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Speaker A: Bankless nation. It happened. The Ethereum ETF has been officially approved. Last week, all the best ETF analysts told us the ETF approval was just not happening. But then today it happened. We got a complete 180 pivot from the SEC. So David and I were on a live stream. We were just like waiting and watching... |
Speaker B: Guys, we got to go do things. |
Speaker A: I'm sorry, we have to go. You guys man the screens for us, okay? And let us know. I'll be checking my phone. Don't, don't, don't. James Safer Jamesafer Twitter we were about to log off. I can't. I can't deal with another false alarm. David, it's approved. Shut up. |
Speaker B: Let's go. Let's go. Let's fucking go. |
Speaker A: Let's fucking go, James. Get him on. Get him on. Get him on the podcast. So we did get James on the podcast shortly after that. That's actually the episode you are about to hear. And I'm sure you heard the excitement in our voices, and here's why we were excited. Number one, this clarifies Ethereum status in... |
Speaker B: Yeah, I mean, the SEC came out and just accelerated and approved every ETH filing that got in there. 19 before. So this is a 19 before order. And what that really is, it's a rule change proposal. Basically, all these exchanges, they had to do this with the bitcoin ETF's too. You have to basically submit thes... |
Speaker A: So this is the number one. It's also the big one. |
Speaker B: Right. |
Speaker A: Because it's the thing that has been, the SEC has been reluctant to say. So that's the 19 b. I think we've got some of the issuers on the screen, but I think there's maybe more. You mentioned, did you say 1719? Something like this? Got a number on the screen? |
Speaker B: No, no, no. That's all of them, plus the grayscale mini. But actually, hash decks didn't, didn't submit a 19 before, so they're not actually going to launch one. It doesn't look like. |
Speaker A: Okay, so are there more issuers, fewer issuers or is this pretty much similar to the issuers for the bitcoin ETF? |
Speaker B: There are less issuers here, and especially if you take into account. So. Right. If you include grayscale. So grayscale. Everyone's been talking about that bitcoin mini trust. I'm not sure if you guys are familiar, but especially they're spinning out ten or 15% of GBTC into the smaller ETF. It's called a gra... |
Speaker A: Low fees and such. |
Speaker B: Right, exactly. We don't know exactly the fee. I think people are saying it's going to be 15 basis points, but it's going to be the lowest fee. They're doing the same thing with ETH and they filed that in here. So that's also going to launch at some point in the near future. But essentially grayscale is goin... |
Speaker A: Okay. So when you say boom, approved, you're talking about all of those filings were just approved all at once. I think this is, this is pretty crazy because of the setup here, which is, it was like Friday of last week, it looked like none of this stuff was going to be approved. Right. Like, you didn't see a... |
Speaker B: Yeah. So early afternoon, we started hear rumblings and we were like, this can't be true, can it? Like, can this actually be happening? And, like, we were scrambling. So we know people that are like, somewhat in the process. Some people are like, outside, but kind of know what's going on. We have a lot of pe... |
Speaker A: Out there yet because it seems so tenuous, it seems so odd, so last minute. |
Speaker B: But we trusted our sources and obviously we were very. We didn't think it was going to happen. As you see, I tweeted that on Friday. Life comes at you fast. But what explains this? It's the political wins. It has to be. People are trying to say this was always the case. That is not what happened here. This i... |
Speaker A: Last vote was like three to two. Right. And Gensler was the kind of breaking tie vote because what is it? The commissioners have to vote. Each of the SEC commissioners have to have to vote, and two voted no. For the bitcoin ETF, three voted yes, and the third was Gary Gensler. So did this break a similar way... |
Speaker B: We don't know. We don't know, though. At some point we'll find out. I don't know exact timelines of that it's not on the site now from, I just checked, like, literally 3 seconds ago. But essentially the commission's five member commission, two Dems, two Republicans, and then usually whoever the president is ... |
Speaker A: So you think this was politically motivated, and that's how it seems. This is how most of the crypto community is sort of interpreting this, but it would also be odd, and I don't expect anyone at the SEC to acknowledge this, least of all Gensler, even if that's what really happened. If what really happened w... |
Speaker B: So, I mean, supposed to be is the key word you use there. Right. And I don't think it's just about the presidential election. I think there's Senate and House elections that people realize they actually care about this. I don't remember exactly who tweeted it, but it's like, I don't know if the numbers are r... |
Speaker A: I mean, James, this feels really good to a lot of people listening in the crypto community feels like in a world where we don't feel like we have much political agency, it feels like we really had an effect, like the crypto vote, the crypto community had their voice heard in DC, maybe turn the tide on this. ... |
Speaker B: One, youre 100% correct. And two, the real short answer is we have no idea. Thats a lie. We have some idea, but we really dont know. Theres not a ton of precedent here, obviously. But even if you asked me Monday morning, like, is there any way they can approve? I would have said no way. They dont have enough... |
Speaker A: So we don't quite know when exactly the pipeline will open to all of this capital, though. That said, this does feel like Ethereum. It's clearly in the territory of commodity. Now, if the SEC is even capitulating on this and approving a spot Ethereum ETF, it's going to be basically impossible for the SEC to ... |
