Sab one twenty one vote in the House and then in the Senate. It's now up to Biden. We'll see what he does there. Trump all of a sudden going full full pro crypto. Here a lot of polling suggesting that this is going to matter, particularly in races where it's close, it could actually swing things. So it looks like that might have been the calculus from
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today's James Seifert, who's an ETF research analyst at Bloomberg Intelligence. James, great to have you back on what's going on, Tony. Nice to see you. Tony and I actually met for the first time last week in person down at DC at an event, so that was nice. But here the virtual Yeah, the funny thing is we live five minutes apart from each other, but that's where we meet. Yeah, yeah, we have to go all the way to DC to meet. Well, James, things are escalating
with the etherorem SPOTTYTF filings and the issue in the SEC. I guess let's start with why do you think all of a sudden, the SEC is starting engaging with these folks who are applying. Yeah. I mean there's two trains of thought, right. The one is like this was the plan of the get go, which seems to be kind of the spin coming out from some
people at the agency. I guess I don't buy that. I mean, this created a whole lot of volatility and circus, if you will, around the fact that they were engaging on this my view, and you kind of see it in the way that like even the statement that the White House put out today on the FIT twenty one Act, basically saying like we look forward to working with Congress on rules and like all those different things, it was way more productive. I mean, it's still not like they're pro the space,
but it seems way less anti. So my overall view is just that it was kind of like a flip. Political wins flipped here and they decided, like, you know this, it's not worth fighting anymore. This all seems to have changed rather quickly in my view. Again, we don't have any definitive confirmation there, but it seems like the SAB one twenty one vote in the House and then in the Senate, it's now up to Biden. We'll see what he does there. Trump all of a sudden going full full
pro crypto. Here a lot of polling suggesting that this is going to matter, particularly in races where it's close, it could actually swing things. So it looks like that might have been the calculus from the dem Party. And I've talked to many people, and the vast majority of people I've spoken to that are in the know, whether it be in DC or in ETF circles, are actually involved in what's going on here trying to get these ets launched.
They're pretty much all in agreement with what I was just saying there, and we're getting more and more signs of that potentially being the case. Yeah. Absolutely, And one of the things that we were seeing months ago was that the SEC was not engaging with the issuers. They were going after consensus and the theorem foundation. So that set the tone like this looks like it's going to be arduous, like a road ahead for these issuers. So there
was no indication the thing that they would do this. But to your point, as the political wins started changing, they did a one to eighty. So I don't think that's coincidence. I think they, like you said, all these factors are influencing them. Yeah, let's be clear here, it's not a done deal yet. It's not a one eighty yet. We could get in order sometime today. It's no after market clothes. I think tomorrow is more likely, but I will find out soon enough. Right that said,
I'm with you. That points to another reason why I don't think this was like planned like the way that they were going after cracking and coinbase and setting wells noticed to Robinhood. I mean, maybe they would have done that anyway, but like particularly the consensus stuff like that certainly indicates that they were leaning towards or looking for ways to go after these etherorum as potentially being a
security. And if they did that, you can't an ETF. So the one thing that does do if they do approve the ETF, that means that eth itself as an asset, as a token, whatever you want to call it, is a commodity. Because the way that these ETFs are all filed right now is under the Commodities Exchange Act, not a Commodity Exchange assets. They're they're register's commodities funds. So that means that that's pretty much a done
deal. I have like pet theories on what they'll still do, claiming like steak eath might be a security that's not done and dusted, but I think for the most part, if they approve these, it's pretty much a done deal that Eath itself the asset, it won't be viewed as security by the SEC. That's my current view. So, like all that stuff leading up in the last few months of them possibly going down that route just points to me to the fact that like, yeah, there's no way they were just
like couldn't go down that route, and they always plan to approve. Yeah, And to your point, I saw the note of the staking being scratched off the list here, like that's not happening. And do you think though, maybe later on they may allow the staking and for future versions of the ETFs. It's a good question. I mean one I think I said it on here, like we were pretty uh pessimistic that these things were going to be approved, even just last week. But I was always like extremely pessimistic,
like even way more pessimistic that staking would ever be allowed here. The SEC obviously has a huge history of having problems with those types of features, whether it be like staking as a service or service or staking itself, so I never expected that to be in there. Could it be in the future, maybe, I'm not really sure. Probably not anytime soon. Maybe with the new admin and new SEC admin, depending what happens with the election in
November, that could change. But for the most part, I don't think it's going to happen anytime soon. If these are approved, and even still like you can look at this. It's similar to like, I don't think in kind transaction are going to happen anytime soon. Right. We talked a lot about this in the past about cash verse in kind, these things are going to be cash creat only everyone knew that already, and for the most part, everyone knew these things were not going to be able to stake,
which makes them less desirable. I guess we think that'll hinder the demand and flows from ND investors for these compared to bitcoin itself. Sure. Now, one of the things I saw you tweeted about was the two phases to this, the nineteen B dash fars and then the s ones. Have all the
potential issuers already updated their nineteen B dashboars. If I'm saying that right, yeah, I just we just called nineteen be four's but you're that's the correct how you spill it out, because they would be S DASH one too. Just nineteen be four and S one's one is basically a rule change documents. That's what those are, the deadlines that everyone used to hearing. That's the nineteen before documents. The s ones are like the offering documents or prospectus.
