Hey, folks, we are recording at Chainling Smart Cohn event and joining me is a Philia Snyder who is the co founder of twenty one Chairs.
Aphilia, great to have.
You, Thank you start traving me.
Phillia told us a bit about yourself in twenty one Chairs.
So I started twenty one Chairs with one of my best friends almost eight years ago. It's actually going to be eight years in early November.
Wow.
And we started the business mostly to help out our moms. My mom introduced me to crypto in twenty thirteen. No way, Yes, I have the wonderful claim of being orange pilled by my mother and not the other way around. And she completely understood everything about the space.
Wow.
She got it immediately.
I got to meet your mom.
She's amazing, but she got it. She was like, you know, we're in a geopolitical anomaly. Swift is not going to last. MERK spends too much money hedging, but global trade is here to stay. We need a global reserve currency. Have you heard of a thing called bitcoin? I'm like, excuse me, no, what are you talking about. But at the time, there was no way for her to invest in the product. She didn't feel comfortable managing keys, and so she never did.
And then a few years went by and this problem still existed, and my co founder had a similar issue with his mother who was Egyptian and trying to make investments of her own, and we decided we were going to solve this problem for them, and so we set out to build twenty one Shares, which has become one
of the largest global issuers of cryptoetfs. We make up north to thirty percent of market share in Europe, managed about twelve billion dollars in AUM globally across the US, Europe, UK, Switzerland, the Middle East, Australia, and Brazil. So we have one of the largest footprints in the space and we've been building ever since.
So that's incredible that you were in so many markets, and we know the United States was lagging behind a lot of the other markets.
So what's it like to finally.
Have ETFs in the United States that you were able to launch.
So one of the interesting things that's been happening over the last couple of years is you're starting to see the US market catch up, and most recently even saw this with the universal listing standards that are coming out that are allowing more ETFs to launch, and what I'm hoping is that soon we'll be able to offer our clients in the US the same products that we do in Europe, where we have forty plus products covering all sorts of different assets, actually including chain link.
Yeah, so let's talk about or double click into the SEC's recent updated a generical listing standards. So from your perspective as an issuer, does that make your life easier?
Is it make the process faster?
So?
Yes.
It's part of a broader trend though, of regulatory normalization, where the relationship between digital asset firms and their regulators essentially in every market is getting to a much more normal place. What I mean by normal is a clarity, transparency, a clear understanding of what it is how you're supposed to do things, as opposed to constantly needing to adjust
for you know, an exception or a one off. And actually it brings the market much closer, the American market, much closer to what we had in Switzerland quite some
time ago with a similar set of constructed rules. But it's really just one piece of this broader puzzle where we're seeing it with many different pieces of legislation, both in the US and abroad, pushing towards a place where people can now really understand how crypto is going to be regulated and therefore build their businesses accordingly, which is ultimately better for everybody.
Absolutely.
So with these new guidance and clarity, if we want to use that word, because it's the bill that's coming up, of course, are you envisioning that a lot of the trad FI ETF products that exist outside of crypto will now be created for crypto assets?
So I think you will start to see more product and more creative product. And that's actually part of the foundation of our merger with falcon X, is this bringing together of a one stop shop that can really offer more interesting, more creative, more groundbreaking products to our customers.
And twenty Winters as a firm has actually launched about sixty products that were global firsts in their categories right whether in different geographies or different underlying assets, and we're expecting to continue to do that and the partnership with falcon X really allows us to accelerate that process, as does this regulatory backdrop that we're operating against.
Oh, for sure, are you blown away by the success of the crypto et apps, I mean just launched, you know, within the past year or so, and we're seeing amazing success across the boards.
It's been amazing. It's been a long time coming, but it's been amazing and I think it will continue to be because there are more people like my mom. Yeah, my mom is actually exactly who you want. Do you want somebody who understands our philosophy as a space, understands the use case, wants to participate. How do you make it possible for that person of participate, how do you
make them comfortable participating? And the answer is simplifying the infrastructure, which means ETFs are going to continue to be a major on ramp for people who are just interested in exploring the space.
Yeah, and what are your thoughts on the Trump administration opening up investments in four to one case different assets, which includes crypto is an excuse my lack of knowledge around this, but it's very beneficial for ETFs and things like that.
It all comes back to the same thing, which is infrastructure. And the end of the day, twenty one cheers and falcon X in a lot of ways are infrastructure first companies. We're seeing a moment in time where we can really streamline how people get access to investment products. And when you think about a four oh one K, at the end of the day, it's just another rapper, sure, And people who have those rappers and want to invest in them are not going to be managing their own keys,
their own coins. That's not the structure, and the asset managers that offer those products may not want to do that themselves either. So I think you're going to continue to see adoption of ETFs because what it does is it shifts who has to actually run the infrastructure to facilitate the investment from either the individual or the wealth manager to a specialized player who really knows how to deliver that value, and that typically helps foster and speed up adoption of of these products.
