The Future of Bitcoin Futures ETFs

been tracking this for oh seven years now. I called to Kentucky Derby for e t F nerds since the Winkelvoss filed in I believe it was when bitcoin was trading at by the way, UM, the all these e t s have been followed with the SEC, and you know, when you look at what really has taken place over those years, it's all been e t F that would track bitcoin like the way g l D tracks gold.

So that would be a physically backed even though people mocked me for saying physically on Twitter, but it's physically backed as you can get. In other words, it would store the bitcoin and track the spot price the way g l D tracts gold. However, Gamsler has come in and we thought he would be a little more lenient on bitcoin because he was an expert in it um.

But he has come in and really been a little concerned about approving physically back bitcoin ETFs because they are filed under the Securities Act of three, which is a looser rule than the Act, which is a more has more protections. That's what all your mutual funds and most e t f s are registered under. So there's a lot more protections in there, and I think he feels more comfortable if an e t F that track Bitcoin

were fall into there. So the only way to go through the forty Act and be bitcoin is to use futures. What happened in the days after we published that story. Yeah, So since he said that in the story came out, there has been I believe there's now five bitcoin ETFs that are now filed that would track futures under the forty So there's almost like a new Kentucky Derby forming in the shadow of the bigger one, and it sounds

like that's what's you know. If all goes well and he is a man of his word, it will probably see these futures ets approved in November UM as early as November at least, and uh, that's what we're gonna get. So we should really look into how they work. And we have two people on today who literally run bitcoin future strategies into fun structure, so I think we could get real inside look at how they're going to work in the pros and cons of them. Okay, So joining

us for this episode Steve Hawkins of Horizon Ets. He's coming back on You may remember him from the SHREWM episode a couple of months ago. And then Simmy and Hyman at pro Shares, who just a couple of weeks ago launched one of these future strategy this time on Trillions. A look into the Future of Bitcoin Futures ecs. Simmey and Steve, Welcome to Trillians, Thanks for having me. Thank you for having me again. Mat. Okay, Simmey and I want to start with you because this your your product

came out literally just a couple of weeks ago. How did you come up with this idea because it was something that you put in motion obviously months ago. Well, we've actually been uh you know, focused on the on the bitcoin space for quite a while. Um, but we did. Indeed, we're very proud A couple of weeks ago to be the first market to bring the first bitcoin exposure in a mutual fund. It's ticker btc f X. That's our

Bitcoin strategy pro fund. We have both pro shares et f s and pro funds mutual funds at our organization UH. And this is indeed a strategy that utilizes futures for exposure to bitcoin and puts that in a forty act mutual fund, as Eric was indicating, and I always like to be careful with e C SEC lane which the strategy was allowed to come to market. Remember, the SEC doesn't approve anything, they allow things to come to market. But we were really excited to be first on this one.

And so let me ask you how this works. Right, So this filing is called a Bitcoin Strategy fund, which is what all of the new filings are sort of called. And they're all active, right, So this is an active strategy. How does it A typical future z et F like UM, you know, natural gas or something would take the front two months probably and then just try to roll them constantly to keep exposure. Does this go beyond those front

two months? Does it use other funds like some of these UH filings are saying they can use futures and or other funds like presumably a Canadian Bitcoin fund or something um So, can you just really take us through how the strategy works and what it holds. Sure, So the basic intendency to use the front month contracts for exposure and the benefit of that historically is that the correlation voluntility and beta of those front month contracts to

spot bitcoin is really high. Now we are an active funds, so that means we do have some ability around the margin to manage the role. You know, you've got a roll from at the end of the month, you got a roll to the next month. So we have some ability as an active fund to say, oh, we see a lot of liquidity today, we're gonna roll a little

more than we intended a little less tomorrow. And there is a little bit of a room around the edges to think about, you know, where the collateral behind the margin, the the uh the futures contracts are invested. But still the primary intent for the exposure is to be invested in those front month contracts. So how's it going so far? Because obviously this is something that as Eric said, he's

been watching for seven years. There's been a ton of people interested in it, you come out with something that is a close approximation of what everybody is gonna be. Uh, moving towards and instant feedback. How's it going. It's going pretty well from our perspective. We've seen the flows started

