The Bitcoin ETF: What Everyone Missed | Michael Sonnenshein, Grayscale CEO
In today's episode Jason is joined by Michael Sonnenshein, CEO of Grayscale Investments, to discuss the long-awaited approval of a Bitcoin spot ETF and its implications. They analyze the behind-the-scenes challenges for approval and the ensuing fee war between ETF issuers. They dig into Grayscales place in the spot ETF market and competitive angle. They also discuss trading volume and flows, the potential pathway for an Ethereum ETF, and the broader significance of crypto assets becoming embedded in mainstream finance. Hear all of this and much more!
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Join us at DAS (Digital Asset Summit) in London this March! DAS is the #1 institutional conference in crypto, hosted by Blockworks.
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Timestamps:
01:43 Behind the Scenes of ETF Victory
06:06 The Fee Battles
11:07 Implications of the ETF
15:59 Arbitrum Ad
16:44 Harpie Ad
18:00 Outflows & Trading Volume
24:02 Grayscale Roadmap
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Disclaimer: Nothing said on Empire is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are solely our opinions, not financial advice. Santiago, Jason, and our guests may hold positions in the companies, funds, or projects discussed.
Grayscale CEO breaks down his firm’s legal strategy against the SEC
Michael Sonnenshein is the CEO of Grayscale — the digital asset manager embattled in a court case against the Securities and Exchange Commission over the agency's refusal to convert Grayscale's flagship product, the Grayscale Bitcoin Trust (GBTC), into a spot Bitcoin ETF.
In this episode, Sonnenshein explains why a spot Bitcoin ETF could have shielded many U.S. market participants from the crypto 'carnage' of 2022, and how Grayscale's veteran legal team is working to ensure GBTC holders receive the most favorable possible outcome.
During this episode, Chaparro and Sonnenshein also discuss:
What will happen if Grayscale exhausts all its legal options
Why Grayscale is waiting to lower its management fees
How a spot Bitcoin ETF will draw more capital to crypto
This episode is brought to you by our sponsors Circle, Railgun, Flare Network
About Circle
Circle is a global financial technology company helping money move at internet speed. Our mission is to raise global economic prosperity through the frictionless exchange of value. Visit Circle.com to learn more.
About Railgun
Railgun is a private DeFi solution on Ethereum, BSC, Arbitrum and Polygon. Shield any ERC-20 token and any NFT into a Private Balance and let Railgun’s zero-knowledge cryptography encrypt your address, balance and transaction history. You can also bring privacy to your project with Railgun SDK, and be sure to check out Railgun with partner project Railway Wallet, also available on iOS and Android. Visit Railgun.org to find out more.
About Flare
Flare is an EVM-based Layer 1 blockchain designed to allow developers to build applications that can use data from other blockchains and the internet. By providing decentralized access to a wide variety of high-integrity data from other blockchains and the internet, Flare enables new use cases and monetization models. Build better and connect everything at Flare.Network.
Why Grayscale Is Suing the SEC Over Its Denial of a Bitcoin ETF - Ep. 448
Michael Sonnenshein, CEO of Grayscale Investments, gives an overview of his firm’s case against the SEC, which has denied requests to turn Grayscale’s bitcoin trust into an exchange-traded fund (ETF). With oral arguments kicking off March 7, Sonnenshein lays out what a worst-case “tender offer” would entail and whether DCG CEO Barry Silbert has any say over GBTC’s fate.
Show highlights:
why Grayscale charges higher fees than, say, the average ETF
what Grayscale will do if it loses its case against the SEC
why Grayscale has not filed for Regulation M relief
Michael's comments on Gemini liquidating 31 million shares of GBTC
the reason behind the October 2022 timing of Grayscale changing GBTC's “authorized participant”
the relationship between Grayscale and DCG, and Barry Silbert's involvement in Grayscale's operations
why the trust agreement of GBTC was changed
Thank you to our sponsors!
