunity. And one day we heard about Bitcoin, don't even pay attention. And we heard about it six months later and said, well, maybe we should look at it because it's twice in a row, maybe it means something. We look at it and right away with our trading eyes, we kind of almost love what we see on the chart, not even knowing what the technology was about. And effectively the next 10 years of our journey

has been almost like falling more and more in love with technology and how we can transform the way we are consuming financial services, but much more big as well. So we really came into it not through the technology angle, much more through the price action and the chart, I would say, and then kind of reverse engineer in the technology. And watching last night Ethereum merging was kind of a very poetic, I would say, moment in the history.

You know, I kind of laugh about it because it takes the SEC 10 years to move the settlement time from T plus two to T plus one. And it just took Joe Lubin and his team and the whole dev of the Ethereum Foundation, you know, I would say a long couple of years to get that done. And you know, it's a, it's kind of an impressive event. Your story echoes mine. I've told it a million times. I came in 2016, but just for the price action and trading, and it took a brutal bear market for me to convince myself that I actually cared about the technology. And then I obviously got orange-pilled. But I think that there's a lot of people who came in for money and then stayed for the technology. If you talk about the disruption in financial services that's possible, have you been encouraged by what you've seen over the past

few years in that angle? How much did affect you know your view because we saw this sort of massive contagion and washout of a lot of the financial services side right which we're masquerading as crypto but you're right so two things i think i think you need to uh kind of separate a little bit who came to crypto and And I think if you look at the companies who are still alive and who are still fighting and believing in something, what true believer, you really get the pre-2017 or pre-2018, I would say crop and the post-2018 crop.

And what's happening is like 2017, get this massive draft into crypto where plenty of people are arriving and VC money is available and you get a lot of VC money in JPNIC at that point. And if you look at the business who failed and who imploded or were done for alleged fraud, all these businesses are kind of like post 2018 businesses. Like the real business who were built for the right reason on the long-term view,

not just with a simple idea and a simple mindset to make a quick buck, are still there and are still around. I always use Bitfinex as it's kind of a crazy example.

This guy built an incredible amount of infrastructure between Bitfinex, Tether, which can have these kind of pro and cons, but they're still standing and they're still there and they're still trying to do their

stuff and they don't make a lot of noise. They just keep moving and keep executing. We can have philosophical discussion about how they're doing it. But what I'm trying to say is like, if you look at business like Bitstamp, Kraken, Coinbase, who were there in the early, early days, they're the ones who just say, OK, we're going to build for the long term. We're not going to try to over stretch ourselves or accelerate and yeah sometimes makes you a bit more boring than the last kid on the blog but that's because there is reason you are trying to execute on the long term

right and i think that's a great summary of what's happened certainly with centralized platforms we've seen a lot of failures there but you mentioned some of the big names that have just continued to build and continue to innovate slowly. But what do you think of DeFi at this point? I think that we had higher hopes, obviously, for TVL and usage and development by this point. So it's funny. I was having lunch yesterday with the founder of Maple, which is one of these lending platforms on DeFi. And we were talking about how it was seeing the future and where it was seeing the innovation coming from. And what needs to be remembered is what we saw in DeFi in 2022, 2021 is not that much different than what we saw in the ICO frenzy in 2017 or 2018. You know, you get like one good ICO, which was effectively Ethereum in early 16, which starts opening the door for a ton of ICO.

