Bitcoin ETF will be listed quickly, but it may take several months for funds to flow: 21Shares co-founder | CoinDesk JAPAN

• Ophelia Snyder, co-founder of crypto asset management firm 21Shares, said that while the ETF could be listed within days of approval, it would take months to assess the broader impact. Ta.
• It will take at least 90 days for the fund manager to process the addition to the list of approved fund distribution recipients.
• Even if an ETF is approved, the underlying assets are still at risk of not being approved by the SEC.

Ophelia Snyder, co-founder of crypto asset management company 21Shares, said in an interview that the first Bitcoin spot ETF (exchange traded fund) has finally been approved in the US and will be trading within days. A listing could take place, but it could take several months to gauge the impact on the market, he said.

Possibility that it will take time for funds to flow in

Snyder explained that wealth management companies have to go through various processes to add ETFs to their list of approved distribution destinations. Snyder’s 21Shares is partnering with Cathie Wood’s ARK Invest to propose an ETF, which received approval from the Securities and Exchange Commission (SEC) on Monday.

“That typically takes 90 days, so we won’t know what it actually looks like until at least a quarter,” Snyder said. That’s not the case. Adding a ticker requires a lot of compliance. A ticker is not something that gets added out of the blue.”

Snyder said he expects the first fund to list on exchanges within two days, similar to when the Bitcoin futures ETF ProShares Bitcoin Strategy (BITO) was approved in October 2021. “The standard ETF process is usually one to two weeks. BITO was particularly quick, and I think it will be faster this time.”

The extent of capital inflow is unknown

Snyder pointed out that it is impossible to derive how much trading volume will change due to inflows into an ETF. Bitcoin (BTC) has rallied 50% in the past six months in anticipation of approval, and traders are betting that the introduction of the ETF will draw huge demand from institutional investors.

Analysts at Standard Chartered say they expect an inflow of $1 billion (approximately 145 billion yen, equivalent to 145 yen to the dollar) in the first three months after approval, with the potential to exceed $100 billion by the end of the year. I expect there to be. Over the past 24 months, there has been about $1.2 trillion in net inflows across ETFs, Snyder said. On the other hand, the total market capitalization of the crypto asset market is approximately $1.8 trillion.

“These are net inflows, not ETF-based appreciation gains,” Snyder said, adding, “These numbers cannot coexist in the crypto industry. I hate to say it, but they look very different when playing with the big boys.” ” he pointed out.

Uncertainty remains

Snyder said there are other uncertainties in the crypto industry, which will likely come under increased scrutiny. The approval does not offset the SEC’s skepticism about crypto assets in general.

“What the SEC is going to do with Bitcoin is still important, but people just don’t understand it,” Snyder said. “Managers at financial companies are risking their reputations and careers to invest If they invest in Bitcoin and the SEC deems it illegal, there will be a problem.”

SEC Chairman Gary Gensler has expressed concern about the crypto industry several times, citing the high number of frauds and bankruptcies. He once referred to parts of the industry as the “Wild West.”

Will there be an outflow from Grayscale?

With this approval, companies offering physical ETFs are looking to differentiate themselves from their competitors. Especially the fees. Initial fees mainly range from 0.24% to 0.90% of net assets. After the initial announcement, there was a race to get the lowest prices, with companies cutting prices on the 9th and 10th.

The one that stands out is Grayscale. It plans to convert the Grayscale Bitcoin Trust (GBTC) into an ETF and charge a 1.5% fee. Grayscale’s fees are high, but the company may be looking to use its scale advantages over other investment firms to offset its higher fees. Grayscale already had more than $27 billion in assets under management prior to the approval of its physical ETFs, allowing it to offer greater trading volume and liquidity than competitors starting from essentially scratch.

“I don’t think you’re going to see a lot of inflow at that pricing, but their pricing strategy probably indicates that’s not what they’re pursuing,” Snyder said. He pointed out that Grayscale may rely primarily on retaining GBTC’s existing investor pool.

Whether there will be a significant exodus from Grayscale to cheaper funds may depend on investors’ motivations: whether they bought the fund for the long term and whether they are currently making unrealized gains or losses.

“I don’t think we’re going to see a major spill right away, but I think it could happen over time,” Snyder said. “As with all things, it’s a process. “It will take time to see how these things change.”

｜Translation and editing: Rinan Hayashi
｜Image: Ophelia Snyder (right) and co-founder Honey Rashwan (21Share)
｜Original: Bitcoin ETF Listings Will Be Quick but Money Flows Could Take Months: 21Shares Co-Founder