to come in. Uh. And look, it's also been a period where where you know, bigcoin is on the rise, so that brings some extra highballs and the fund is doing what it's supposed to do, and we're seeing some nice flows, and um, I just want to get wonky real quick. I know Steve's waiting in the wings, but we just got to get through this mutual fund real quick. Um,

this mutual fund. Right, So a lot of the filings that are coming into the SEC will say something along the lines of we're going to attrack futures and potentially some other funds that whole bitcoin and I guess that and I think some of you mentioned o t c s, o CC trusts, which would mean GBTC, does this one hold any of those? Was that in the language, And do we think that Genzler will actually filter out ones

that have that? And because now we're seeing filence come in and just say just futures um and there's some talk that those are the ones will approve any thoughts on all that, So I don't want to sort of guess as to what the sec might do or what they're sort of signaling. But you know, back to my earlier point, because we are active, that means we do have a sum ability to think about how the cash is invested, particularly the margin behind those those contracts, so

we can use a few things other than cash. Again, it's not the dominant intent of the strategy that the strategy parts perspectives indicates a focus on those front run traffic contracts, but there's a little bit of ability to think about where the where the cash is sitting. And just to be clear, the Act requires funds that hold securities, whereas you can fall into the thirty three Act and not hold securities. And bitcoin isn't a security, right, so

you file into the forty Act because you're not. Futures aren't securities either, But you get the margin and you buy treasuries with them, and then presumably that's what you're holding. Therefore you get through. Am I right on that or

am I missing anything? I'm gonna focus on. I think what's important to the investor in the distinction between the forty and the thirty three Act, because for for folks who are tuning in UH thirty three, the thirty three Act is a common structure for commodity exposure as compared to the forty Act structure, which by these are named for the year in which they were they were put in place, nineteen thirty three and nineteen forty The key distinction.

As an investor, there is a real benefit to being in a forty Act, and that is perhaps most importantly the avoidance of the annoying K one. Most thirty three Act funds will generate a K one. You gotta deal with that when you file your taxes. When you're in forty acts space, get plain old ten ninety nine. So

that's probably the most salient difference from an investor's perspective. Okay, Steve, I want to bring you in here, um because in addition to to the shroom conversation that we've had with you, you're also in the bitcoin space, which basically sounds like a pretty fun job. How do you get what you read? Okay, may want it to so what you read on the thirty three forty Acts and what's your distinction, Well, I mean I would I would just step back for a

second and look at it from our perspective. So we launched our Bitcoin Features Index tracking EKF back in April this year. We were in a race with a few other um I would say digital let's call it digital currency, uh eric from a digital not physical asset perspective. Um.

So we had our synthetic futures based product. They had their digital asset hole in the physical digital currency themselves, and we really thought that our regulators in Canada were actually gonna go down the same route as what the SEC has said. And so we believe that we were going to be able to get the first bitcoin ECF to market here in North America using futures as the

underlying asset class rather than the physical digital currency. We just did really didn't think that they could get there on the market making and all of the sort of issues around liquidity that could occur directly with the holding the digital asset in the e t F custody account, if you can even call it that, and getting like the regulators themselves understanding the custody and the risks around custody of the digital asset themselves, and I think that's

exactly what has you know, been holding up the SEC for very very long with all of the comment letters that we've seen on the pasta on the physical bitcoin filing. So that's why we went really hard down the route of the futures based et F here and and obviously the regulators approved the physical digital asset e t F before the futures and we were quote unquote novel and uh um, so we we had to go down that road and we uh you know, launched about a month

after them. The physical products themselves are a little bit over a month. And you know, from our pay from our take, we really truly believe that futures is the

best place for from this asset class to get exposure. Still, um, we believe that you know, all of the market the efficiency of market making and how an e t F actually works is best through underlying futures exposure in the et F. And that's both long and also we you know, we launched uh inverse bitcoin shortly after that because we're giving these things as trading vehicles and if people want to use them as trading vehicles, um, then we believe that the futures is really the best place to go,

