Episode #517: Bruno Caratori – The Bitcoin ETF is FINALLY Approved. Now What? – Meb Faber Research

Guest: Bruno Caratori is the co-founder & COO of Hashdex, a global crypto asset manager that launched the first crypto index ETF in the world. Hashdex also runs the spot Bitcoin ETF, DEFI.

Recorded: 1/10/2024  |  Run-Time: 38:43 

Summary:  In today’s episode, we’re talking all about the SEC’s recent spot Bitcoin ETF approval with someone from one of the 11 companies in the Bitcoin ETF race. And in crypto fashion, the approval actually happened halfway through our episode! Bruno talks about what a wild week it was with the fake announcement by someone who hacked the SEC’s Twitter account. Then he shares the unique structure he created for their ETF (DEFI) and some year-end crypto predictions.

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Links from the Episode:

• 1:32 – Welcome Bruno to the show
• 3:06 – The Bitcoin ETF approval
• 7:22 – The enthusiasm surrounding a Bitcoin ETF
• 9:02 – Introducing Hashdex & DEFI
• 19:22 – The significance of crypto-native companies running the Bitcoin ETF
• 30:26 – Forecasting the crypto market in 2024
• 37:19 – Delving into Bruno’s most controversial viewpoint
• 39:57 – Reflecting on Bruno’s most notable investment
• Learn more about Bruno: Hashdex; Twitter; LinkedIn; Instagram

Transcript:

Welcome Message:

Welcome to the Meb Faber Show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer:

Meb Faber is the co-founder and chief investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb:

Welcome, everybody. Fun episode today.

Our guest is Bruno Caratori, co-founder and COO of Hashdex, a global crypto asset manager. In today’s episode, we’re talking all about the SEC’s recent Spot Bitcoin ETF approvals with someone from one of the 11 companies in the Bitcoin ETF race. And, in crypto fashion. The approval actually happened halfway through our episode. Bruno talks about what a wild week it was with, a fake announcement by someone who hacked the SEC’s Twitter account, then he shares the unique structure he created for their ETF ticker, DEFI, and what his prediction is for total assets in Bitcoin ETFs by the end of the year. PS listeners, after seven years of the podcast, and tens of millions of downloads, you now don’t have to hear about my 2013 tweet saying I’d bet a sushi dinner on when the Bitcoin ETF gets approved. The day has finally come. Kanpai.

Please enjoy this episode with Bruno Caratori.

Meb:

Bruno, welcome to the show.

Bruno:

Meb, thank you so much for having me. It’s a pleasure to be here.

Meb:

Last time, we hung out having some Asian food in New York City, some drinks, talking about one day in the future where we might have some Bitcoin ETFs trading in the markets, everything going on in that world. Where do we find you now? Are you in New York City?

Bruno:

I’m in New York City, Meb, and I’ll tell you, I don’t exactly recall when that was. Things have been moving a lot faster than I ever thought they would, and I’ve been in crypto for over six years now, with Hashdex, and for several years prior to that. So, what we’re going through right now, Meb, is indeed pretty unique. We’re on the cusp of seeing some things.

Meb:

It feels like New Year’s Eve; the clock is finally getting to close to midnight. It’s been a long wait.

Long time listeners of the podcast know I have a 2013 tweet. People were talking about a Bitcoin ETF back then, and I said, “There’s no way a Bitcoin ETF is making it to market this year. I’m willing to bet anyone dinner. I prefer sushi,” and then I’ve just retweeted that every year. Until, the last year. I said, “All right, it feels like we’re close.” So, given that we’re recording this Wednesday, January 10th, which is the potential day before the Kentucky Derby starts, give us a little update, because it’s been, in the most crypto way possible, being a drama queen. We got Twitter accounts getting hacked, everyone following every filing, which I don’t think anyone has ever done in the history of filings. No one reads these.

Give us an update. What’s going on in your world?

Bruno:

I will comment on some of the things that I think have not happened before in US, and maybe even Global Capital Markets, Meb, but as we speak, this is the afternoon of January 10th, right? This is a date that folks have been waiting for a long time. This is the final decision date for one of the Spot Bitcoin ETF applications, which is ARK and 21Shares. Supposedly, the SEC is required to give a final answer to a rule change proposal that would allow, ultimately, Bitcoin ETFs.