And same thing in DeFi. You get a good start, a few good products in DeFi, which created a lot of copycat. And, you know, I think the history will remember that out of this first DeFi push, you get some very, very solid product which have been created. You look at something like Aave, something like Compound, something like Curve, you get something like Uniswap. You look at all this platform collectively, we're talking about Uniswap making more volume than Coinbase recently. So you look at all this kind of stuff together and you say, well, wait a second. Okay, there's all the noise, which is like the DeFi noise, all the exploit for poorly

executed contract of stuff which are pushed online too quickly, which get reverse engineered. At the same time, you get this kind of massive piece of work which are there and which are building also in the background for the long term. And, you know, kudos to all these funders who have been doing that. And, yeah, you can look at Aave and Stanley doing all the projects at the same

time and trying to do many stuff as well. But the Aave platform, which was, funny enough, used last night on the reverse prism bug to do something quite elegant again in DeFi, is showing that it is built for the long term. And it's always the same thing. It's like you can see the frenzy happening with a short-term player who are just trying to, I would say, capitalize on the trend. And you get the people who are building trying to, I would say, capitalize on the trend and you get the people who are building because they are believers.

And they are believing in the longer journey and the longer time horizon of DeFi, not just the 2019, 2022 horizon. You talked about Uniswap having more volume than Coinbase, which I find to just be an astounding statistic that we've seen of late. I think a lot of that obviously has to do with trouble with banking rails and all the regulatory things happening in the United States. But do you see a world where we really do make a wholesale move towards DeFi and centralized platforms become really diminished in importance in the background? Or do you think that there'll sort of be parallel rails for different people in different jurisdictions? I think it takes time.

I'm going to share. We always try to look at the way to research team to see how the human brain is capable of completely appreciating the power of distribution of technology because it's just not built this way. And I think things like Uniswap and Cibla Compound and Curve are really creating the rails for something new to come. But it's very difficult to perceive the full extent of it because of all the regulatory barrier or frameworks which are in place, which need to be adjusted and adapted around that. There's a big question in DeFi. The DeFi world has been striving on the absence of KYC and AML.

You have now processed which are happening on DeFi to KYC wallet and make all this kind of stuff happening. So it's going in the right direction. Once again, the regulator likes to see a fully packaged product

which is finished and polished and ready to deliver. The technology innovation style, technology driven innovation is more to ship fast and keep, I would say, reshaping and updating and upgrading all the time. So the functionality get added all the time. So we can see how we have now a DeFi environment,

which is becoming more closer and closer to what the regulator will want to see. Obviously, the regulator keeps looking at the V1, he's not going to be happy. If he looks at the V10 or V12, he's going to be, okay, this guy is already going in the right direction. So it really depends where you put your cursor on what is the requirement from a regulatory perspective and what is the regulator looking at. The speed of innovation is so quick that by the time they finish review V1, you're already at V5. It's a bit unfair to some degree to the regulator because they're not equipped to be able to assess that properly. And sometimes I think we are making ourselves a disservice as a community by not embracing the regulator more and not taking them on the journey with us. You know, at Coinshare, we have a very open book policy with regulators where we just invite them in and just say, OK, guys, that's the way we're doing it.

That's the reason why we listen to the company as well, because we wanted to be able to provide full transparency on what we're doing. And we have an open regulator sometimes, the second staff inside our business to say, we're very happy for you to send us some of your staff so we can show them what it means to run a proper, transparent, regulated business in crypto. So as you can understand the commercial and the business side of it as well when you start to write policies and procedures. It's interesting because you talk about bringing the regulator along. And I think our biggest problem was that we had the wrong person bringing the regulator along because the environment in 2022 was seemingly much more favorable when SBF was being viewed as this hero.

And he was on Capitol Hill and taking meetings with Gary Gensler. And he was the last person on earth that we wanted to see be proven a fraud because I think he embarrassed the industry. And I think he embarrassed the very legislators and regulators that we were hoping to woo to some degrees. I mean, you guys had 30-ish million dollars exposure to FDX. Feels like everybody in some way did. How much damage did Sam do, do you think, to the regulatory environment? Mike Novogratz, I talked to the other day and he said two years. He thinks he's set us back two years.