and that's why we agree with the SEC in that regard. Well, but let's let's dive into this. So unfortunately came out a month after the physically backed ones um. And but whether you're looking at the gold area where the futures gold ETF has one percent of the assets in the physically back gold ETFs like g l D and i AU in your case, this one has about one percent of what the physically backed big et F has in Canada, it's a very almost exact parallel, which basically shows the

same thing people just wanted physically backed. But you're saying that futures are better. Um, seems against the grain. Like even someone I know you want to say, I want people to use the bitcoin futures at F, but like it just seems like nobody would agree with that. Well one first to market, eric, Right, So if if our big right here's ETF was first to market, you would

not be seeing a hundred to one from an assets perspective, right. Um, it's just underling becoen exposure that they were going for, and it was who was providing the first and access to it in a liquid vehicle that could be traded on the exchange every day. I mean, we had a closed end fund here in Canada or a couple of closed in funds that had over a billion dollars of assets, and you know they were trading at premium to the

net asset value every day. Guess what happened to that premium on the day that a bitcoin ETF got listed. It's now trading at a ten percent discount, right like, because the people don't want to be locked up into a vehicle that they can't trade in and out of on a regular basis. And you know, when you look at the efficiency of what et f s do in

the marketplace, market makers have to trade this. They have to provide a bid us spread and they have to be able to hedge that exposure and actively trade that hedge as they buy and sell units in the marketplace. What are they hedging against any bitcoin et F right now, whether it be physical or future space. They are using futures because that's the only vehicle that they can trade intra day to hedge their underlying buying and selling activity. And guess what if your futures bas ETF and your

market maker is using futures to hedge their exposure. They're getting one to one direct contra you know, contraining UH exposure.

When that happens with a bitcoin digital currency physically back ETF, they're trading futures against it, there's gap and there's always going to be gap risk in that regard, and you know, it is what it is from that perspective, and so we believe that again as the market sort of UH evolves here and becomes matures from a from a market efficiency perspective in trading bitcoin, there's more bigcoin products out there, we believe that investors will lean towards where markets are

more efficient from a trading perspective, and the e t F should trade it more efficiently. You know, we can accept futures UM and deliver features as part of the creation redemption baskets again making it more efficient for the UM liquidity providers in the marketplace. So it's it's a very very different asset. I'm not a trader, I'm a norm e UM futures isn't something I normally think about touching UM. So how does this market work? What do

I need to know about it? Who listed them? How big of a market place are we talking about here? Can you guys break that down for me, so I'll start with you. Yeah, so among the benefits of the futures market is the regulation. The futures market UH is governed by the c m E and the c FTC. There is a central clearinghouse that you know, ensures that you know trades are not the folded upon and that those are really important aspects. Again, we can't be in the mind of the SEC, but we know what the

what the advantages are. And exactly the Steve's point, the more that there are opportunities for for bitcoint exposure, the more volume and the more liquidity we see in these markets. But even in and and so, you know, simply you're buying a futures contract for what the market thinks the price of big point would be a month from now. And as we as I mentioned, the tracking of that has been pretty close to spot. But everybody likes to

talk about role cost. That's everybody's favorite thing to talk about. It was any and Eric was gonna ask me, So I'm just I will throw a couple of comments I think before you even ask. He's so upset he didn't get to ask it. So I'll just pretend he asked it. So think about this, he's in my head. In bitcoin spot bitcoin, I think it was up about three d and five per cent. If you looked at a strategy that you know, approximated rolling one month contracts, you would

have gotten about two eighty five. So everybody goes, oh my god, there was roll cost. The market was up three oh five. I mean, the only way there's meaningfully positive role cost is when market participants think the thing is going up. That's first principles in jargon e terms, the future is the unbiased estimator of the future spot price. So yeah, I mean, if it's up three oh five and you've got two eighty five, I don't think anybody's

gonna be so worried about that. In a more normalized environment, it's very likely roll costs would be smaller. And the more of us that get involved in this, the more liquid the stuff is. That being said, I think ultimately there will be many different ways to get exposure. And also this these point, they all come with costs. We know how big that premium and discount is to the

thing or things that are trading over the counter. We don't even it's it's hard to even get your hands around the opaqueness of the transaction cost if you're trying to get a digital wallet. So there's no freeway to get exposure. It's like the stickers on all on all the you know, on all the e T s. You know you you cannot get the exact return of the theoretical index. It doesn't exist. Eric, are you gonna try and ask a question about world costs? Now? Send it

my way, Eric, send it my way. And yeah, okay, So yeah, look, I agree, that's a very good point. I mean, you're up to eighty five. We we always say that about the shiny object lane. Nobody cares about fees over there, because if you hit it, you're you're you're you're tripling the S and P like arc right, nobody cares they charge whatever. So many five basis points, um,