We’re all expecting this to happen within the next few hours. What is interesting is that, with everyone, issuers, and everyone who’s following this are getting signals that the SEC will blanket approve all 12 or so ETF issuers seeking to launch a Spot Bitcoin ETF. So, they will not only call a decision on the ARK 21Shares, but, as I believe most of your audience has heard, the likes of BlackRock and Fidelity and Franklin, Invesco, they’re all in this race, too; and, there’s the odd horse in this race, which is Grayscale, which is navigating in its own track, because, in a way, they’re the folks who have caused a good amount of this.

But, this is what we’re all expecting now. I don’t think people have followed that closely the nuances of an ETF approval, what a 19b-4 is, and what making a registration statement effective is, but now, there’s almost a minute-by-minute play on what happens next, the audience has probably seen this, too, to make this entire process either more interesting or more memorable depending on how you look at it.

Yesterday, the official SEC account tweeted that the ETF had been approved, which everybody felt was really odd. We at Hashdex were having our own internal meeting about our Spot ETF application. I imagine a bunch of the issuers were going through similar processes: “What the heck is going on? Since when did SEC issues approval orders through Twitter? But, I guess this is real. How should we react to this?” And, only a few minutes later, Gary Gensler comes out saying, “The official account was compromised. No ETFs were approved,” at which point we all throw our hands in the air and we’re like, “Oh, my God, what’s happening? Even the SEC is not able to use two-factor authentication in their account and do their part in protecting investors.”

That’s how exciting and unusual the last several hours have been, Meb.

Meb:

Assuming this happens; today, tomorrow, next week; but, it seems like all signs point to it being imminent. It could happen on this podcast. After the close, which is about 10 minutes from now, we’ll check back.

What’s the significance? Give us a little step back macro view of the world. Why is everyone so excited about this? Bitcoin and crypto, ETFs and funds, and fund variants have certainly been around, not just variants in the US, not Spot, but other countries around the world have certainly been able to invest in these through traditional custodians like Coinbase and elsewhere. Why is everyone so excited about this? What’s the significance? And then, at the end of this, I want to hear the prediction, year one, Bitcoin ETF, AUM, Spot in the US end of 2024.

Bruno:

I’ll try to give you that range, but Meb, I think there’s so many layers to this significance. We discussed this a lot internally, because it informs how we talk to our clients, but even, it informs our company strategy. But, at first layer, the significance is that US investors will finally have access to a fully regulated product that gives them exposure to Spot Bitcoin.

There’s a lot of expectations around what this does for Bitcoin, for the asset class, what this does for prices, how much inflows folks can expect. Once Spot Bitcoin is packaged inside an ETF, it’s a lot easier for financial advisors to offer this to their clients. It is a lot easier for all types of investors, to holders, tax advantage, retirement accounts, even for institutional investors, who arguably could have access to the likes of Bitcoin in some other way. The truth of the matter is that they still largely prefer the well-established rails that they’re used to.

So, that’s a first level. Okay? What we think at Hashdex is more interesting, Meb, is what this unlocks, right? And, you don’t have to be following this super closely to know that the SEC has been largely hostile to crypto for over a decade now. In a lot of ways, differently from a number of jurisdictions out there, and I’m happy to comment on this, too, Hashdex has been building and launching crypto investment products across the globe. We’ve had a lot of experience, not just internal building this, but interacting with regulators.

Meb:

Why don’t you give us a quick Hashdex overview?

Bruno:

Pin that to the wall. I’ll come back to the significance question. You’re right. I would imagine it’s great for the audience to know the background that we come with.

So, we’re an asset manager, Meb, that is completely focused on crypto, so we’re dedicated exclusively to crypto. We were founded in 2018. Even though we came from humble beginnings, out of an idea on a few people’s minds, we actually started with problems that a number of us in the filing team had been seeking to solve problems that we had ourselves.

We believed in crypto as a technology. We believed in crypto as an assets class. We wanted to invest in crypto as we would invest in any other asset. We wanted our investment to have the same governance and security and risk management safeguards as we require of other investments. We wanted to have access to it in our brokerage accounts. We wanted great strategies, so, we didn’t want just to be able to buy Bitcoin; we always thought that crypto was a lot larger than Bitcoin. And so, we set out to build the company that would build the products that we wanted to buy ourselves.