Oh for sure, I mean the ETFs of being in success And to your point, even my own parents who are interestedting crypto, ETFs are easy wrapper that they're familiar with the process versus going on coinbase.
But exactly exactly, it's a tough ask for somebody to open a new what they perceive of to be really a new bank account just to make one investment. That's a tough ask for people.
For sure, and are you working with or in the process of educating rias and wealth manager about your ETF products and are they receptive now?
Yeah, So we've been doing that for years and twenty one Shares as a business has always led with clarity, transparency and education. We both want to make it possible for people to buy the products. We also want to make them comfortable in buying the products, and those are actually two different things. And we've been on this road of educating different investor bases around how they can allocate
to this space for a long time. What we've seen is there's a spectrum to institutionalization and I think people often miss that, which is you can have either an individual, which I think most people understand. You can have a brokerage who's going to allow that individual to execute. You can have an investment advisor who, if their client asks them, will let them buy the product. That's mostly where people
are at today. The idea that that investment advisor is going to give you advice on a crypto allocation, for the most part, hasn't really even begun, let alone what would be considered much more institutionetionalized players thinking about like insurance or pension plans or government funds or endowments. That's really the upper end of what institutionalization looks like, and we're in the very very early innings of what that will be, which is why the success of the ETFs today is so interesting.
Yeah, are their plans.
Look, there's a lot of crypto assets out there right and we're still waiting on the market Structure bill to pass. But are their plans to expand the portfolio of ETFs around different all coins. It may be too early to answer to that, but I'm curious, you know, how you guys are planning as more clarity comes.
So I think if you look at our products suite in Europe, that will give you a lot of the answers. We offer forty different underlying assets. We have index products and we've been running a lot of these four years. Actually, the first product we ever brought to market, all the way back in twenty eighteen was a index product. It wasn't a bit QUINNYTF, it was actually a crypto index. Wow, bring a bitcoin ETF to market until a bit after that, and I think you were hoping that the same thing
will be able to occur in the US market. That we will be able to really see clients have the same level of access they do in Europe, and that's my expectation for where the market is going.
It's exciting to see all the building and innovation, and you guys are ahead of the curve in many ways building that index product because that is you know, the majority of investors, they're not they don't have time to pick stocks or stuff, but they.
You can invest in an index.
Yes, yeah, and I think that is We've seen that in every other asset class, that that is what investors like, and I think you're going to continue to see that here, which is we will there's some people who love picking stocks, and we'll always want to pick their own stocks and that's wonderful, but there are a lot of people who don't, and I think you will see increasing popularity in some of those types of products over the next several years
as interest moves from being a very bitcoin heavy story to being a broader story.
Talk to us a bit about staking, because that's been a recent addition to certain ETFs with the SEC it's still some approval still needed.
And so forth. But are you guys working or anything like that.
So we've offered staking atfs since twenty nineteen. Wow, so we've been doing this for a long time. We brought
the first staking atfs to market in Europe. We were some of the first, like big institutional clients for staking products with our providers, and so I'm really excited to see that expanding and continuing to see market normalization that just because you're in one jurisdiction versus another, you can access a similar type of product, and I think that is very much the theme for crypto markets right now.
We are normalizing our relationship with regulators, we are normalizing our relationship with asset allocators, and we are becoming part of this global ecosystem as an industry. And it's really interesting time. And it's actually that timing that made the merger with Falconex so interesting.
Absolutely, it may be too early answered his question, but there's a race to tokenize different assets equities, money market funds, gold, precious metals, real estate much more. Do you think those assets might find their way into ETFs eventually?
So I think you need to look at it as a wrapper, Okay, Right. ETFs are just a rapper. You can think of them like an empty box. You can put anything you want in the box and trade it. That's actually how ETFs work, and you can think about it like imagine like a gift box that you can buy and you can put anything in it. You can put a PlayStation in it, you can put anything you want, and an ETF's work exactly the same thing. You've put anything inside that wrapper you would like to. Tokens are
just a different type of rapper. So imagine an ETF is a blue box and a token is a red box. You could theoretically put a red box in a blue box, but I don't know why you would like it. Depends on what the use case is. Why do you want to do that?
Right?
