Cboe Digital Chief Legal Officer Weighs in on Spot Bitcoin ETF Excitement

Bitcoin broke above $35,000 earlier today, fueled largely by investor optimism that spot Bitcoin ETF are on the way. Joining us now to discuss is the Chief legal Officer at CBO Digital Catherine Kirkpatrick boss. Welcome to the show. Catherine. Thank you so much for having me. Well, I got to get your reaction to this market action this morning. Of course, a lot of people are saying that this is on ETF excitement, so has had involvement in some of the spot Bitcoin ETF applications. What's your reaction? Well, I think there's a lot of momentum and a lot of optimism. I think it's kind of funny because it's still truly impossible to predict when the commission is going to approve the ETF. They really have discretion. They could always choose to go back and have another issue with the applications. Uh That being said, I think there's been a lot of positive developments in crypto uh and people are getting excited. So it's nice to see additional investor engagement. You're seeing a lot of the big whales come back in and generally, I think people are ready for crypto winter to start to thaw. So we're seeing kind of an overall, you know, energy in the market and I think people are cautiously optimistic that we're going to get an approval, you know, December or January. That's what a lot of analysts are saying, December, January. Uh the conversation has really about when not, if the approval comes, is there a chance it doesn't get approved? And what, what do you think those chances are? Yeah, absolutely. And the funny thing is I'm only speaking on a very high level because I was talking to a couple other lawyers in this space. No one really knows when we're going to get approval. So you're seeing a lot of speculation, you're seeing a lot of comment, they're using best efforts like things like the fact that the commission hasn't put up significant roadblocks in disclosure review, etc, but that's really somewhat anecdotal because the commission has every right to determine the timeline of approval. There may be additional litigation if we don't see approval in January, which could cause additional complication as to the overall timeline. But again, I think people even the fact that we're here talking about when, as opposed to if that's a, that's a massive shift from even a year ago. And that is, I think one of the biggest driving forces of all of this excitement, you know, we're about a year from November 2022 when F TX imploded and the general sentiment in the industry was not good and so to see all of this trad institutional interest is really remarkable. What do you make of, did you expect to see this interest? These strad five players really pushing for products like this so soon after the industry really kind of fell? Well, it makes me extremely excited because one of the reasons I joined SBO Digital is I believe in the intersection of Trad and crypto. And we're seeing a lot of maturation around the whole crypto ecosystem as a result of the volatility of 2022. And that's absolutely essential in a nascent industry. You're also seeing a lot of easy entry points for crypto engagement. ETF S are a great example. You're seeing a lot of activity around tokenization, nfts and gaming are also obviously growing rapidly and those are easy entry points for people who otherwise aren't comfortable with, with crypto. You know, ETF S, let's wrap a crypto product in a, in a trad five product. It's a nice way for institutional investors or ultra high net worth individuals to kind of put their toe in the water without jumping in. And personally, you know, as someone who's obviously a major proponent of the whole crypto ecosystem, I'm like come in the water's warm. This is very exciting to see this level of engagement. You're seeing growth and you're seeing kind of, we're still very young, we're still very, very young in this space, but you're seeing a lot of rapid development both in the tech and also things like the legal and risk infrastructure, which is something we take really seriously on this show. We love to talk about Canada and some of these ETF products have already been approved, they're already available to Canadians and it still hasn't pushed the market in the way that some are expecting this spot, Bitcoin ETF approval in the US to push the market. Why do you think that is what you're seeing a huge discrepancy between how different regulators are treating the space? So I think it's appropriate for us regulators not to automatically look to other regulators as to how to treat a product or an industry. So I think people are mature enough to realize that development in one jurisdiction does not mean anything for another jurisdiction. You know, you're also seeing a lot of jurisdictions kind of change their mind about crypto, you know, you're seeing pro movement and then you're seeing the next day something dramatically negative as to digital assets. So I think people are observing this carefully and observing, you know, overall holistic movement. That's pro crypto in the G 20 countries, which is really encouraging, but they're smart enough to know that that really doesn't mean anything for us regulatory purposes. How are tr five players engaging with us regulators when it comes to crypto often, especially in the news that we cover, we hear about crypto native companies engaging with regulators is the experience similar for five players. That's a great question. I think for tr five players, you have entities like c we have very long good relationship with regulators. We value our relationship with regulators. Every step we take, we consider, you know, we want to preserve that relationship, we want to be a good citizen and a good player in this space. And part of that is really positioning ourselves as kind of a safe option for institutional investors. They can engage with a fully intermediate solution that looks and feels more like a traditional market. I would say that a lot of tr tr five players feel the same way in that they're not going to be quite as disruptive or experimental. Given a there are other interests. For example, if you're a public company and you have interests that have nothing to do with crypto, you don't want to upset the Apple Cart. Uh and also just strategically like, how does this affect our other business? How does this affect our current customers? Like is this a growth opportunity for us on a number of fronts? So trad I players really have to be a little bit more strategic whereas crypto natives can be a little bit more disruptive and experimental and that's appropriate our previous guests. Some of them called for more clarity from a trad by perspective, is there still more clarity needed from regulators? I think clarity, it can mean a bunch of different things look as someone in crypto, I would love the more rules and laws you can throw at me the better. But I also don't want a situation where we have legislation or rule making, implemented that where they don't have comments or consider from the ecosystem because something as simple as a definition, if it's overly broad, it can cause a lot of collateral damage to crypto. So I appreciate that everyone is at the same time right now trying to be strategic and thoughtful with things like legislation and rule making and the policy voices. They're out there working really hard on the front lines of crypto to make sure that the infrastructure that's being put in place. Now that's going to be impactful for years and years to come is productive and that's more important than just having a set of laws to work with tomorrow. You mentioned a few different aspects of the industry earlier on. Yeah, we gaming NFTS um outside of ETF S. Are there any other parts of crypto that institutional players like co are looking at or looking at experimenting in? Well, I I would definitely say tokenization because that's interesting. You could also digitization, the prospects of tokenization. You're seeing a lot of trad and even bank engagement in tokenization and experimentation because the sky is the limit for tokenization like let's talk about tokenized ETF S tokenized bonds, tokenized commodities. So that's a really interesting facet because I think you step away from all of the crypto or the alt coins, which a lot of trad fight players turn down their noses at. And you can say, well, look, it's absolutely indisputable when you look at the efficiencies of tokenized assets and the speed and the settlement efficiency. So I think we're going to see more engagement on that front, for sure. Catherine, thanks so much for joining the show this morning and good luck with the rest of the day. Thank you so much for having me. All right. That was Chief Legal Officer at SBO Digital Katherine Kirkpatrick boss.