Fast-forward six years, our genesis is in Brazil, even though we have a global team. But, strategically, we decided to start operations in Brazil. Brazil was a much more welcoming jurisdiction for crypto back in the day. It still is. And, after Brazil, we started to venture out into Latin America, into Europe, more recently into the US.

Meb:

Is there a regression on how volatile home country currency is? Or, maybe it’s said differently, the currency declines relative to the interest in cryptocurrencies? It seems like it should be a pretty high R-squared on that one.

Bruno:

Maybe you’re right, but that’s not the reason that Brazil was more welcoming, I think. Unexpectedly, Brazil has a highly sophisticated financial system, including regulators. This is number one.

And two, it was more welcoming, largely because, I think, the regulator chose to hear players such as Hashdex, and mainly us, that put forth the correct argument that, as long as regulators would not provide clarity to investors, they would have to be dealing with the scams that, unfortunately, we’ve all gotten too used to crypto. That’s what built the very constructive interaction that we’ve always had with the Brazilian regulators and elsewhere too, and it’s why, in Brazil, a lot earlier than anywhere else, we were able to launch not just the first Spot crypto ETF globally, Meb, but also the first multi-asset Spot crypto.

So, the product that Hashdex built and launched in Brazil back in 2021 is a huge success case in crypto-listed products. We refer to it as Hash 11. It’s the exchange ticker to that product. It’s not a Bitcoin product or an Ether product. It’s a product that tracks the NASDAQ Crypto Index. So, it’s a basket product that seeks to offer exposure to the entire crypto market.

We’ve reached over 250,000 investors globally. At the height of the market, we had worth of a billion dollars in AUM, which in crypto is quite respectable. At the moment, we have something between six and $700 million in AUM. We developed a very strong partnership with NASDAQ early on in our history, and it’s been tremendous. Not just for us, but for our investors, in that most of the products that we built are, in one way or another, in a partnership with NASDAQ, which is, of course, a major player in not the US financial markets, but in global capital markets.

And more recently, which is somewhat relevant to the conversation to US, we entered the US market with an embryo for a Spot Bitcoin product. People often don’t realize this; along with our partners at Tidal, we’re the only company that currently has a 33 Act ETF trading in the US.

Meb:

You just said a phrase that we understand, but you got to explain this for the listeners. What in God’s name does that mean?

Bruno:

Let me get into the significance of this a little.

Your audience may recall that, in the quest to bring listed crypto products to the US market, in the fall of 2021, so, this is over two years ago now, some firms were able to reach this partial success by listing Bitcoin Futures ETFs, notably ProShares, and I believe Valkyrie, VanEck, and some other firms did that. The way they did that is because they found this creative path of launching a 40 Act product, which, with some constraints, allowed them to offer Bitcoin Futures in the wrapper of an ETF to investors. But, for a number of reasons, it wasn’t the ideal structure, because you don’t get the optimal tax treatment. And, most importantly, the regulatory structure that is able to hold commodities in an ETF is a 33 Act ETF. And, that did not happen at the time.

Hashdex worked through a more elaborate process of making this happen, because our vision was that, if we can get a 33 Act ETF to hold Bitcoin Futures, we’ll be way better positioned to later make this fund get exposure to Spot. And, a 40 Act product would never be able to hold Spot Bitcoin, because a 40 Act product cannot hold commodities. It can only hold securities. So, the real quest to bring Spot Bitcoin, or Spot Crypto in general, exposure to investors needed to clear this hurdle of working with the SEC to finally launch a 33 Act product.

This is what we did throughout many months, and arguably years, and about, what now, a year and a half ago, a little over a year ago, we should say, we were able to finally list this product. And, it’s been trading at the 90. Its ticker is DEFI, and it’s a great product for American investors, as they could access, now, only ETFs of Bitcoin Futures. But, more interestingly, it is great because it’s a product that allows for the conversion. Once the commission is finally comfortable with that, which seems to be happening this evening, would allow the conversion to hold Spot Bitcoin as opposed to Bitcoin Futures.

This is the quest that we entered as a company back in 2022. We launched that product. We left it on the back burner. We didn’t think that the US market needed yet another Bitcoin Futures ETF; what they needed was a Spot Bitcoin ETF. So, along with our partners, we worked for many months to finally convince the SEC that our product, our strategy, our proposal, would offer all the necessary investor protections that we know the SEC cares about.