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Guest
Michael Sonnenshein:
Twitter
Links
CNBC: Court sets date for oral arguments in Grayscale's challenge of SEC's bitcoin ETF decision
Reuters:
Grayscale would appeal lawsuit against SEC if court rejects case, CEO says
Ruling in Grayscale-U.S. SEC lawsuit likely within a year
MarketWatch: Grayscale may ‘ultimately’ consider tender offer for bitcoin trust, CEO says
CoinTelegraph: Grayscale terminates Bitcoin trust material agreements with Genesis
CoinDesk: Grayscale Slams SEC's 'Unreasonable' Barring of Spot Bitcoin ETFs
Bloomberg: Hedge Fund Sues Grayscale for Data on Battered Bitcoin Trust
Bitcoinist: Here's What A Reg M Will Entail For Genesis, DCG And Bitcoin
Why Investment Experts Say a Spot Bitcoin ETF Would Be Superior to Bitcoin Futures ETFs by Laura Shin
Andrew Parish’s tweet on the possibility of the case going to the Supreme Court
Grayscale’s End of Year CEO Letter to Investors
Ycharts: GBTC Discount or Premium to NAV
Previous coverage of Unchained on GBTC:
Bitwise's Latest Plans to Get a Bitcoin ETF Approved
DCG's Dilemma: Should It Sell Its GBTC Holdings to Repay Gemini?
Gemini vs. DCG Is Heating Up. Could Gemini Force Genesis Into Bankruptcy?
‘The Last Big Whale’: Why the Crypto Contagion of 2022 Eventually Hit Genesis
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Grayscale's CEO details hiring plans, the long-term goal of a bitcoin ETF
Michael Sonnenshein took the reigns of cryptocurrency asset manager Grayscale Investments earlier this year.
At the helm of the more than $30 billion investment firm, Sonnenshein is charting a course for a broad expansion of the business, which is best known for its Grayscale Bitcoin Trust.
"We brought in $5.7 billion last year," Sonnenshein said. "We are launching new products, we are investing in technology, we're building out the various teams, it's really about continuing to stay ahead of the growth we are experiencing at really an unprecedented rate."
New inflows into the firm helped push Grayscale's assets under management (AUM) to new highs, while also lining its pockets with fee-based revenue. Estimates by The Block Research suggest Grayscale has brought in more than $109 million year-to-date.
In addition to new hires, the firm has a plan for upgrading its GBTC product to an exchange-traded fund should the regulators ultimately approve such a product.
"We spent the better part of 2017 in SEC registration for Grayscale Bitcoin Trust," Sonnenshein told The Block. "And we made a lot of progress with the commission and ultimately realized the regulatory environment wasn't ready for a bitcoin ETF and we pulled out of that process."
He added:
"But we hope in the future, like we were planning to in 2017, to register and uplift GBTC onto a national securities exchange as a bonafide ETF."
Still, competition is mounting, with BlockFi and Osprey recently rolling out new funds. There's also Bitwise, which has seen its assets under management climb towards $1 billion in recent months.
In this episode of The Scoop, Sonnenshein breaks down its hiring goals for 2021 as well as the following:
What a bitcoin ETF approval means for Grayscale's GBTC
Why mounting competition will result in fees "absolutely" coming down
Why he wants to convince a nation-state to buy GBTC
The firm's #DropGold campaign and plans for future marketing campaigns
The technology investments Grayscale is making in its platform to make the investing process more seamless
This episode of The Scoop is brought to you by Kraken
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39 - Grayscale: $10B Bridge to Crypto | Michael Sonnenshein
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Michael Sonnenshein is the Managing Director at Grayscale Investments, the largest digital currency asset management company by far.
You may have seen a GBTC or ETHE products in your Schwab account, a way price exposure to ETH and BTC
...wondered what those things are?
We're going to talk about that today with Michael.
Grayscale has built a bridge for almost $10B to flow into the crypto world, by working inside the legacy system, rather than outside of it.
Listen to this podcast to see how Grayscale is helping promote crypto!
Retail products:
What Greyscale products can the average, unaccredited retail investor buy today?
What’s the difference between GBTC/ETHE and an ETF? What are the fees?
Accredited investors products ($1m in assets or $200k per year)
How do accredited investors power the Grayscale trust?
What narratives that are driving the inflows?