Yeah, I think it's two years. What I'm more concerned about is more bruising ego. Bruising people is fine. Bruising their ego is something else. And it's always take longer. Bruising your financial statement as a company is one thing. Bruising your ego is another. And people tend to recover much, take much longer time to recover from a bruised ego. So two years is definitely a right number. But if you look, what's happened with Temasek

Investment, they were one of the big investors in FTX and all these guys, their reputation was on the line. A lot of people invested because they saw the Temasek brand on it as well. So this kind of association is very damaging for them. And when it comes to the regulator, I think the regulator wanted to get a representative or someone they believe in to do the right thing in crypto, and you're casting mistakes happen to everybody. So I'm not going to throw them the stone and say, you guys get the wrong horses in this race.

Everybody makes mistakes. Question is like, are they going to be able to go over that mistake and restart thinking and say, okay, we need to find another champion and see, okay, who is going to be our company or set of companies to help us navigate that? Because I still believe deep down that they need to work with businesses. They need to work with them to understand how to regulate this environment. Brian Armstrong had a very good analogy a couple of months ago when he was saying, please don't write this kind of policy in a vacuum. Don't lock yourself in an ivory tower.

It's a John Locari quote saying, seeing the world from an office is a very dangerous place to be. And that's exactly what the regulator tends to do because they don't go on the ground with the businesses to understand what are the commercial rationale and how things are running. So really having the business input, I think is very, very valuable and very, very important. And again, I'm conscious we always here to just give his hands and give you support when it's needed. Yeah, I hate the sort of interpretation that because Sam was a fraud, the entire industry was a fraud.

And there are people in the government that clearly have sort of taken it that way. And I don't know if, like you said, it's because their ego is bruised. I mean, Maxine Waters, Gary Gensler, I mean, there's pictures of these people with Sam, you know, arm around them, that optics are everything in politics.

So you have to wonder if they're just sort of overcompensating to the other side to punish all of us for his misdeeds. Well, you know, the pendulum always overswings. That was my theory, bless you,

around the lack of regulation was always that if at some point someone gets hurt, the regulator is going to overreact to that damage. And if it's a big institution getting hurt, it's one thing. If it's millions of retail taxpayers getting hurt, it's another story. And I think what we are seeing right now is this over swing to the other extreme where everything is bad and it will normalize. When Mike said two years to normalize, he's probably right. He just needs a bit of time to normalize and get there. But the pendulum, it's a Soros

principle of reflexivity. It's like 17. And that's exactly what's happening here. It's like at some point, we need to be able to swallow it and to digest it. And it's going to go through the system. And eventually, we're going to come out of it stronger and in a better place. I mean, you guys have been sort of at the epicenter of innovation in this space since almost the very beginning. As you talked about in 2013, you've created exchange traded products.

You know, we haven't obviously gotten a proper ETF in the United States yet. Are there things that are being built right now that you're still as excited about as you were at the very beginning? Yeah, actually, you know, it's funny because we were watching the merge last night with the team and like realizing what a massive progression it has been.

You know, you have been, you have got so many of these kind of Ethereum killer narrative, you know, trashing Ethereum for years. And all of a sudden Ethereum make this big mature move and transformation, which kind of reshuffle the cards and say, okay, well, you better have a serious reason to kill Ethereum now because they managed to do what is an incredible transformation. People tend to forget, but I think you get the technology aspect of it, which is very important, which makes stuff slow, but you get also the fiduciary aspect. If know, if you if this merge was not working, there was a lot of Ethereum stake which was at risk.

So the way the Ethereum foundation, I would say, for sake of a better word, and with all consensus are managing that to make sure that, you know, the fiduciary element of that was fully respected and fully conserved is remarkable, is absolutely remarkable and it proves that our industry is maturing and maturing in the right direction by taking care of its stakeholders, not just like doing things for doing it and like we will figure out the consequences later. So there's plenty of stuff keeping us very excited, you know, and what can be built in the future is just like incredible. So it's just about, you know, staying, staying

awake, and not like falling asleep because of the old regulatory narrative and like zooming out and looking at the big picture. And believing you know, like it's too easy to be focused on the micro element of it because we are on a day to day basis basis looking at it. If you zoom out and you look at it, it's quite remarkable. Yeah, I think regardless of your view on proof of work versus proof of stake, you should at least intellectually be able to admit that that was one of the biggest technological maneuvers in history. It could have gone wrong in so many ways.