And, in a way, it is all happening now. We’ve been working on this product intensely even before this entire movement began. Maybe you’ll remember that there wasn’t much discussion about Spot Bitcoin ETFs until June, when, in early June of last year, of 2023, BlackRock very surprisingly filed for a Spot Bitcoin ETF. So, BlackRock is, of course, not just an important player in this space. It’s arguably the most important player in this space.

Differently from other players, they had never really taken a position. They had a trust for some of their investors, but they had never taken a position on building ETF for crypto. They did it in June. It surprised a lot of people.

A week before BlackRock filed for ETF, the SEC announced that it was suing Coinbase and Binance, in what people thought, “Oh, this is more of the debacle from FTX back in 2022.” So, BlackRock, in a way, started this wave. Hashdex, along with some other players, had been working for longer, and we worked intensely for the last several months to show to the commission that American investors could gain exposure with all the necessary investor protection that they deserve, could get exposure to Spot Bitcoin through an ETF.

Meb:

You guys are a global firm. You have a lot of arrows in the quiver. Everyone’s certainly focused on this US Spot Bitcoin ETF, because that’s where the eyeballs are. How do you think about where you guys fit in this sort of scrum? Is there a particular angle?

Because, I like to say, and I’m not trying to talk junk about some filers, but, there’s a certain amount of history and legitimacy from some firms that are crypto-native, meaning they’re doing this for reasons that they believe in. And then, you have somewhat of the opportunists, I’m not going to mention any particular names, who just simply putting out products, trying to capitalize, perhaps, on what they see as an opportunity rather than really being proponent of the concept and idea. So, it’s a little grating to me, sometimes, when I see that happen in markets, but so be it.

But, where do you feel like you guys slot in? How do you project this? And, you still owe me a 2024 US Spot ETF AUM by end of year. Go ahead and answer that one first. What’s the prediction?

Bruno:

I’ll answer that prediction last. Let me just start telling you what we think we bring differently, uniqueness, to investors. And, I hear what you’re saying. Some firms have been here for a long time, building, and other firms often feel like more tourists, or somewhat opportunistic, in that they see an opportunity for a quick revenue stream. Ultimately though, Meb, I think the investor doesn’t really care about who built this first. The investor cares about who serves them best, and that’s what we always try to keep in mind at Hashdex. We built the company with this in mind.

In fact, we built the company not only planning for the likes of BlackRock entering this, but somewhat hoping that this would happen, okay, because this would mean the evidence for adoption was really strengthening, right? And, I think we’re seeing this right now.

So, from the beginning, I think there’s two pieces in our founding beliefs, and how we built the company, that we believe make us unique.

One is the complete focus on crypto. And, I don’t mean this just as a banner to celebrate. What I mean by this is that, crypto, it still is a novel asset class. Investors need to understand what they’re investing in, how they should invest into something, how they should think about calibrating their positions, how they should think about composing the portfolios. We think that the offering of investing in crypto cannot be just the product itself. We think it’s the support in navigating the asset class. And, in fact, this has been our experience in every other market that we have stepped in since we were founded: that it doesn’t suffice to have the products. You need to be able to help investors understand the asset class, understand even the technology, which, arguably, is underneath the asset class, and make the right investment choices.

I’m happy to say that this has been paying off in a number of ways for us. We are largely dominant in the deals that we first started. In Brazil, for instance, we have over eighty-five percent of the crypto ETF market. Our market share is just tremendous. And, we’re already competing in Brazil with some of the largest local financial institutions, who, in a number of ways, has parallels to the BlackRock of here. They come in, somewhat opportunistically, because they saw their firms charting, just doing the trailblazing for them. But, at the end of the day, what really matters is not just having the products, helping investors and the advisory community in general navigate this asset class.

So, this is one aspect that makes us unique. Our crypto focus positions us a lot better to be this partner to the investors and advisors and the professional investors out there.

Secondly, I alluded to this early on, we began with the founding belief that crypto is and would be a lot larger than Bitcoin. Crypto is, in essence, this very basal fundamental technology that builds, codifies, trust in software. Whereas, in the past, if you had any system that needed trust between parties, and when you think about it, a lot of our society hinges on trust between parties, all of this was usually built on reputation, on people and institutions. And, now comes a technology that can make this happen through software. This is such a big breakthrough that we always believed, “This is going to be revolutionizing societies and economies and creating use cases for decades to come.”

