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00:00First of all congratulations on a big day I know for grayscale amid all of this market craziness and volatility. How crowded is the market for crypto ETF. And are you nervous about the competition. Well I think there's a real opportunity around crypto ETF. Certainly in the US as well as in the UK market where there aren't crypto ETP just yet. I think it's exciting to see that on the regulatory front both the US and the UK have put out executive orders really focusing on digital asset innovation and regulation. And I think investors have been patient and quite frankly deserve access to this type of exposure in the form of ETP that has certain protections as well as a certain familiarity to them. So it's a matter of when not a matter of this. On the question of timing I'm giving the week. We've just had in terms of the crypto market the volatility the extreme moves the questions around terror. Did you and the team stop and pause and think maybe this isn't the best time to launch what the product that we're launching into the European market is an equity based ETF. Many investors have come to know the grayscale team for digital asset exposure over the last eight years and we felt that it was time to give investors a complementary exposure to that digital asset exposure. They have to really focus on the infrastructure the companies that are building the products and services around the transformation of financial services. So for us the Grayscale Future of Finance ETF is really about focusing on the digital economy. The confluence of tech digital assets and finance which is the future finance index actually was pretty much muted where there was a broader sell off in the markets. But our investors really that sophisticated because they're not just think crypto. I'm not sure I want to make money. I want to make fast and I'm not sure whether knows right time even to go into the infrastructure. Well the thing that we hear from investors is really not so much about timing. Most of the investors who are putting capital into crypto these days are doing so over longer term time horizons. So they're not necessarily going to be deterred by volatility. In fact they know it comes with the market and comes with the territory. So fundamentally if their conviction hasn't changed but they can buy the same asset at 30 40 50 percent lower than they could maybe a few days or few weeks ago. Well then for a lot of investors that's a compelling buying opportunity. How are you and how investors thinking about the fundamentals of this space at a time when of course economic conditions are becoming tighter liquidity is being drained from the system with all the central bank action. What is the overlay on that. Because this isn't going away anytime soon. Well unfortunately it doesn't seem like almost any asset class could be saved from the recent draw downs crypto included. So again many investors are using these pullbacks to either average down on their positions or perhaps take new positions altogether. I mean you're talking about the crypto believers. How many non crypto believers are suddenly believing or at least are taking meetings with you to find out more about the product. I mean it's it's pretty it's pretty compelling to see who has been investing in the crypto space. I mean any of the regulatory risk that some investors would have previously perceived around crypto that would have prevented them. That's been shrugged off. Any kind of professional or what do you think. Investors. Sure. Pensions endowments hedge funds. Absolutely. What's interesting about crypto is that it actually went into the hands of retail first before institutions. So certainly that institutional wave of adoption has been accelerating over the last 18 months. And certainly I think you're going to see a lot more of that into the back half of this year. But let me take the counterfactual on this because you just look at the US dollar itself what 7 percent on some measures year today of course BTC Bitcoin is down about 40 percent 36 percent year to date. You just buy the greenback and you're getting that hedge. Bitcoin encrypts ISE don't offer you that hedge around geopolitics. They don't offer you that inflationary hedge. And in fact within an inflationary environment they're losing value. I think when you pull back on a longer term time horizon the thing that is so compelling about crypto is that it means something different to everybody. For certain investors it remains a store of value or a digital gold. Then it does remain uncorrelated to other markets and can act as a hedge in those types of environments to other investors. There may be more excited about it as a technology or to some investors maybe even as a payment trail. But what we have to remember is that it remains early days for the asset class and every day every week we're unlocking new opportunities and new use cases around crypto as a whole. How did you get into it Michael. Remember how long ago. Give us a glimpse into her. So I've been around crypto now for about the last eight years. I had a traditional finance background and was ready for a new challenge ready to be a part of building something and the opportunity to now lead the grayscale business. We have an unbelievable team and every day everyone shows up looking to build and looking to offer access to the ecosystem. Talk to me about your views on what happened last week with Terra which is obviously an algorithmic stable coin. And then you have Heather which has its own assets and linkages there. Are you concerned about the vulnerability of tether first off. And secondly those algorithmic stable coins. Is that the death knell for them. Are they out. We should start with stable coins in general. These were assets that were created to have liquidity remain in the digital asset ecosystem primarily for traders and others who would be moving. And out of different digital asset positions and not wanting to have to rely on the traditional banking system to park cash. And so what a lot of investors are thinking about now is just evaluating different stable coins. Are they functioning as they're intended to do. So we did see a lot of leverage and liquidity come out of the system. And generally over the last 8 years when you see that happen it tends to be a good learning lesson for the crypto ecosystem as it's being built. And it does come out stronger and more resilient. Are you expecting these kind of volatility crazy swings to to last for much longer. Well crypto you know isn't new ecosystem. I will say today that the market around crypto is as developed in two sided and healthy as it's ever been. You have lending you have derivatives you have all the trading tools that investors at one point never had order management systems tax loss reporting. And so a lot of that will help to dampen volatility over time. Do you look at price levels for crypto for Bitcoin for ether in terms of flaws. I mean it coming at 29000 some people suggested 30000 is a crucial level. Does any of that ring true for you. Is there a level that you're looking at for bitcoin. Well I am not going to pretend to be a you know a technician or be able to pick spots. What I will say if I did have a crystal ball is that who is investing in crypto and how exciting the ecosystem is and remains how early it is. I do think the opportunity remains quite bright for crypto as a whole overall. So what's your plan to. Are you setting up formal shop in the UK or in Europe for you expanding here. Well so the grayscale team was really thoughtful and methodical about our European launch. What we wanted to do is not look at Europe as just an entire continent as a whole but instead really focus on different financial centers and think about the fact that each of those financial hubs have different investor appetite and different which one to gave years ago. The grayscale future of finance use its ETF will initially be launched on the London Stock Exchange. The Deutsche Absa and the Bourse Italian. But we'll be passport ID around Europe. So over time we hope to continue expand into the European market. This is a really exciting day for the team and our very first launch into Europe. Let me ask you about the clock. The clock is ticking on that July 6th deadline of course around your conversations with the S.E.C. to convert the grayscale fund into an ETF by July 6. What progress if any have you made with the S.E.C.. Do you think you'll get to that deadline. So not sure all of the European viewers or global viewers know what's happening. But in the US grayscale runs ticker BTC grayscale Bitcoin Trust the world's largest bitcoin investment vehicle. We've been working proactively with the FCC to convert it to an ETF and we continue to make a lot of progress with the FCC and regulators more broadly. Investors who had been in this product for a while have been advocating for this product to convert to an ETF. They want an ETF. Ultimately I said what I said before. It's a matter of when not a matter of if. And our team is putting the full resources or resources of the firm behind that initiative. So you're confident it will happen. It will. And then you roll it out to Europe. It will happen. And we'd love to be able to bring other assets like that to Europe. Absolutely.

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Grayscale CEO Sees Opportunity in Europe Crypto ETF Debut

Grayscale CEO Michael Sonnenshein discusses the state of the cryptocurrency market as the company launches its first equity-based crypto ETF in Europe. He speaks on "Bloomberg Markets: European Open." (Source: Bloomberg)

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