What are the most popular products with this group? Bitcoin Trust: $39.5 million
Ethereum Trust: $9.0 million
Large Cap Fund: $1.1 million
Bitcoin Investor Study - what were the takeaways?
Size of Greyscale relative to supply
How much BTC supply - 400k in June (3-4% of all Bitcoin)? As a proportion of mined BTC?
How much ETH supply do you own?
Can Grayscale do a staked ETH product? Any other yield-bearing products?
What’s Greyscale’s next move?
Expanding more outside BTC?
Getting acquired?
AUM size?
Specifically with DeFi?
Action items:
Read reports Bitcoin Investor Study https://grayscale.co/insights/bitcoin-investor-study-2020/
If you’re looking at GBTC or ETHE in your portfolio premium vs spot price first: https://ycharts.com/companies/GBTC/discount_or_premium_to_nav
https://ycharts.com/companies/ETHE/discount_or_premium_to_nav
5 - star reviews the podcast!
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Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.
A Conversation with Michael Sonnenshein, Managing Director at Grayscale
On this episode of The Scoop, Michael Sonnenshein talks about the largest Q3 that Grayscale has experienced in it's 6 year history, the increased participation of institutions in the space and the transference of traditional wealth that will be occurring over the next couple of decades -- a transference that will undoubtedly expand the scope and usage of digital currencies.
Trends in Crypto: Marco Santori, Michael Sonnenshein and Barbara Minuzzi on 2017 and What's Next
In this live recording of a panel discussion at the CoinAlts Fund Symposium, Marco Santori, president and chief legal officer of Blockchain, managing director at Grayscale Investments, and Barbara Minuzzi, cofounder and managing partner of Ausum Ventures take stock of the 2017 year and discuss a range of trends they're seeing in the industry. Santori describes what the ICO wave was like from his seat as one of the most in-demand lawyers for ICOs, and why he doesn't actually think that securities (such as a SAFT) can later transform into something that is a non-security. He also talks about how big corporations are thinking about use blockchain technology -- and why we haven't yet seen much activity on that front in the market. We talk about the current clouds over the industry -- custody and regulation -- and Sonnenshein explains why investors choose Grayscale's investment products, such as the Bitcoin Investment Trust, rather that investing in the coin directly, and
Blockchain.info: https://blockchain.info
Grayscale Investments: https://grayscale.co
Ausum Ventures: https://www.ausum.vc
Thank you to the CoinAlts Fund Symposium for hosting the panel: https://www.coinaltsfundsymposium.com
For more on regulatory issues, check out these past episodes:
Perianne Boring and Amy Kim of the Chamber of Digital Commerce on crypto regulation: http://unchainedpodcast.co/the-chamber-of-digital-commerces-perianne-boring-and-amy-kim-on-why-us-crypto-regulation-is-complicated-and-confusing
The Tax Rules That Have Crypto Investors Aghast: http://unchainedpodcast.co/the-tax-rules-that-have-crypto-users-aghast
How Crypto and Blockchain Technology Should Be Regulated: http://unchainedpodcast.co/how-crypto-and-blockchain-technology-should-be-regulated
Jerry Brito and Peter Van Valkenburgh of Coin Center: http://unchainedpodcast.co/how-coin-center-is-helping-define-the-big-fuzzy-gray-area-of-blockchain-and-cryptocurrency-law
Caitlin Long on How 'Utility Tokens' Are Now Legal in Wyoming: http://unconfirmed.libsyn.com/caitlin-long-on-how-utility-tokens-are-now-legal-in-wyoming
Former DOJ Prosecutor Kathryn Haun on What the SEC Subpoenas and FinCen Letter Likely Mean: http://unconfirmed.libsyn.com/sxsw-episode-former-doj-prosecutor-kathryn-haun-on-what-the-sec-subpoenas-and-fincen-letter-likely-mean
For more on custody issues, check out the episode with Mike Belshe of BitGo and its acquisition of Kingdom Trust: http://unchainedpodcast.co/mike-belshe-on-what-bitgos-kingdom-trust-acquisition-means-for-crypto-and-how-security-will-develop-in-the-future
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