If you pay attention to these words. It's like bically disclosed all the risks, how the fund's going to operate, all the people involved. It's way more in depth. Whereas the ninety be four it's just like, we need to change this rule. These are the rules we are going to abide by if you allow us to list these. In this case, it's in Etherorum based etf you need a special rule change to allow you to do this.
They needed this for the Bitcoin ETFs as well. The difference with the Bitcoin ETFs is they did these these like two parallel processes at the same time with
Bitcoin, which was also somewhat uni to come. Many times they'll do the ninety before and then go through the S one process or they're not always on top of each other, but they wanted to do them on top of each other and approve everything, so they go listing at the same time, which is what we saw with Bitcoin. Here, we haven't seen much of anything
any updates. There's news reports coming out that the SEC is having conversations with these issuers on those S one documents, but the first ones that need to come out are those nineteen be fours. That's Manx deadline is tomorrow, so there needs to be in order tomorrow, and it sounds like they're going to get you the same order on everyone. So I think by my account, there's four different nineteen B fours that are in We'll see if there's any more.
I I haven't seen hash decks is yet, and that's not to say that they're that it won't be there. Wait. I just actually got an update. Now that's bit Wise an ARC and yeah, these are just notices of filing. Sorry, but yeah, so we we have five. So there's there's you have ARC, bit Wise, Investco, Galaxy, Van k Uh. I don't need to list all of them, but black Rock and
and actually gray Scale has two. They've they filed these nineteen B fours for both their regular conversion of EV into an ETF and for their mini trust, which is unique. So I initially saw them filing stuff for their mini trust on Monday or no yesterday, and I was like, oh, I assume the'se got This isn't going to be able to go out in the first wave, but it looks like it might be based on how how many filings are
going through. They filed their initial filing yesterday and there's a red amendment posted for them today, So that was intriguing. Wow, So James, I saw you and Eric tweeted out that you guys are at seventy five percent chance of approval. Now are you thinking partial approval? Like could they approve certain parts? And that's news? And then two weeks later approved another part of it. What do you mean by part? You mean like the different issuers.