And, we love Bitcoin. We certainly have a lot of respect for the role that Bitcoin has played, and been playing, in the history of crypto. Bitcoin is, of course, very top of line right now. But, we’re still confident that crypto will be a lot larger than Bitcoin.

In our case, Meb, this translates into, differently from most other folks who already have some presence in crypto, our largest and most important product is our get exposure to the home market product that follows the NASDAQ Crypto Index.

Again, our vision was, “Crypto is larger than Bitcoin. This is the founding team. We need ways to gain exposure to an entire asset class. It should be as easy for any investor to invest in crypto as an asset class as it is to get exposure to the S&P 500 or to the NASDAQ-100 index. Let’s build the IP. Let’s build the structure. Let’s build the products that will get investors this access.”

Early on, we partnered with NASDAQ. Of course, building an index in crypto is somewhat more nuanced than your typical equity index. For starters, it’s a different nature of asset. There are worries with aspects that you don’t really have to worry about in equities, for instance, so, there’s a lot of worry about security about legitimacy of protocols. There are countless stories of scams happening in crypto, so there was a lot of thought that needed to happen, that’s crypto specific, for us to be able to build an intellectual property that we built with NASDAQ.

Fortunately, we came out what we believe to be a really amazing product in the form of the NASDAQ Crypto Index. And, that index exists now for almost four years. It’s been behaving super well in all aspects. What I mean by this is it’s been resistant to all the odd things that will happen in crypto land and that won’t happen in your normal equities or bond index.

One important thing to note, because legitimacy, safety, security, are so top of mind for us, and it should be for crypto investors, the NASDAQ Crypto Index has safety and security rules built into it. So, it has very strictly eligibility requirements that basically is able to filter out a lot of the risks that normal investors would run if they were making those choices by themselves.

You probably followed the FTX story, and that’s just one example. But, before the FTX story, Terra Luna, Voyager; a lot has happened to crypto, and we’re happy to say that the NCI has remained immune to all of this throughout its history. So, there has never been a case of that index having to adjust anything because of shady assets, so, in a number of ways, has delivered to investors on the promise of not just giving them access to crypto as an investment asset class, but giving them safe access to crypto.

Meb:

Does the index largely, at this point, with Bitcoin and Ethereum being the top two, is that the main components?

Bruno:

It is. This index, as a market representation index much akin to the NASDAQ-100, the S&P-500, it is weighed by market cap. So, you’re right that both Bitcoin and Ether are very large components of that index. But, it has north of 12 assets right now. It has representation of protocols that not only do the store of value, or try to be a substitute for money, such as Bitcoin and Bitcoin Cash and the like, smart contract platforms such as Ether, such as Solana, such as Polkadot, it has protocols on the emerging field of DEFI.

As I’m sure you and your audience have heard before, one of the first applications that people are figuring out is, “Oh, if crypto disintermediates trust, there’s a lot that I can substitute on finance.”

When you think about finance, there’s so many steps to every transaction. “Why do I need a broker who needs an exchange, who needs a clearing settlement agent, which needs a custody provider?” All of this, in a way, exists to spread out risk and better control the system. But of course, it introduces cost to the system. And, when you have a technology that is able to do atomic swaps, so you no longer need someone to build the order book of an exchange and someone else to guarantee that the trade gets settled, you can build this completely through software, then you have creative entrepreneurs creating protocols such as Uniswap, SushiSwap, DXDY, and a number of other DEFI protocols out there.

The NASDAQ Crypto Index already gives investors exposure to such assets. So, there’s a lot more that investors are getting now, from investing in an index such as ours, than they would by just investing in Bitcoin.

Meb:

You got to give it to me. AUM. Year-end. 2024. Bitcoin Spot ETFs in the US.

Bruno:

Meb, I’ll tell you, the range is wide. I’ll take a risk and I will put my rear end out there with a prediction.

I think that the short term will upset investors, I think, a little. I think there’s a lot more expectation created for what can happen in the next few days, weeks, and months. So, I don’t expect this to be a multi-billion dollar launch. Maybe we’ll reach one or two billion dollars, but my sense is that there’s a lot more rumor than substance to the money that will come in.

I think it will be successful, but I think that, the next several days and weeks, we’ll get these ETFs in the order of magnitude of hundreds of millions of dollars, so, under billion for the near future.

