Short-term view on spot bitcoin ETFs ‘a mistake’ says 21Shares president

Ten spot bitcoin ETFs started trading Thursday after garnering approval from the US Securities and Exchange Commission, with one from Ark Invest and 21Shares among them.

The fund saw day-one trading volumes of nearly 6 million shares, or $275 million — as competing funds by Grayscale, BlackRock and Fidelity saw more activity.

The volumes reflected the “pent-up demand” for such products, according to 21Shares president Ophelia Snyder, who spoke with Blockworks in an interview.

“The excitement surrounding the entry of US institutions into the BTC market is justified,” she added. “We expect a second wave of activity in the coming weeks and months as this becomes more mainstream.”

Ark Invest and 21Shares first partnered to launch a spot bitcoin ETF in 2021. They re-upped their efforts for such a fund last April, prior to BlackRock entering the race — a move that spurred a swathe of other firms to refile.

While Ark specializes in products and research focused on so-called disruptive innovation, 21Shares has operated crypto exchange-traded products in Europe for years.

Snyder noted that a spot bitcoin ETF opens up crypto to various investment professionals who previously could not invest on behalf of clients.

Roughly 80% of financial advisers said they were either unable to buy crypto for clients or unsure if they could, according to a survey published by Bitwise and VettaFi earlier this month. Of those interested in buying BTC, 88% said they were waiting for the SEC to approve spot bitcoin ETFs.

But for many, Snyder added, adoption of such funds is not likely to be immediate.

Keep reading for excerpts from Blockworks’ interview with Snyder.

21Shares CEO Ophelia Snyder

Blockworks: Why is a spot bitcoin ETF such a big deal, in your view?

Snyder: Most people who manage money in the United States cannot purchase crypto.

How comfortable is the average, real crypto user when making transfers from their hardware wallet? It’s a panicky feeling. It’s not pleasant. Did I send it to the right place? Did I do the right thing?

That’s when you’re doing it for yourself. What happens when you have to do it for somebody else to whom you have a fiduciary obligation? How likely are you to do that? You’re not [going to].

[Financial advisers] always had two options. You either do nothing, or you use a lot of time and energy to set up a completely redundant system to support spot products.

Because, by the way, none of your existing systems will integrate, right? Crypto reporting, crypto tax, crypto trading, crypto custody, crypto compliance — it’s a completely different operating stack.

Their job is to serve their clients. Their job is not to spend a lot of time setting up extra infrastructure.

So they’re not going to buy spot [bitcoin] outside of that infrastructure. They’re certainly not going to buy it individually [for clients]. There’s no pragmatic way for them to enter this space while remaining within their infrastructure.

Blockworks: What do you estimate the short- and long-term demand to be for these from a flow and assets under management perspective?

Snyder: Anybody who has a gatekeeper of any kind is not buying on day one.

Most large platforms have a gatekeeper. They do a review, they do due diligence on the manager. There’s a bunch that has to happen; that process takes weeks.

So I think this fixation on the short-term flows is crazy short-sighted and largely not the point.

Having done this in Europe, what we’ve seen in the past is people dip their toe in. They try it a tiny bit to see how it does, see how it works, see how it feels to have in a portfolio and how the client reacts to it. And then they go up.

It’s going to ramp over time, so I think the short-term view is a mistake. I think they’ll do very well in their first week — that’s not to say I don’t have faith in that — but I do think that the really transformational stuff that will change the way our industry perceives these things will take a little bit more time.

Blockworks: We have seen various crypto-focused marketing efforts in recent weeks from rival firms such as Bitwise, Hashdex and VanEck. How is Ark Invest and 21Shares looking to position its brand?

Snyder: Really, we want to bring new people into the fold here. That’s the whole point.

If you look at how our competitors have positioned [themselves], there’s been a lot of focus on a “crypto is cool, come be one of the cool kids” kind of vibe to their marketing positioning. And one of the issues with that is we don’t want to ‘FOMO’ people into these investments.

You want them to actually feel confident and comfortable in it and welcomed into our community. That’s a huge part of this.

So the messaging we’re adopting is actually to look at people who are a little bit more crypto curious. If you don’t know all of this stuff, that’s actually okay — let us help you. I’ve been running products for five years, Ark’s been researching products for 10 years, in crypto.

The slogan is ‘a little bit curious,’ because that’s the whole point. We want people who are interested in our space, see value to it, but [are] nervous to come in feeling confident and welcomed.

This isn’t about do you know what ‘GM’ means? It doesn’t matter. That’s not the point. We want you to see the vision for our technology, the vision for what crypto can do, the vision for bitcoin as a new way of thinking about money.

Blockworks: Ark Invest and 21Shares filed for a spot ether ETF in September. With a spot bitcoin ETF now approved, when do you expect a spot ether ETF could hit the market?

Snyder: ETH spot is actually a very different animal.

I think what you’re going to look at is where Ethereum’s current market construction and bitcoin’s current market construction deviate, because that’s a lot of the meat in the 19b-4, and a lot of the meat for how you make these decisions.

We’re obviously really excited to continue to engage with the regulator on that. We have wanted to have those conversations, so we’re looking forward to the next six months on that one.

This interview was edited for clarity and brevity.

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