And we have some, in the Coinshare research team, we get so many debates about, and because we get some very Bitcoin kind of like, I would say, maximalist people in our team and we get some more

EVM specialists and you can see how the fruitful debate happened between them and like they have very good argument on both sides, you know? And what, you know, but if you go beyond that, you know, you need to be able to realize, as you said, that, you know, and what we know.

And that if you go beyond that, you know, you need to be able to realize, as you said that, you know, from a technology point of view, which has been at what I wanted, what has been achieved is fantastic, is remarkable. And I think everybody in our team, I think, is realizing that and and is seeing that there is some interesting thing there. Right. And as we're recording this, obviously, you've hinted to the fact that last night was the Shanghai update, which effectively allowed people to be able to withdraw.

We've also, you know, alongside all of this roadmap and them sort of hitting their targets here, we've seen a massive, massive move with Optimism, Arbitrum, Polygon, the Layer 2 narrative and ZK EVMs and all these things. Do you think we're seeing sort of a reconsolidation back into Ethereum as the main narrative? I mean, it seems like a lot of the shine has sort of fallen off of other Layer 1s as Ethereum has continued to innovate. Yeah, I think, well, that's not probably the house view. It's more my personal view. And like you have like, I will that's not probably the house view, it's more my personal view.

And I will be much more inclined to see a refocus on Ethereum and the layer two, which are built on Ethereum. There is a lot of things which are very interesting around the rollup. The rollup happening kind of unlocks another level of innovation and allow to just obfuscate things which were unclear before. So we're really going to another level of permission, permissionless kind of debate, which is very, very interesting. You talked about being on Aave last night, doing some sort of unique maneuvers that are only available in DeFi. So it sounds like you actually use this

stuff and you dig in pretty deep. No, no. Well, we use Harvey. We use all these kind of things, of course. But we're more watching the exploit and seeing how people were very cleverly engineering exploit around Harvey and the Prism update. It was more like an illustration that not everything was perfectly fine. There was always some little patches to make it happen and once the patch goes, everything is fine. Yeah, I understand. So I want to talk about institutions, obviously. We've sort of had the narrative of institutional adoption leading crypto upwards for as long as I've been here, certainly. And I look back at 2017

and it's laughable that we thought that that was being institutionally driven when we didn't even have custody solutions for institutions and their coins. Do you think that we are seeing still this continued uptick in interest from institutions? Do you think that 2022, talking about that, unfortunately, again, sort of dampened that excitement I mean you guys are at the forefront of this you're talking institutions I would imagine on a daily basis yeah so yeah crypto market has this kind of unique nature where it's not built down from top to bottom is built down bottom up so it starts with crypto retail and it goes up into institution which is very, kind of

a very, very different journey. And probably why it gets so much resistance from institution because that's not invented here syndrome. And, you know, if you look at the gold market, it was, I think it was a big allocation from the institution and then, you know, eventually the retail can get access, you know, and that was a very different approach. Now, what is interesting is a lot of infrastructure were missing. As you mentioned, you mentioned custody for institutions was a big piece missing of the puzzle. At CoinShare, we realized that very early on.

In 2017, I think we have $2 billion worth of crypto in our books. And we're like, okay, Xapo is shutting down, which was the only gaming town at the time. And we said, OK, well, we need to get a proper custody solution. And that's where we partnered with Ledger and the Mura and said, OK, we're going to build a custody solution for the right, to address our need, which understand what are the requirements of financial company. And that was done.