So I get it. I think maybe let's put it into proportion of the fact that when physically backed e T f s, if they were to come out, probably would track more of that upside but also the downside. So I don't know, it just seems to me that in general, and I'm not Look, the futures are a fine way to get exposure to many different areas. Typically, though, if you can get it the physical physically back way, people tend to prefer it like we went up in

Canada and just discussed that and in gold. Um. But the idea I think is just that humans that are investors generally just want something that tracks the price, you know that, they just want the Kelly Blue Book value, like just don't complicate this for me. That would be my one pushback on that. But to your point, if there's nothing else in the market, like if Steve's fund had gotten out a month before the physically backed I think he would have been bigger, had liquidity and been

been stronger. So in Simeon's case, let's say these futures et f s come out, um and they're out for well, let's let's just start there. How do you think the SEC is going to approve or allow these? Are they gonna put out like all four or five at once? Will they pick some? How much do you attention and assets do you think they'll get relative to let's say a physically back to e t F getting introduced, which we think would be ten billion dollars within a month.

So one let's look at physical gold versus a digital currency wallet, right, and who custodies that, how has it held? Is their risk to that underlying asset. Can somebody hack your vault at Fort Knox and remove your gold and sell it somewhere else? This is not gold finger anymore, right, But cybersecurity and hacking is like, this is something we have to live with for the rest of our lives. And will somebody be able to at some point in time hack Gemini Trust and figure out how to take

money out of the digital currency e t F? That's there, you know what, I don't know, but I'm not going to take that chance, and I'm not if I'm invested in my gold physical goal EPF. I know that I'm not going to lose my physical gold anywhere, at any time, under any circumstances unless somebody misplaces it, which I don't think can happen either, because you know, we have a very very strong settlement cycle and way of trading gold

and physical gold, even gold futures. But with digital currencies, when you're dealing with you know, exchanges that are getting hacked from time to time, You're dealing with custody arrangements which you're getting hacked from time to time, you're dealing with a lot of unknowns, as Simeon was saying, with respect to the actual trading of the fit you know, of the digital bitcoin, and it will be very very interesting when sort of we have interim financial statements coming

out right now for the physical uh bitcoin ets here in Canada, and we really don't know that underlying trading costs and custody costs and flow through costs until we get This will be the first public reporting period for those et f s, so it'll be very very different

from that perspective. I also wanted to say, like also to Simeon's point, when you're looking at the backwardation in contango of you know, the features curves for bitcoin, you know, since the inception of the bitcoin futures back to it wasn't really only until like the last twelve months, even less like ten months where we saw this huge sort of you know, contango effect which started creating tracking air between sort of BTC one on a long term basis

versus uh spot Bitcoin. And to Simeon's point, like we created a five day rolling features index and you know, on a one year basis right now we're about you know, thirty five percent behind. Um. You know that three hundred uh, you know three and one percent return of BTC one right, and you know our role in futures. There's a cost to it, and it's only really been in the last year since bitcoin has been going straight up from your point of ars to sixty. Something's going to happen during

that period. From a from a contango perspective, in the future is curve. It's just you know, reality. But when you normalize it, and when you normalize gold to gold, futures like this is a marketplace where we believe that futures will be again the best tracking vehicle because you've got to take the contango with the backwardation, and as you know, we see bitcoin slide, the backwardation really fits nicely into allowing us to really make up some of

that gap. Um, as long as we're fully invested, which is you know, what all our ets are hoping to be. But I mean Simeon's might be a little bit different because it's active. Ours is passive and invested at all times. So Simeon, I want to ask you, um uh, you know you coming out just recently and then all of a sudden you see all these new of filings, handful of them that that Eric mentioned earlier. I'm sure you've had a chance to look at them. What do you