Towards the end, it’s an exciting time for assets such as Bitcoin for a number of reasons. We think that the technology will continue to mature, it will continue to gain adoption, as more and more we see, you may have followed this, throughout history.

Back in ’21, PayPal and the likes started to offer Bitcoin for both for trading and transactions. More recently, PayPal released its own stablecoin, which is its own interesting case in crypto. What’s going to happen right now is that very important institutions will gain a lot more comfort in dealing with Bitcoin than they had even a month ago. And, as this happens, this is a tremendous catalyst for adoption, and it’s a tremendous catalyst for innovation.

As new use cases emerge, Bitcoin will tend to appreciate in value, and we expect that a lot of this will be unleashed a lot by the clarity that the SEC is providing now. The fact that large banks, who have always been largely outside of crypto and Bitcoin, will now be dealing with Bitcoin, will now be having to build their own infrastructure, will have nurturing the ecosystem, we think that’s a catalyst for more price appreciation.

We don’t see economic uncertainty, or even geopolitical uncertainty, going down in the near future. In fact, and I don’t hope for this to be the case, but our projection is that policymakers are still largely blind on what they should do with regards to controlling inflation with regards to how to get out of the quantitative easing hangover that we’ve all been in for years now. So, Bitcoin will continue to use that as a tailwind.

We think that all of this, with price appreciation, agents in the market becoming more comfortable a little more gradually with crypto and Bitcoin as an asset class, I think that, throughout 2024, we’ll get to multi-billion dollars in these ETFs. The next few days and weeks, I’m expecting hundreds of millions of dollars, but I think that by the end of the year, we may be getting to close to $10 billion in these ETFs in the US.

Meb:

It’s a good number. I think I’m right in line with you. I thought you were going low at first when you said hundreds of millions. I was like, “Man, I think, end of year, 510.”

Bruno:

I just think it would be more gradual than folks somewhat wish it will be.

Meb:

There’s not any financial advisors that are just going to haymaker in a bunch of VWAP trades day one, because those that would’ve, probably done it with Futures already, would be my assumption, but.

Bruno:

So that’s my prediction. Meb, I hope I don’t regret this. I hope I’m right. I hope I nailed this, and then I’ll use it for the rest of my career.

Meb:

So, let’s take a look forward. Assuming this is in our rear view mirror, these are trading. You got Ethereum at some point down the road. What’s on the horizon for you guys, for the industry? What are you looking forward to? Any key macro scenarios you think people should pay attention to?

What’s on the horizon now that this gigantic event, that everyone’s been waiting for, is likely behind us?

Bruno:

Here’s what I think, Meb: in the near term, you’re right. I think people will very quickly shift their attention in terms of new products, from Bitcoin to other protocols. We already have filings for Ethereum coming out. As I alluded to before, Hashdex believes in the entire assets class.

In places like Brazil, we have six ETFs that are live already; and, they are not just a flagship NCI that offers exposure to the entire market, we also have single assets products out there that are pretty meaningful inside the Bitcoin product and Ether product. But, we already have thematic in the ETFs, one in DEFI, one in Smart Contracts Platforms, one in the Metaverse. We expect players such as us to be pushing forth with that agenda, first of all.

But, secondly, and I would argue more excitedly, in our industry, Meb, there’s an irony to all finance players who are getting their hands dirty in crypto, in that the technology’s here to disrupt even the things that we do ourselves.

We at Hashdex have always been really attuned to this, and we put a lot of energy, not just in thinking, but also working through what possible solutions would be like, what the next generation of asset management will be once crypto really matures and really gains its space as a technology. There are some early solutions on this already. We would argue, and this has been a core belief of Hashdex, that, especially investing, you need to give time to regulators. So, this is a stance for us that we don’t go faster than regulation goes, because it’s in the space, as sensitive as investing, it’s not good for investors.

But, we think, if the regulators are slow, ultimately they get it that they need to move and that they need to understand a new technology and new space, and they need to think of new ways in which investors are vulnerable, when to offer protections. This will happen in the tokenization space, for instance, with stablecoins, but we think it’s speeding up now. I think what’s happening today, this week, it’s a testament to this. And, we look forward to be working with regulators to see where the next generation of asset management is. And, in a way, that broadens access to investing, in a way that makes investing cheaper, in a way that broadens access to the assets that people can invest.

