Apr 9, 2024

VanEck CEO Jan van Eck weighs in on bitcoin's 2024 rally and the success of spot BTC ETFs in the U.S. Plus, he explains why it's unlikely for the SEC to approve the spot Ether ETF applications in May and shares insights on competitions in the stablecoin market.

Video transcript

Transaction costs are now available at affordable rates through Solana or the so-called layer tubes because you see the transaction fees for Bitcoin and Ethereum. No one would ever use that database to build anything on. Right. My analogy for no, you know, crypto people is, would you want to fill your far at $50 you know, week after week and then one week of $600 you know, and that's effectively what high gas fees are on Ethereum. Hey, everyone. Good morning. It's Tuesday, April 9th 2024. And you're listening to Markets Daily a show where we get into the minds of some of the smartest, most experienced investors, traders, analysts, professors Ceo S who have something smart or hot to say about what's going on in the crypto markets. I am Jen Sani. Before we get into our discussion today, let's take a look at what's going on in crypto markets according to coindesk indices at 8 a.m. Eastern time. Things are looking relatively flat. Bitcoin was down about 2.5% at $70,711 either pretty flat this morning at 3629 and the coin desk 20 index at around $2650 down almost 2%. Let's get into our conversation this morning for more on the market. We are chatting to Venne Ceo Jan Wee. Thanks so much for joining the show from Paris, I believe, from a very busy Paris Blockchain week conference. Yes. Oh, my gosh. Well, we look at the markets this morning, like I said, relatively flat. You're sitting in Paris at uh Blockchain week. What's the vibe like there? What, how are people feeling about the markets? It's very busy. Uh It's an interesting mix. Uh We're the only ETF, at least that I've been able to identify. So it's kind of interesting. Uh you know, a lot of the conferences I go to follow of banks and financial trad five financial services companies. So it's a little bit nice just to be amongst, uh, you know, people really focused on crypto solutions. That's really interesting. I mean, given all of the excitement around the ETF S, you would think that there would be more ETF issuers at a conference, like the one that you're sitting at right now. Why do you think that you are the only one there? Well, first of all, a lot of the US issues don't have a presence in Europe. So we're lucky. Uh We set up our ETF business in Europe several years ago. We're approaching 10 billion in assets. Uh Well, that's the 15th largest. So, you know, we have our own family of, of users funds and as well, you know, they're, they're really ahead of crypto regulation. So we launched our Bitcoin etm over three years ago, we have 12 uh funds or ET MS that track one token or more than one token. So, uh you know, it's, it's, it's, we're, we're well ahead of where we are in the United States. In fact, last week, our E uh ETN here in Europe announced that it's gonna be uh offering staking rewards to investors and, you know, in the United States, we're not even approving any ETF. Yeah, that's really interesting. It's been uh a years long battle to get that Bitcoin ETF approved in the United States. I think there's been frustration from within the SEC. We've heard from Commissioner Hester Purse about her frustrations, frustration from institutions that were, uh wanting to launch the product. Um given that journey and given the sheer volume of inflows that we've seen in the ETF in the United States. Uh Did you expect that to happen? Like, uh how, tell me a little bit about what you're thinking, how you're feeling, how you're talking about the ETF at Van Eck now? Yeah, I know. I'm, I definitely surprised by a couple of things. Uh, first of all, I mean, we've seen a Bitcoin ETF get approved before in the United States, right? With Bitcoin Futures and that was about a billion dollars. We've seen it get approved in Canada, we've seen it get approved in Europe. We've seen it get approved in Brazil. And so it's never been kind of that quantity of money. Uh I think one of the sources is definitely retail pent up retail demand, which has been a large part of our inflows. And I know that's true for other issuers as well. And then there were, I'll call them Bitcoin Wales or investors that had Bitcoin maybe in Coinbase or in self custody. And they decided to move it into the ETF. And that's frankly one thing that we didn't appreciate, we approached the market with very competitive feeds, but we didn't waive the fees. And I think some of those people who are transferring assets wanted to fee waiver that's never worked really in ETF history, but it did work this time for those issuers. So we missed out on, on some of those allocations at least in the early days. Are you surprised that the interest is coming from retail right now? Did you expect uh a bigger interest from