But and by doing that, we saw how institutions were starting to be interested because it was all about, okay, how do we check the very long list of, I would say, due diligence they been dumped a little bit, or the mood music has been dumped a bit by the FTX damage, and especially by the... A lot of people took a lot of, I would say, cognitive bias or validation by having big names like KOTU or whoever investing in this scene, seeing all this kind of leader being heard, kind of like slow down a little bit ambition of others. But funny enough, they were back talking to us much faster than we anticipated. So we thought it would be like an 18 months before we hear from anybody else at that point. And funny enough, come January, people were back calling and discussing and activating

calls so it's a very very um shorter cycle than we anticipated actually you talked about that being in january now it's april but has any of this been a result of the banking collapses and the large move in bitcoin i mean anecdotally i spoke with quite a few people who are saying, now we're finally seeing this flight to safety narrative for Bitcoin, and they're getting calls from unexpected people asking about that. So it's an interesting point you raise here. And I'm going to, you know, we have this massive CRM where people share notes with us, and I have quite a lot of updates with my team and and i think one of our sales guy uh which is like working very closely

with the distribution network in europe uh raised back for the first time in his entire career with coinshare and he was with us since 2016. that's the first time i get an institutional client calling me uh to discuss bitcoin and call Bitcoin like a safe even asset. I'm like, okay, well, maybe it's a one-off. And that's not going to repeat, but it feels like the banking crisis and all this kind of stuff, as you described, people say, oh, we get ETF, we get gold ETF. Where is the gold? Well, we get like 10 people in between.

And people start to figure out, say, well, how do we get closer to our asset and how do we start to remove intermediaries? In a business which has been very intermediated all the time. So the simple fact to remove a few of them is better than nothing. Do you think that we have any chance of seeing a spot ETF in the United States anytime soon? I would argue no chance with

gensler at the helm but uh that's my opinion i i think the jury's out on this one i think it will take a bit more time right i don't think it's happening overnight i think you have a i think garrigan's still have a three year and a half term left in his current term so i think he's maybe i'm wrong but uh i think you see it under a different uh sec leadership then i guess the next question is does it matter do we need it well people will argue that there is already a lot of money allocated to things like grayscale and other structures in the US, which with the lack of an ETF has done the job of an ETF. So I think it's still needed because there is a lot of tax

benefit linked to it. It's not like you can... If you look at Europe, which is more the coin share market than the US on that front, If you buy a product in Germany or in Sweden, you're buying tax-free, no capital gain, there's a lot of advantage there, especially if you hold it for a year. If you just buy Bitcoin outright, you can't really get the same thing. If you buy our stake product, we have stake Tezos and stake Solana and stake all the thing, other product. If you buy them and you get the staking reward paid out because what we did was quite innovative where we have zero management fees and we share the staking reward with the customers. If you buy that, your old tax

foreign are gone because go explain to the tax inspector now that you get a capital gain on Solana, but you also get some dividend like from Solana, which is only 3% or 5% or whatever number. So it's becoming very complicated and it's become not very tax efficient. So there is some benefits in this product. They can be out within your retirement plan, from your retirement accounts. And it's not like as simple as do we need it? It's like what is the benefit of one versus not? And I think for the usual allocator and the person who is not a professional investor, we just a self-directed investor. That's a lot of value.

And it's a little peace of mind as well, because, you know, people are big advocate of, oh, yeah, I can buy Bitcoin on myself and put it on my ledger. And I'm a big, big- Endowments aren't doing that. Pension funds aren't doing that, right? Yeah. But I'm a big supporter of ledger and we have a fantastic joint venture together. Pascal is a very close friend of mine. But at the same time, the reason we created BANG is because people were mugged on the road, traveling from one city to another, because eventually people know they were traveling with money. So the moment people are going to start traveling with the Ledger Nano or their other hardware device in their pocket,

what kind of insecurity trigger are you going to attract? And that's a point where, well, at least your savings are in the retirement plan, in a product which is a mid-field security. It's a much more interesting proposition than holding it outright. And you're right. It's interesting to show investors at scale like Endowment. It would be an interesting story to look at.