So, that’s where we look to for the far out future, Meb.

Meb:

Cool. It should be exciting and eventful, to say the least.

What’s something that you sit down with friends, and you make this statement, it’s an investing belief, could be crypto related, could be not crypto related, that the vast majority of them would disagree with? So, two thirds, 75%, you say this and they say, “What? Bruno, what are you talking about? I don’t agree with that.” Anything come to mind?

Bruno:

It does, and it’s also put my rear end on the line. My life is 200% crypto these days, Meb. And, the prediction I have is that, if not Ether itself, but, Smart Contract Platforms in general will be larger than Bitcoin way sooner than people think.

I think Bitcoin will continue to play a decisive and pivotal role in crypto history, but what I expect to happen in the next crypto cycle, if you believe that crypto will continue to behave in these cycles, is that probably Ether will gain a lot more importance. And, I honestly think that the use case for Ether is a lot larger than Bitcoin, and Ether, as an investable asset, will be larger than Bitcoin within the next four years in terms of market cap.

As you may know, crypto is, even within the crypto enthusiasts, it’s a really polarizing space. A lot of people even hate me for even thinking this. Some people agree or at least see merit in the argument, but we’ll see how that’s going to play out, Meb.

Meb:

And, what’s the time horizon on that? Why is the SEC slower on Ethereum style funds on Bitcoin? Is it just size and depth?

Bruno:

They’ve been slower in Ether mainly because they’ve been so hinged on what happened in the CME Futures markets for Bitcoin and then Ether. And, in a way, it was a self-fulfilling thing, in that everybody was also pushing forth a Bitcoin agenda way more than an Ether agenda.

The truth is that the first Ethereum product ended up reaching the first regulated listed product, which… When were they? I think the 40 Act Ether products were approved last October. They ended up being approved a lot faster, as measured by the day they were first proposed, than the Bitcoin ones. So, again, I think it’s not that the SEC has been slower. It’s that participants, issuers, have had less of a focus on things other than Bitcoin, which won’t be the case going forward.

Meb:

What’s your expected timeline there? Do we have one?

Bruno:

I think we’ll see Spot Ether product being launched before the end of the year. There goes another prediction.

Meb:

There you have it. I got all packed into one year. 2024. Hard to say.

Bruno:

2024. This will have been a historical year for crypto.

Meb:

What’s been your most memorable investment? Anything come to mind? Can be crypto, doesn’t have to be. Good, bad, in between.

Bruno:

I have to stick with crypto. I wasn’t one of the earliest to get into it. My co-founder, who’s quite a character, he entered into crypto really early, in 2011. And, we’ve been friends for over 20 years. And, for years, he would hound me to invest in crypto with him. And, I was one of the people.

Meb:

Doesn’t sound like a crypto early adopter. Come on.

Bruno:

I was just telling him, “You don’t know what you’re doing, and you should not dabble your hands into this,” up until 2015 or so.

I wasn’t early, but I was still early enough, I think, to have seen it before most people. And, it’s been rewarding for me. Way less. I didn’t invest much, because I didn’t have much, Meb, but, from an intellectual perspective, it was memorable for me to have seen the light in Ether and Bitcoin way sooner than most people.

Meb:

All right, so you’re a HODL-er. Do you say HODL or HODL?

Bruno:

I buy and hold.

Meb:

Very cool, man. What’s the best places for people to find more info on all that you guys having going on? Not just in the US, but everywhere.

Bruno:

Oh, so please, I encourage everybody visit our website, follow us on Twitter. We’re really active on Twitter, but also on LinkedIn, and even Instagram. It turns out that Instagram is really big in the investing scene outside of the US. But, Twitter is the best place.

And, if you go on our website, depending on which geo you are, you’re able to learn about all the products that we have there and, I think most excitingly, subscribe to our email newsletter. That’s, I think, the most reliable way to get up to date with all the knowledge that we’re producing in crypto. We take real pride in putting a lot of energy, again, into not just building products, but educating investors, and being that partner as to navigate the asset class.

Meb:

Bruno, my friend, it’s been great catching up. Thanks so much for joining us today.

Bruno:

You’re welcome, Meb. Thank you so much for having me. A pleasure. I look forward to staying in touch. Let’s see how those predictions go a few months from now.

Meb:

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