Crypto and TradFi Collide at Miami ETF Conference

Some of the world’s largest asset managers, with little to no interest in crypto, shared the stage with prominent digital asset natives during this week’s Exchange ETF conference in Miami. 

The event followed the swarms of bitcoiners — and piggybacking proponents of other cryptocurrencies — that flocked to the streets, clubs and waterways of Miami for Bitcoin 2022.

Pippa Malmgren, a tech entrepreneur and economist, kicked off the conference by calling blue-chip Bored Ape Yacht Club NFTs a “revolution in finance.” 

She likened Web3 to a “Windows update,” saying the growth of the metaverse will force traditional financial titans to pay attention.

“You’re just going to be in it — whether you like it or not — because everything you work with is going to get upgraded into that space,” Malmgren said. “It’s a very different creative process that you engage in when you enter these spaces, and that is where we’re going in the world of finance.”

Michael Sonnenshein, chief executive of Grayscale Investments, spoke about the company’s proposed conversion of its Grayscale Bitcoin Trust (GBTC) to an ETF.

The leader of the largest crypto asset manager — with more than $35 billion in assets under management — doubled down on remarks that “all options would be on the table” if the SEC denied the proposal, including suing the agency.

MicroStrategy CEO Michael Saylor — speaking with Frank Holmes, executive chairman of HIVE Blockchain Technologies — meanwhile, said the US government’s move to regulate digital assets is “a green light” for the crypto economy. MicroStrategy, the biggest global corporate buyer of bitcoin, now holds about $4 billion of bitcoin.

Valkyrie Chief Investment Officer Steven McClurg and Dave LaValle, Grayscale’s head of ETFs, made their own case for the value of digital assets.

Asked by an attendee why investors should purchase a bitcoin ETF when they can already own the cryptocurrency outright, LaValle said an ETF takes some of the uncertainty or “extraneous education” of owning crypto out of the process.

McClurg added that while it’s important for individuals to own their own crypto, such an investment vehicle is key for professionals to bring exposure to clients.  

“We are in a room with a bunch of financial advisors, and if your clients own the coin directly, you can’t get paid,” McClurg said. “The best wrapper for you to put your clients in something like this is either a [separately managed account] or an ETF, because it’s easy.”

Off the stage

More than 2,200 people attended, including nearly 1,000 financial advisers and institutional investors, according to Matt Hougan, chief investment officer of crypto-focused Bitwise Asset Management and a conference co-founder.

ETF providers, index providers, exchanges, trading firms and service providers were among the event’s 124 sponsors, including “a significant number of crypto market participants,” Hougan said.

The booths of the likes of crypto-focused Grayscale, Valkyrie, Bitwise, Gemini and Osprey surrounded the larger, traditional asset managers in one of the Fontainebleau hotel’s largest rooms.

Next to ARK Invest, which focuses on disruptive innovation, was Vanguard, for example.

A Vanguard spokesperson told Blockworks in January that “the risks of investing in cryptocurrencies are high, and the investment case is weak.”

Financial services titan Fidelity Investments announced during the conference that the crypto economy and metaverse ETFs it had filed for in January are set to launch on April 21.

“These are obviously two topics that are hot and of interest to our clients, and we want to be able to solve their needs,” Greg Friedman, Fidelity’s head of ETF management and strategy, told Blockworks. “Crypto is just another asset class.”

The ETF event’s outdoor oceanside lunch was sponsored by 21Shares, the world’s largest issuer of crypto exchange-traded products and a firm hoping to launch a spot bitcoin ETF in the US with Ark Invest. The firm’s CEO, Hany Rashwan, joined Blockworks reporter Ben Strack on stage Wednesday as part of a panel with Jake Rapaport, Nasdaq’s head of digital asset index research.

The Exchange conference will be a crypto conference within three years, said Dave Abner, global head of business development at crypto exchange and custodian Gemini.

“There’s not that much to talk about with 5 basis point S&P 500 ETFs anymore,” he told Blockworks. “[Crypto] is the stuff that’s interesting. These are the guys that are sponsoring the conference; money’s flowing in that direction.”

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