what do you make of of those um of those offerings. Yeah, we have filed for an ETF. We're in the quiet period, so there isn't much else I can say other than we filed and uh. This is a this is a rapidly evolving and maturing space. I think when we get to some steady state, there will be multiple ways for investors to get exposure to bitcoin. And I think perhaps one of the best things that you can do as an investor is try to split up the underlying use

case for bitcoin with the from the alternatives. As an investor, I think that's really important and it gets lost if you're trying to do this research because you know, whether it's the anonymity, the functioning of the blockchain, uh, the evolution of defy, all those things that are part of the underlying value proposition of bitcoin or any other cryptocurrency are are critical to you know what will drive its

price over time. But you don't need a smelter to invest in gold, so those things are not necessarily the relevant question. The relevant question as more ways are allowed

to come to market. To get exposure is to ask yourself the questions of as an investor, trade off the call, the the transaction costs of being all the in the spot market, in the futures market, if there is ultimately that choice, the tradeoff of being in a forty act versus a thirty three act in terms of your you know, personal tax positions or your predilection for a K one.

So I think that's what's really important, because that can get so lost so fast because you go into the into the al Gores Worldwide Web and you you try to figure out what's going on with bitcoin, and all of a sudden you're reading the Setoti paper and you

don't know how that's gonna help you. So I think, if if there's a piece of to take away here as an investor focused on the relevant distinctions in what it means to you as an investor, leave the underlying use case commentary perhaps a little bit to the side for that for that evaluation. Okay, let's take a step back and look at what might transpire. So, you know, we just talked about there's other filings. So here's exactly what Gensler said that everybody has honed in on which

is quote. I anticipate there will be filings with regard to et s under the forty Act. When combined with the other federal securities laws, the forty Act provides significant investor protections. Given these important protections, I look forward to the staff review of such filings, particularly if those are

limited to the CME traded bitcoin futures. Now, all of the filings, the first three filed, including your SIMI and Vanac, yours and invest Go have this language which says the fun and test intends to invest in pooled investment vehicles, including e t f s that invest directly or indirectly in bitcoin. This The last two that came in, Valkyrie and Galaxy, simply say we're only futures. They don't have that e t f s indirect bitcoin sentence. Does that matter?

And how do you see the approval working? You think they'll approve all five at once, because when you file forty actors, you're on like a seventy five day clock, right, so it seems like the first one filed could be out first. I don't just give me your take on all that. I can't really opine on what the SEC might do, which which which I know you'd love for me to do. I we don't know, We really don't know. Um, it's pretty clear from the language that you know Gensler

is a fan of futures and a forty act. But at that nuanced level, you know, all I can really, you know, respond to is yeah, we're active and we have that flexibility to manage at cash collateral collateral in a little bit more flexible ways than maybe some folks who are who are painting that a little bit more narrowly. Steve, the SEC can't harm you. You're up there in Canada. What do you think about that sentence? Do you think that will matter? And he'll prove just the two that

said only futures or what's your taking? Well, I wish our regulator had the same thought process as against h first and foremost, because that I would have been first in marketplace. But that said, I you know, I believe, um, you know, he's really honing in on the fact of how can they get comfortable from a regulatory perspective around custody and trading of the underlying assets when this is such a new and you know every day it's changing with respect to how you can access digital currencies or

any and and you know how you can hold digital currencies. So, um, this is an unregulated cross border currency UM asset and

it's just completely unknown for them. But having the related uh CMME listed features governed by the CFTC is sen Emen saying, um, you know you have full on margin accounts, segregated margin accounts with a different trust, which is what we have had to do with with our e t F. You know, these are all I think these are all the comfort levels that is giving the regulator saying, I think we can get there now with the sort of e t F futures based and I think you know

all the I think there's five or six filings now which are features based specifically in the US. I believe that they're all going to get approved um and I believe that hopefully. I believe that the SEC will approve them all together, Like if they're going to prove one there, they should be approving all of them together roughly around the same time. So for the people that are on defence with their their physical ones, um, you know, like