I don't know how much Harvard and Endowment own outright gold in the safe at D.P. Morgan versus how much ETF. I never look at that actually, but it would be an interesting number to look at to see how much real physical gold they have. Trey Lockerbie I would venture that most of it is paper gold. David Stein I think it's correct. Trey Lockerbie Yeah, I would venture that most of it is paper gold, right? I think it's correct. Yeah, I would think so. You talked about the fact that you offer staking services,

and we've seen sort of already SEC push back a settlement with Kraken for staking as a service. So does that concern you at all? I mean, for the products that you're offering, how do you navigate that? We're not really offering staking as a service. It's more like we are embedding the staking reward in our product. So our product are priced almost like a total return swap, i.e. the price by the reward derived from the staking is already embedded in the price, which gives it a very different

aspect than staking as a service. So we didn't go with the sticking as a service rule. We really stay on what we know, which is financial services, and find an elegant way to make it fit within a regulated financial services product. So obviously the Ethereum merge and the Shanghai fork have been the major narratives of late. One of the other ones, and as I mentioned before, you guys were obviously affected, is that FTX has recovered $7 billion-odd in assets and they're considering turning the exchange back on. What do you make of that?

Well, I think the numbers are kind of moving a bit. It's a moving target, but I think the number was like $12 to $14 billion of debt outstanding at FTX. So if they really recover 7.5 or 7.2 billion, it means not accounting for fees or whatever, but we are almost like $0.50 on the dollar versus what it was. So I think the people who are buying claim did very well for themselves because I remember seeing people buying claim for $0.02. $0.15, $0.10, $0.02. very well for themselves because I remember seeing people buying claim 15 cents, 10 cents, 2 cents, 2 cents on the dollar on

the on the day on the next day. So So I think right now all the offering, you know, we part of this massive distribution list where we see plenty of offering coming our way. I think people are buying anywhere between 15 and 30 and maybe 25 more than 30. So it's interesting to see that the bankruptcy lawyer is giving out some numbers. The fact they want to reopen the exchange is very interesting. It'll be very interesting to see what's happening there and under which jurisdiction and under which brand as well. So it's food for thought and with which capital as well, because obviously

you're going to need to get a bit of capital to prime that to get going. So it'll be interesting to see that happening and see what the next step in that direction. So I know we only have a few minutes left here. How much hope do you have that this market has actually bottomed and that we're recovering here in 2023 and things are going to continue on the way up um i think there's a few stuff which are interesting right now i think the market uh has been uh very much supported by the old banking directive as we discussed i think the market market is pricing a Fed pivot at some point or pivot at some point this year. So that's kind of what's supporting the market.

What I would like to see personally is a bit more volume. It's like I still believe the volume are very thin and very weak, which doesn't give me the extra comfort I will need as the kind of, I would say, recent price action. I would really want to see more volume and new highs, new current highs, I would say, or local highs on stronger volume will give me a bit more conviction conviction uh that uh this is like a uh a long-term thing and we are like truly entering into this new dynamic this is how we know that you're a trader right at heart we know you're a trader at heart when you're saying it's

on low volume and it doesn't count well i have a very similar theory i just think that it's the moves are more volatile because the order books are thin and the spreads are off and it's just a different market. It's a different market. The CME is concentrating a lot of volume, you know, like the FTX debacle, you know, make a lot of volume go out of the market full stop and you get a lot of concentration on Binance and all the marketplace so the the deck has changed uh dramatically on the derivative side but i would just be happier to see more volume on the spot

market you know like uh you know if you if you park the derivative market for five seconds i would want to see more volume on the spot market i i agree i agree 100 so i know you got to go where can people follow you after this conversation and check out everything that CoinShares is doing? So CoinShares website, CoinShares.com, CoinShares LinkedIn and Twitter page. And my personal Twitter page. Awesome, man. Thank you so much for all of the insight there. Really valuable. This ethereum narrative i'm hearing it everywhere now and i i like it thanks a lot scott talk soon