So let's say and correct me if I'm wrong here, because I'm kind of ignorant in the process. But let's say there's news came out that they approved there the nineteen oh, that nineteen before and this one. Yeah, so, like we said, the Bitcoin etf that went at the same time for here, that's not going to happen. There's almost no way that's going
to happen. So interactions have just started. So the nineteen before's are handled by the Division of Training Markets. The s ones are handled by a separate division called the Divisional Corporate Finance. Those conversations, from what I can tell, and mostly honestly, it's not even my own talking with with people that's seeing other reports have recently started. That process has can take it. Like I've seen instances of that process like getting through the s ones, all the
disclosures, risks, you name it. I've seen it take five months, So I don't think that's going to happen here. I have a feeling that everything's aligned, particularly if this was a political shift, there's a lot of pressure from above to get this done. That said, there's no way it's happening like in the next day or two like that's going to take on. Those documents are very long. There's a lot of things you need to go
through, and I just don't know. It kind of depends how much time and effort and energy the SEC and really wants to push these things through. But the theoretically, if you get the nineteen before, this isn't like guaranteed, but in historically the norm is the nineteen before is approved. It's only a matter of when, not if. Like you just need to work your way through all these things with the SEC and then the S one will get approved or go effective is what the term is, and then then that we'll
list. So my thinking is maybe a couple of weeks it'll happen, but it could be much longer, could be sooner, I guess if they really push this thing. But that's that's a long, arduous process. These are many like hundreds of pages of texts that they need to kind of go through before these things are allowed to go live. And there's at least nine different ets here trying to do this. Wow, So I guess the good news is there, the gears are in motion here, We've got momentum. It's
just not going to happen tomorrow. But you know, maybe we can hear some partial approvals, but the actual full on approval is weeks away, and things, yeah, the full on listing, so they'll be approved. It's just like getting to the point where they're actually listing and trading on an exchange. I have no I really I can guess like I said, I would
probably put the Oprah under it two weeks. Then that's by emphasizing the fact the SEC might really like put this into overdrive and work really hard to get this done, but there's no guaranteed that it will happen, like I said, I've seen Like for the Bitcoin ets, the conversation started in October, and I'm sure you and your listeners remember there were updates happening in throughout December and like literally like multiple the week leading up to the launch, and those
were over this S one. There was constant iteration and back and forth. And so even if you compress it down like they were working basically every day, there's people pulling all nighters like for the for ten days in January. Like it's it's not something that can happen immediately. The flip side of that argument is they already have etherory in futures ETFs and we have spot bitcoin. There's probably a lot of analogous situations that you can put into these documents.
There's not going to be as many comments as were needed for the first physical Digital Acid ETF, but there's definitely a lot of uniqueness to these filings that will need to be ironed out now before I let you go. The other thing is the London Bitcoin ETPs went live. I know we're still waiting on information on that, but any thoughts so you have to share there. Yeah,
they're gonna go. They're gonna go live I think on the twenty eighth or something or but they're basically greenlit and it will be bitcoin end to theerem I think. But the caveat here is one they'll be physically backed, which of course they better be right or no one's going to want. But there's still a ban on retail, so like retail investors will not be the access.
That's only professional investors, institution's advisor. I think advisors. I'm not really one hundred percent familiar, but there's going to be a restriction on who and Kenning cannot use those products. But no matter how you slice it, it's just another area. Like we had the Hong Kong ETFs come live. They are not doing nothing. They're doing well for their market, but it's not massive. It's just showing just growth in different regions and different regulatory regimes
around the world. And things are going to happen in baby steps, like even with the ETFs, it's in cash now. I think eventually we'll get to in kind. There's no staking right now. I think ultimately, at some point maybe we get to staking, but I don't know how long that takes. Is that going to be a year, multiple years? Who knows? Yeah. One final thing here, we're seeing the inflows with the bitcoin US ETFs on the rise again after the outflows you know, were pretty significant
over the past couple of months. Do you anticipate that trend to continue given that we've maybe found a bottom for bitcoin. Yeah, who knows. I mean, I'm not a I'm not a guy to talk about the price of these things. But I think a lot of this demand is one there's a there was a wipeout, a flush out during that week where there was a lot of flows coming out of those ETFs. And also this week there's obviously what happened on Monday when we broke the news that there was engagement happening.
There was a huge renewed interest in the space. And it wasn't just ethereum that saw prices rise, right, it was Bitcoin also got head. So I think there's just renewed demand. And also I talked about like what our
theory is, right, the political wind shifting. I think the thing here is like, yes, like the first order effect here is we're going to get an etherorym ETF most likely again not guaranteed we see it, but that's the most likely outcome, right, But the more broader outcome is just like things are kind of shifting here to the point where it looks like there's going
to be some more constructive dialogue going on. I don't think the Dems are going to flip to a pro crypto stance here, but I think it might be less anti I guess, is the way I would put it, and I think that has broader implications than just the fact that we're likely to get an ethereum ETF because of the actions of the SEC. James always great insights, my friend, and maybe I'll have to have you back on pretty soon because let's see what happens tomorrow in the coming weeks. But thank you so
much. Yeah, thanks for having me. Good chatting, Tony