the cryptoins and the wise and the first trust. You know, I think they should be getting there, you know, futures based filings in a SAP so that they can get onto the uh the train with the rest of the filings like uh you know, pro Chairs and and UH and Galaxy and invest Goo and Vanac and those guys who I think will leave the charge. If not, then I think they're going to be watching as uh these you know, US issuers get to marketplace with their first

futures based TTF. And to your point, in Canada, they allowed this bitcoin ETF to come out one day alone and then they let somebody else come out day two. It was already like too late. It was so I agree they probably should approve all at once, given what they saw in Canada. And then they I think they corrected and the three ether e t s all got approved and allowed to launch the same vein and it was more of an even fight. Correct But that's how

that's how big first the market. Now back to you, Simeon. Now you have a mutual fund that's futures and there's an e t F that let's say the e t F s get filed, I mean launched. What about pacity? Somebody brought up capacity where they thought, well maybe the mutual phone is approved, because the mutual phone can always

stop taking new assets. The e t s can't. Do you think if there's futures et f s approved and they really get a lot of flows, is their capacity concerns that you and you can't close you know, the e t F to new creations or I guess you can, but it would just annoy everybody. Yeah, I mean there's a couple of pieces to that. First, the uh um, it's it's likely that capacity limits is something that will increase and and uh ameliorate over time. So there are

limits two thousand limits on the front month traffic. That's about if you had it all up, it's about four underd and fifty million dollars in today's bitcoint price. But also remember we are active, so that gives us, that does give us the opportunity around the around the edges

to manage that process. So I think it's manageable. Um. You know, we would have no intent to convert the mutual fund We have me as I said, profile and pro chairs has we have mutual funds and e t f s on the platform, so we would anticipate that those codesists for us. I would add to the Semings point, you can there's there. The see me has a limit on the front month that you can own, and it

also has an overall limit. So like we had to build into our prospectives the ability to UM go to a certain limit on the overall fund and we could go we could move outside of sort of the the index, and we can actively manage the portfolio to the index based on what we were allowed to get exposure to.

So if that meant owning the front month, the second month, the third month contracts UM so that we were approximating the performance of the front month or the rolling front month index, you know, that's what we had to do. And the Semings point, as there are more and more products that are coming to marketplace, um, you know, there's significantly more trading volume in those underlying bitcoin futures, which we've seen effectively pick up almost every month since they

launched into seventeen. There was a bit of a lull in twenty eighteen, but like the number of contracts outstanding basically has increased every single month, which is and it's provided more depth to marketplace, more liquidity for us to be able to trade and you know, we have been in discussions with the CME UM I can openly say for over two years now to try and get them to move those contract limits and give us exemptions away

from those contract limits. And you know, because we actually you know, licensed the semi features UM you know, pricing and index that the that they had UM. You know, they've been very very open to talk to spend it and understand the issues. And you know it's something that we have to deal with our market makers all the time. But to your point, Eric, you know, under Canadian law, we have the ability to cap the et F very

very quickly and easily. And you know the one thing we don't want to happen though, is we don't want this to turn into a closed end fund UM. You know, we wanted to stay an open ended fund that you know people have the We don't want to trading in a premium. It's a closed in fund. You will never have day to discount because they always have the ability unit holders always have the ability to sell and readeem UM.

But buying it, if we have no more capacity to add exposure, then it typically will end up trading like a closed in fund, and trading in a premium. We just don't want that. So we're hoping to see me to hoping that everybody. You know, we're putting a little pressure on the CEME and as that market has become significantly deeper, will relax those individual contract limits that we're up against the currently, Steve, how big do you think your product can get? Then? What do you think the

potential is? Well, I mean we saw like if we were first to market list I'm just gonna say hypothetically, like, you know, we saw a billion dollars come in in the first week, right, I mean like if we had brought a billion dollars in in the first week, um, and used dollars like we would have been capped out in the front month contract. We would have been moving in the second month. Um. Wait wait, wait, time out, time out. So let's actually that's fascinating. Let's actually grow

this too, because you're using the same futures. So how how much could Bitcoin futures et F as a whole as a group have in assets US dollars before you're capped out? Any One fund is capped right, but multiple funds are not. I say, okay, so but one fund