Obviously, for things like investible crypto assets, so you know Bitcoin, Solana, ethereum, people are looking for that exposure and so the rapper provides that functionality. When you think about tokenization, the question is you're providing access to that product in a different way for a different audience. And I think that is something we will continue to see both from a distribution perspective, but also from a settlement's infrastructure perspective. Tokens are just
much much much more efficient as financial instruments. From a settling from a clearing perspective, and so I think you will start to see more and more TRADFI assets on chain, including ETF's, being put into tokenized formats. And I'm my perspective is I'm actually not even sure the end users will know. They will know, not necessarily because this is back end infrastructure for brokerages, and I think that is
very much the direction of travel. And that's what I mean when I say TRADFI on crypto rails.
Yeah, that definitely makes sense. And it's amazing, affiliate the amount of trad fi institutions that are entering the crypto market, all the big banks, the big Wall Street firms. What do you think about how they've all started jumping into this race and they're all trying to tokenize, launch stable coins, trading ETF's custody and all that.
It goes to show you that we're at that inflection point where this now makes sense and the technology is mature enough to actually support those types of use cases. In the very early days of building the company, we went and tried to pitch some very large allocators and they told me things like, if I can't put five hundred million to work, I don't without moving the market, like I'm not going to do this, This doesn't make sense for me, Like I need to write bigger checks
than that. And these were like large I think, like you know, large pension funds or even UH endowments and things exactly governments and things like that. So one of the issues that I see is that we're finally at a scale where these technologies can actually be used in that way. And it goes to this idea that we will have a world where it is easier to transfer value in the format of a token than it is
in the format of an otherwise created security. And that has much more to do with infrastructure than anything else. And so when you see all of these large financial institutions building out that infrastructure, whether it is whether it's custody services, staking services, trading services, investment solutions, it's just part of the trend moving us towards what ultimately was the vision for crypto, which is we want to run the world's financial rails.
It's funny, it seems like blockstream rails are going to be powering all the markets eventually, economy and certain parts of the government. Yes, it's exciting CD innovation. That's happening. We touched on it a bit earlier, but the Market Structure Bill is coming up. Everybody is waiting for that because it's going to give clarity and what you can do can do and what the regulators.
Need to do.
Do you think we see that pass by Q one twenty six and what impact do you think you'll have on the market? Oh?
Our question?
I know.
So. Look, I think timing is always tricky, especially with like the way the US government's been functioning. I think the timing of knowing when bills are going to be passed, I couldn't tell you, But I think what's really interesting is that you are seeing this trend not just here but globally. This isn't an America's story. This bringing of clarity is not an America centric issue. You're seeing it
in many jurisdictions. In fact, in most major jurisdictions, you're seeing this real push towards having regulatory clarity, knowing who's in charge of regulating these assets, defining them in some way. And the way I typically conceive of regulation is sort of like a layer cake. The bottom layer is how do you define what you're regulating, who's in charge of it?
Sure.
The second is what are you actually what are the rules of the road, And then the last is figuring out how that's going to fit with every other piece of financial regulation out there. And so, for example, if we're going to create crypto's new asset class, that's amazing, what does that mean for equities? What does that mean for fixed income? How is it going to change the definition of these other things? And I think what we're seeing is that first layer, who's in charge? How do
we define this? Who's in charge? Has finally started to really take shape on a global basis, and we're starting to see what those rules of the road are going to be so that we can eventually get to a place where crypto is just another part of the existing and financial system as opposed to this super special thing on the side, which is actually not to anybody's benefit.
Yeah, well said.
And even the coordination of the world governments on how they can at least have some synergy in how they view this asset class.
That requires harmonization. Yeah, that's actually the European word for it, is you have to harmonize regulations across the Eurozone. But given the way crypto markets work, you will need to actually harmonize a lot of this legislation on a more global basis to make sure that it works together in
some way. And I think that's what we're seeing is there's as that clarity is coming through, As we're starting to see global standards for how you can do these things emerge, we will start to have a much clearer way to build sustainable real businesses in this sector, which is ultimately what we need to have staying power through market cycles.
Oh, absolutely, final the question for I let you go, what's on your roadmap that you can share?
So you know, obviously we just announced the acquisition by falcon X, so sure one of the things that we're really excited about is how these two firms together are going to build a one stop shop in crypto strength and derivative strengthen trading strength and regulated product and how we're going to be able to use that as a cornerstone for bringing more creative, more innovative products to market, stay on that bleeding edge while doing things faster, better
and more cheaply than trad five players and then other players in the market. So I think, really that's what you can expect from us.
Well, I'm looking forward to the updates. We keep an eye on twenty one shares. Thank you so much for joining me, Philli, thank you.
For having me.
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