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00:00So you also represented the Winklevoss twins in their first attempt to bring a Bitcoin ETF to market. So let's start with your legal perspective Kathleen. And just using Bitcoin ETF as an example there's concern that there would be a derivative on a derivative of an underlying asset that's unregulated and skeptics have even call it perhaps the next CDO. So from where you sit. Talk to us a little bit about the structure of the ETF and why the wrapper of ETF should not inspire confusion or bewilderment. Yes the ETF whether it's for bitcoin or for anything else usually involves a physical deposit. So for instance if you were talking about bitcoin it would be a physical point if you were talking about Spi it would be the underlying S & P 500 stocks and those are deposited into a trust . And shares are issued. Those are the things that are sold on the exchange and those are the things that are redeemed and one of redemption occurs. You give back the underlying in proportion to the number of shares. So it's always even now when you talk about a derivative ETF that would be one that has derivatives in it like swaps or futures and there are those as well. And of course when we talk about the Bitcoin ETF that will be a derivative because would be Bitcoin feel there is there are several different kinds that are pending right now . One is physical. One is with the futures Bitcoin futures. So they're both now the launch of Bitcoin futures does pave the way for Bitcoin ETF. And here's what former FCC commissioner Dan Gallagher told us. Let's listen truth be told the substance of some of the concerns that the FCC had will remain. And I don't expect this to be an area in which the FCC moves precipitously. Just because you have some futures trading now Kathleen you know the S.E.C. Well you know what they're hesitant on you're familiar with a checklist that they go through. Well we've seen a Bitcoin ETF in the next six months . It's possible. Chris anything is possible. The question is whether or not the FCC will feel that the derivatives market is sufficiently established that it provides some regulatory relief because the underlying bitcoins are not regulated at all. And so the question is since bitcoin derivatives were only released two weeks ago or one week ago the question is how long will the S.E.C. take to feel that that's established. And what's your what's your instinct on that. My instinct is it will take at least six months. OK. So at least six months before they seriously consider it. At a recent conference ETF in depth you said that Bitcoin approval reminded you of the process of getting GLAAD approved. Yes. Talk a little bit about that. Well the same questions were asked. Jihye Lee although it's a ancient kind of an investment so it's unlike Bitcoin in that way. But it was similar in that it's not sold in a stock market. So the FTSE was concerned about the sale of the big gold in gold markets and they wanted to know how established the gold markets were who regulated them. Were they regulated. Could they establish surveillance and information sharing with the markets and all those things were yes. So that's why they finally permitted the gold and then subsequently platinum and palladium and all the other precious metals right once they approved it. Everything was easy right after that. Right. So that's kind of what we're looking at here as well. Right. OK. Now when it comes to ETF there is a lot of excitement in this world about the S.E.C. maybe getting rid of the exemption relief order making it easier to create ETF ise is speeding up the approval process a good thing or are we going to get too many ETF. Could we get too many Nishi gimmick ETF that eventually you're going to get along lines. You get a lot of headlines but then they can't last. Yeah but you're going to get them anyway either good either they'll take a while to go through the exemption process or it will be quicker and you know they won't have an exemption order process to go through. But either way all of those things will be introduced and then the question is do they survive. Why is that why do you think we're going to get it regardless. Because there are a lot of sponsors who believe that their special sauce is really the one that will capture the audience. And so they want to you know present their product to the world. That being the case do you think we're at peak ETF. I mean are we at a bubble that could be on the cusp of bursting. I think people are endlessly inventive. I think we'll always have new ones . So what would be the next ETF won't be the next bases of ETF you bet. OUTFRONT in front of so many different products whether it was advocating for the Bitcoin ETF for the Winklevoss GLAAD. SB Why what could be next. It probably will be in the area of cryptocurrency you know bitcoin and then based ethereal or something else and probably work its way through that .

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ETF's 'Spider-Woman' on Bitcoin, Fund Life Cycle

Kathleen Moriarty knows the ETF life cycle better than arguably anyone. As partner at Chapman and Cutler, she's better known as "Spider-Woman" for her role in building the legal framework for SPY, and for helping launch GLD and the first leveraged ETFs. She joins Bloomberg's Scarlet Fu. (Source: Bloomberg)

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