would be a billion, one fund could be a billion dollars. Yes, yeah, it could be a little bit different for pro shares between because the one having a fund and one having an e t F and both of them, I don't believe that both of them from my own personal view, I don't believe both of them have the ability to go up to that two thousand front month contract limit um under the way that I've read the semi rules. But I could be mistaken, and I'm I'm not Simon's lawyer,

and I'm not going to give him advice there. But you know, it's an entity uh limit per se and to the extent. And you know, one of the issues that we were running into is the trading partners when it comes to the you know that there there's a limited number of fcms in the US that are willing actually to trade at the bitcoin features, and then the

margin around those is significantly different. Like when you're putting up you know, five percent margin on a on a gold features contract, we're putting up forty two on a bitcoin futures contract. Very very different way of of operations

for us and managing these underlying portfolios. The one really nice thing that's happened though, you know, recently this year though, is the addition of the mini Bitcoin features, so that in itself has actually allowed us to really give us the ability to define tune the exposure in the ets to making sure that we're almost a hundred percent matching all the time, so you know, we have up to you know, one one bitcoin future when when big bitcoin features five contracts and if we're able to add in

a you know, a mini contract to round out the exposure where we need to. Um, it's been a lot better for us to manage that way. And Timmy and how how how about you? How big do you think your product can get? And then how would that compare

if the if the et F version were approved. Yeah, I don't I don't want to throw a specific number out there because again, because we're active, that gives us a little bit of an ability to to manage around if there's enough liquidity to put a little bit past the front month to you know, to to think cleverly about how uh and effectively we could uh we could manage the the the the collateral in the margin to

get a little bit more exposure. So it's it's a little bit softer when when you're in uh when when you're on the active side. Okay, they could also own e t F inside. So if they get capped out on a pro funds basis for the maximum number of futures contracts they own, they can easily backfill with other either futures based yes, or even some of the the digital currency back etf here in Canada. Okay, so this

is fascinating. We went way down some wormholes. I want to actually just back up for a second and and Simon, I'll just ask you, how hard is it to actually just compete with like robin hood on this front? Like I could just open robin hood as a consumer you know, the day trading Yahoo if you will, and like just buy some BTC, Like, how hard is it to compete with that? Oh? I don't think it's hard to compete because I think it's as an alementor of mine once said,

let a thousand flowers bloom. There will be multiple ways to get exposure to bitcoint that that will be uh, that will have pros and cons and that will have uh have advantages for different constituencies. Uh. There's a heck of a lot of people out there that would not be would not be pursuing their exposure the way you describe. But man, when you tell them, wait, there's a mutual fund.

Oh that's pretty clean. So I think I think there's plenty of room for for lots of ways to get exposure and and there was certainly from our perspective and underserved or not served at all constituency that will find the forty act vehable vehicle to be uh quite the attractive alternative. All right to close, Simeon, We've got Steve this before, although I can't remember what it was, and I'll probably asked him again. We always ask folks, what is your favorite et F ticker that is not your

own favorite e t F ticker that is not my own? Well, tell you to prepare, Simeon. Oh I didn't. I thought I was going to get a list of the secret question how can you go wrong with g L D? So that's that's pretty And Steve, have you changed yours? I do? I have a new favorite now, and is because we're getting at the space specifically, but uh C S I C K is my new favorite, especially from the U S E T S so amazingly I don't think we've had that one before. Yeah, they're healthcare. You know,

it's uh, it's it's it's just totally sick. So I like it. Well then that that one's got a good mirrored pair with Cure. I always like tickers that are also great bands like R. E. M. Cure. There's a couple of them there. Used to be Bono that was a Latin America bond fund, but that close. But yeah, good choice, Steve inspiring triple leveraged. Wow, look at you. What are you doing in your personal account these days? I'm playing the leverage marijuana. That's as well as inverse bitcoin.

Those are my favorites that I like to trade daily. All right, Simme and Steve, thanks so much for joining us on Trillions. Eric, always a pleasure, Thanks for having soon. Thank you. Thanks for listening to Trillions until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Weber Show. He's at Eric Falcinas. This episode

of Trillions was produced by Magnet Hendrickson. Frincesca Leeby is the head of Bloomberg Podcast Bite