Jan 10, 2024

Valkyrie could be trading a spot bitcoin ETF as early as tomorrow if the U.S. Securities and Exchange Commission (SEC) green-lights the product.

Video transcript

Valrie could be trading a spot. Bitcoin ETF as early as tomorrow. That's if the SEC gives them and a handful of other hopeful asset managers, the green light joining me now to discuss this Valkyrie Ceo Leah Wall Leah. Welcome to the show, Jen. Thank you so much for having me. Happy 2024. I'm sure it's been a whirl wind for you. This January, what is going on over at Valkyrie? How are people feeling? Are you guys high fiving each other in the hallways? I Oh man, I not yet on the high fives. However, it's a lot of euphoria and that's because we actually filed our Bitcoin spot ETF back in January 2021. So we've been working on this like a lot of the other issuers for a long time and to actually get to this time period is really exciting. So definitely not a high five until we hear that official news from the SEC, but there's a lot of excitement, emotions all around a sense of relief yet or is there still a little bit of tension? How sure or not sure are you that we'll see an approval? I think that there is no certainty until we do have that certainty. Um I think most issuers myself included do feel quite confident that we will see approvals later today. However, until we see that official approval, um we can just prepare accordingly, set up the plumbing, uh get ready to go, but there is no certainty until that time and I will know that that tweet situation and the hack yesterday uh does not help Um, what's going on today? I'm sure that there's a lot happening at the SEC uh as they deal with that situation. So, um, we're not gonna celebrate until we hear that official news from the SEC. Hopefully later today. I'm glad you brought up that tweet. We spoke about it at length earlier on, in the show, we even had former SEC special counsel, Hermine Wong join and weigh in on the tweet. What were you thinking when you saw that yesterday? Did you, did you think it was real? And the announcement was out and you hadn't heard anything? Oh, I'm gonna sound obnoxious, but I did not believe it. I, I actually spent a little bit of time working in the government and it would surprise me that after 10 years, actually, 2013 is the first time that the Winkle laws, uh, officially applied for Bitcoin ETF. That after all this time, Chairman Gary Gensler would finally approve the Bitcoin ETF S via tweet seemed a little off to me. Um that's not the way that the SEC operates and it, it, the, the sec uh Twitter account, any official coms is run by typically the coms office, which is a professional group of individuals that have a lot of protocols. Now, we can talk about cybersecurity issues that were obviously at fault yesterday. However, uh it would be exceedingly surprising that the approvals would come by a tweet rather than uh us hearing about it first. So it, it surprised me indeed. All right. But, but you weren't, you didn't get duped by, by the hacker. You had an inkling that uh this, this is probably not real. I I want to turn now to another headline um that we spoke about on the show earlier today. There's a little bit of a fee war that kicked off this week between the D for an asset manager in the running here for a spot. Bitcoin ETF I know Valkyrie originally set the fee at 0.8% but then dropped it to I believe 0.49 talked to us about the decision that went into dropping it amongst all of the other, all of your other colleagues doing the same. It's a fairly unprecedented fee war to be able to see this type of action movements this close to trading day with this many issuers for a new asset class that would be trading. Uh again, with that spot level, we are constantly assessing where we should be fitting uh within that competitive landscape. Now, on the topic of competitive landscape, talk to us a little bit about how you plan to compete. You know, your fee is still higher than some of the other asset managers in the running. I believe it's one of the higher ones. Um Do you plan to drop the fee more? How are you gonna stand out if all of these applications get approved at the same time? Yeah, I think that's a good question and definitely the question that all of us issuers are thinking about in the background, not only because we need to be competitive on where we price our fees. There's a lot of um issuers that have also done these large waivers as of right now, Valkyrie has done a three month waiver. However, from a core principal perspective, how are we different? And, and that is the question to ask from a Valkyrie perspective, we believe that we are different because we are the crypto native firm in the market that knows how to run crypto products. We launched the first NASDAQ traded Bitcoin Futures ETF. In 2021 we have been running a Bitcoin miners ETF as well that has and performing very well. Uh We know what we're doing. We have great partners, we have the infrastructure in place. So, whereas there's a lot of newcomers to the market from running a crypto native uh ETF product in the United States, we think that we feel very confident in our acumen and again, knowing which partners to uh actually partner with in the market. Now backing up, we all learned that in 