institutional investors? No, I mean, really, I guess if you think about it, all the, all the market value that has been created within crypto two trillion, three trillion, it's all really basically just held by individuals, right? They're so called Bitcoin Whales. It's people that got involved. I always date people in crypto from when they started buying. Uh So I'm a 2017 person, but people that got involved in 2012 or 2013 are sitting on massive gains. So, uh and that's all individuals. It's very few institutions so far that we can see that are, that are allocated. What's it gonna take to get that institutional interest, that institutional location in an ETF product in the United States? Do you think? I think it's two things. One is time. Um I mean, no, no broker dealers that we work with have really approved it for finance their financial advisors to recommend they can take orders for the ETS but not to recommend the ETF S. That's number one and number two is I think the way that financial advice works in the United States is there are a lot of model allocators. So you're not the individual advisor is not making the buy sell decision rather than hiring expert allocator to make that decision. Some allocators like a van act like Black Rock like Wisdom Tree have started to get uh regulatory approval or approval and their fund prospectuses to allocate to Bitcoin. So I think actually that will be um an interesting source of demand going forward, but that won't take time. Yeah. Where does it go from here? I feel like every month we're like, wow, record inflows. I know last month uh trading volume tripled to $111 billion. Do you expect to see that number increase in April and the month following and the month following or what, what is your friend indicator look like it flows, often follow prices, but I'm, I'm very bullish for Bitcoin a year ago. Um, you know, came out on TV and instead of pounding the table on Bitcoin and gold, uh said it was a buy for 2024. Um, our strategist Max Siegel and I both predicted all time buys uh this year and it happened pretty quickly. I I don't think the drivers are really only the big point. The fru will say that, you know, the macro factors, which we know the fed, lowering interest rates or stopping raising interest rates and then also the Bitcoin internal dynamics of um you know, the avenue coming up, you know, the one data point that might be interesting to you is that you can track the Bitcoin trades 24 7, how much of the appreciation happens during us trading hours? And even since the start of the uh Bitcoin ETF S in the US, um it's only been about a third of the appreciation has been during US hours. So like even over the weekend, right, you saw big moves of Bitcoin uh uh coming out of Asia. So I, I think, I think Bitcoin ETF S have been helpful, but I don't think they're the dominant narrative. I would say this year, even though we, people are talking about it all the time, you know, you're not the first person to tell me that on this show, Marcus Tin, founder of TED X research has said the same thing. So are you, are you maybe saying that we're putting maybe a little bit too much focus on the Bitcoin ETF when we're looking at what could be driving price movement in the markets? I think. So it's time to move on. Well, it seems like in the news, we cannot move on from this ETF approval. It was a decade coming. So I think we're gonna be talking about it and I, and I don't want to minimize it because um I mean, Van Eck, our history is in gold. We started the first Gold Fund, the United States in 1968. And there are lots of things about that just through their analogous to Bitcoin. But interesting, we, we had to invest in gold mining shares because it was illegal to own Gold bull in the United States. We couldn't own or offer a bit uh a gold bullion ETF. So I I it's non-trivial. I think an ETF basically makes it impossible to make Bitcoin illegal in the US. That's not non-trivial. I don't need to minimize it. Um I just think um yeah, there's a lot of things happening in the markets every day and the impact that this sort of way over time. Well, on, on the topic of ETF si do have to ask you about the Ether ETF si know you said that it's unlikely that we'll see an approval in May I know V has a deadline coming up in May that everyone is talking about, have you engaged with regulators at all on that or what's some of the thinking behind that's probably not gonna happen. The basic thing that happens is uh when the SEC is gonna approve uh a prospectus and that's one is they start giving you comments on it. So the Bitcoin ETF S really started moving in my mind when they called us and said, oh, here are our comments. Well, we filed uh filed uh for that before approval. We filed our S one and we haven't heard anything. So that's uh that's kind of a sign. It won't happen without getting the, you know, the disclosure documents in order. So we'll see, I think our night before