Speaker B: Yeah, those numbers are correct. They're like 59 billion ish right now. And like, like 13 billion. |
Speaker A: Gold is like, what? Like 90 billion, something like this. Like we're in. |
Speaker B: It's around 100. It's just shy of 100, I think. |
Speaker A: Okay, so what do, what do we expect? If we've got benchmarks for bitcoin, it's just like, just launched this year and we're already at like 60 billion. Gold is 100 billion. What do we expect for Ethereum? Do, do we have any way of knowing this? |
Speaker B: Yeah, so, I mean, the two things is, one, a lot of those assets came over with GBTC, right? So GBTC came over with like 30 billion in assets when it converted. So just going on assets isn't necessarily the strongest way to do it because that's a massive head start. If we go on flows, I think that's the bette... |
Speaker A: Percent, you're talking about. |
Speaker B: Yes, percent of the flows. Yeah. So if say it was 10 billion. So we're talking, then we're talking about a billion to 2 billion, maybe, of flows that would come in over the first couple months. Um, and some people were like jumping down our throats like, that's crazy. It's going to be way higher. But I think... |
Speaker A: Um, so what does that come out to? So if we get the, the 10 billion from just like grayscale kind of converting over. What does this come out to, like about, you know, like 15 billion all told, something like that compared to bitcoin billion? |
Speaker B: Yeah, ten to 15. |
Speaker A: Probably ten to 15 in that range. Is it also fair to say that, um, tradfi and, like, the institutions understand Ethereum less, like relative to bitcoin? And what, what do you think the education campaign, it's like, that's going to happen because we saw this, we saw it with, you know, once fidelity had a bi... |
Speaker B: Yeah, so I think that's part of it. Right. There's just a less interest, I guess I would say, overall, from my experience talking with people in the tradfi world, in the institutional world, there's just less interest in ETH. Like, it's also easier to understand, like digital gold call option a store of valu... |
Speaker A: It's going to take longer for tradfi, I think, to understand Ethereum. It's got some more complexities and two more questions, James, and then I'll let you go. The part of that education process, probably the upside of that for something like Ethereum is that it gets a couple of shots at this. So first of co... |
Speaker B: So one, it probably would require another round of approval process. These do not allow staking these 19 before orders. So I believe you would have to file another. You would have to go through the SEC again to basically say that, can we use staking? They're not allowing it right now. One of my theories, eve... |
Speaker A: That's what Joe Lubin literally thought. He was like, they're coming after him as a security. And I think he might have been right about that. Before the political tides changed, I think. |
Speaker B: They were dotting their I's and crossing their t's and trying to look for a way. My theory was I never really thought they were going to call Eth security in what they were going to do as denials. I think they were going to kick it down the road. It opens up a massive can of worms with the CFTC, with the fut... |
Speaker A: Well, that's right. It does feel like the individuals can think what they want, but it sounds like they can bend to the political pressure as well. Okay, so last question for you, James, and then I'll let you go. I know you want to run through these, like, filings. Are there any other ETF's on the horizon, p... |
Speaker B: Yeah. Before I even get there, I want to hit on something that I just thought about. You asked about the security stuff. Um, these things are commodities based trust shares. So the SEC, by approving these, is explicitly saying they're not going to go after ETh itself as a security. So that's one thing I woul... |
Speaker A: That's a long time ago. That was eight years ago now, right? |
Speaker B: Yeah, yeah. And then. So what's next? Not much. I don't think anything's happening remote anytime remotely soon. You need a regulated futures market, a federally regulated futures market, or surveilled futures market before you can get an ETF. That's clear. I skimmed the document that was in there lately. So... |
Speaker A: Absolutely. Monumental week here, James, with the approval of Ethereum ETF, the second crypto asset to be approved in the US as an ETF, and clearly demarcating both bitcoin and Ethereum as not securities, which is something that we've wanted certainty from and clarity from our regulators for a very long time... |
Speaker B: I'm going to be reading these documents, which you sound so scary. |
Speaker A: It's probably not the week you thought it would be, huh? Different week? |
Speaker B: No, not at all. But I will be in consensus next week in Austin. So are you going to be there? I know. I obviously know David will be there. So David. |
Speaker A: David is scheduled to, for a boxing match, so. And I'm scheduled to. I'm going to be there from the comfort of my office, actually. Live stream that. So I'll be here. But if he's there, I'm sure he'll be there and he'll say, hello, James, this has been great. Where can folks follow you for future updates, to... |
Speaker B: Yeah, I mean, if you are the, if you're a terminal client, that's the, I have like a whole bunch of clients responding to me, so I have to reach out to them right now. But that's the fastest, easiest way and quickest where I'll reply after that. For people who don't, it would definitely be Twitter. I'm fairl... |
Speaker A: Amazing. Well, thanks so much, James. Thanks for keeping us up to date on all of this and on a successful week. Congratulations. Another ETF in the world, ETF maximalist. So it's a good thing from your perspective, and we certainly appreciate it at bankless as well. |
Speaker B: Yeah, thanks for having me. Good to see you, Ron. |
Speaker A: See you later. |
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