2022 it is necessary to understand partner risk. Valkyrie was not affected by any bad actor Celsius. Three hours capital Voyager, obviously FTX across the board, Genesis, anything Gemini earn. And that's because we choose our partners very carefully, understand due diligence. And I think that that shouldn't be, you know, underestimated the importance of that right now. Um And I hope that the rest of the issuers are looking at their counter party and partner risk because that will matter. This is a spot product. So that's something we're constantly assessing and do believe that's one of the most major points of differentiation for us. Uh Among the other issuers, I want to turn now to Ether. Everyone's talking about the potential for a spot Ether ETF if an approval does come through for the Bitcoin ETF today, the price of Ether jumped as people anticipate this. What's your outlook there? I think we have ways to go to be very transparent. It's taken us a very long time to get the sec comfortable. And as we know, I Ethereum and Bitcoin as a network and uh Bitcoin and Ether as the tokens are very different animals. Um There's a lot of points that can be made of why Ethereum is not a decentralized network. Um I know that, that may sound like a Bitcoin maximalist uh standpoint. But again, going back to the dow days and what has happened historically could be pointed out by the SEC and by others in the market um as more of an evangelist position, but does see doubt. So, whereas these products have already been trading in multiple jurisdictions globally, that does not mean that the SEC is going to write a blank check after approving Bitcoin spot. So I hope that uh the SEC starts feeling more comfortable after the spot. Products start trading. However, I think that we have a lot of work to do to ensure that they also understand the Ethereum network, how Ether operates. Uh And again, with all the network changes and all the nuances that exist within Ethereum, that they understand that from an educational perspective and again, can get comfortable, you know, Valrie is a crypto native firm. You have been in the industry for a long time. Uh The ETF is really kind of running the narrative for January. But what do you see the narrative for this industry uh developing as, as the year moves on? What do you think is going to be one of the main contributors to the next bull run? Should this ETF kick that off? It's a good question. And I think that I will have a bifurcated answer. I think that it's definitely obviously important to isolate uh what's happening from a price appreciation perspective. And potential from the ETF S being approved, the adoption that will ensue from that uh the RAAS Financial advisors, sovereign wealth pensions insurance that can now all buy this product with spot underlying incredible. But then there's also everything that's happening on the network level, on the protocol level. What's being built on lightning liquid with the developers with the having how miners are currently exploding with transaction fees and what's happening with ordinals and how that's adding to it. So from again, a development perspective, I think we we very much are looking at both and see both as a positive catalyst for 2024 that should all potentially add towards price appreciation leading towards the end of the year. If we look much more long term, the most important thing for a Cryptocurrency for network is activity and that's within the community, within the developer activity. And we've learned that time and again throughout the IC O boom and buzz throughout all these different cycles if community developers taper off the network dies. So what's interesting to us is again, looking at those on chain metrics, looking at developer activity, seeing poor developers equally engaged as they've been with new developers and young blood coming into the ecosystem building on Bitcoin as well. I think that that's all a net positive and needs to be considered alongside these wonderful vehicles that will allow greater adoption by letting folks that haven't already been able to buy the underlying, be able to buy through these ETF products, any particular chain or ecosystem that you're watching that stands out to you right now. Outside Bitcoin. Yeah. There, there actually are quite a few that we have our eyes on. Um I, I, we very much are looking at a theory. M I actually went to the Korean Blockchain week not too long ago with our lead PM and we went to a staking specific summit where the entire day this was run by a 41. They're an incredible Korean company. They put on this incredible staking summit with all the nuances of what's happening in the staking industry and liquid staking and especially what is being built on for eat staking and I was blown away. Um So I left that just excited about the staking industry, liquid staking and, and the Theorem network um as it grows and as it continues to develop and continues to work out its case on the staking situation right now. Ok, Leah, we are gonna have to wrap it there. Thanks so much for joining the show. My fingers are crossed for you. Good luck with the rest of the day. Thank you so much. Thank you again for having me. That was Valkyrie Ceo Leah Walt.

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