um expired the same day as um A and 21 chairs uh Kathy Wood. So that's in May a little different than the lead up to the approval of that spot. Bitcoin ETF, there was some back and forth with regulators. Um They were looking for clarification and some of the filings, right? Yeah. And they were giving us a lot of details about, you know, could we take in fine creations and uh you know exactly how the creation redemption process would work like it broke the dealers to touch Bitcoin. I mean, kind of funny things. Um you know, with e you also have the tax issue around whether staking is gonna be possible, what, whether staking is possible at all? And then what the tax implications of that are that if they're available in the legal structure of an et? Well, it's like a 33 A ETF. Uh, I mean, on that note, I know that there's probably a little bit of a longer road ahead than you would like for the Ether ETF. But are you looking at any other crypto assets for an ETF in the near future? Not in the US? Um And frankly, you know, we're active investors in our, with our institutional funds, uh with different tokens and, and frankly, I think, uh both bit Bitcoin and E miss the most important uh story of 2023 which people know, but I don't think they focus on enough, which is simply that uh transaction costs are now available at affordable rates through salon or the so-called layer tubs because you see the transaction fees for Bitcoin and Ethereum. No one would ever use that database to build anything on. Right. My analogy for no, you know, crypto people is, would you want to fill your far at $50 you know, week after week and then one week of $600 you know, and that's effectively what high gas views are on Ethereum. Uh So I, you know, I don't think, I think just focusing on those two and sorry, that's where we're at. In the United States. So it's natural. But the most interesting thing happening to me right now is that you have databases that can scale, that can take a lot of users like high up time and now have predictable costs. And so real stuff can be built on these databases now. And I think that's just we're gonna see that in the next couple of years. You said not in the US. Are you looking at launching other crypto related ETF s, let's say maybe in Europe where you're sitting now, I think Europe, we, we've pretty much saturated what we want to do, which is giving investors access to the L ones and some of the bigger L twos and some of the more ho uh so I think we, we now are focusing on our actively managed uh partnerships. Um and, and trying to, yeah, that just gives us so much more flexibility and, and there's so many opportunities in the, in the market. OK? We do have to go, but I have to ask you about this because I, I love a family working together and your son launched a stablecoin recently a US dollar back stablecoin called Agora. Uh Did you have much involvement or were you advising him when he was building this? Oh, no, you know how it goes. He, he, he uh I think we discovered Bitcoin together but uh I'll give him credit for discovering it first uh that he's been that's been his career. Uh I, I do agree the Stablecoin market is very interesting. You know, there's about 200 billion in Stablecoins but 10 trillion in annual transaction volume and it's dominated by two players. And I agree that there's a lot more competition, um opportunities in the Cable Point space. And what we're gonna be doing for Gora is what uh Blackrock does for Circle, which is manage the uh the reserves and you need, I think a regulated entity and transparent accounting for uh a stable foreigner. We hope to provide that to a law. Well, you mentioned the competition there. Um and it seems like more and more stable coins are launching for different use cases and different reasons. But do you think that there is room in the market for multiple US dollar backed stablecoins or do you think we'll see consolidation at some time in the future? Listen, I think they need to have wide adoption. Uh Right. So that's, that's really the test for, let's say, uh a centralized exchange in the US, I'll leave the names out or a big fintech uh with millions of users. It's OK, but they need to get that volume of usage. Um So that's what everyone's striving for. It's a nontrivial go to market uh effort. They also need to trade. Well, I mean, it's uh you know, circle about a year ago during the financial turmoil around Silicon Valley Bank traded it down to 93 cents. So um you know, as an ETF sponsor, that's not something you want to see. So you really wanna build something that's super brood and uh and you need market makers and liquidity around it as well. So it uh it takes an ecosystem. So uh I think, yeah, I think, you know, there can be competition in the space. We're excited about it. All right. Yeah, and we are gonna wrap it up there. Thanks so much for joining the show today. Thanks John.

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