Waiting for the Bitcoin ETFs

Transcript

Nicole Casperson [00:00:04] Hi, everyone, Nicole Casperson here, Fintech Reporter with InvestmentNews and welcome to Three Questions. Today I’m joined by CEO of Osprey Funds, Greg King. Osprey funds builds Digital Asset Solutions for Investors. The Osprey Bitcoin Trust, or OBTC, is its flagship offering, giving investors access to a low cost, publicly traded Bitcoin fund. It’s also advisor friendly with Fidelity as its custodian. The fund is now accessible to all US investors through traditional brokerage and IRA accounts. For today I’m going to ask Greg his advice for how advisors can access Bitcoin and where the industry lies on the future of a Bitcoin ETF in the US. Thanks, Greg, for joining us.

Greg King [00:00:48] Hey Nicole, great to be here.

Nicole Casperson [00:00:50] Since a Bitcoin ETF isn’t yet available, could you talk to us about some of the ways Osprey is delivering value to advisors and investors by broadening their access to Bitcoin?

Greg King [00:01:00] We launched the Osprey Bitcoin Trust for exactly that reason. Our experience is as Bitcoin becomes more and more popular and people understand its investment potential, they want to have access to it, not just via direct ownership of Bitcoin, but typically in a lot of cases, via their brokerage accounts, IRAs and other areas of investor capital that are basically being saved for retirement. So we see that as a huge untapped potential market for accessing Bitcoin. And that’s why we launched the trust. The ETF, as you say, hasn’t it hasn’t come yet. And a lot of people are debating when that will happen. But in the meantime, we’re offering the Bitcoin trust as an exchange traded, I should say, as a ticker based traded product for investors in the US market.

Nicole Casperson [00:01:54] Yeah, amazing. And I know that you guys are offering it at a low cost. Right. Well, you just remind us quickly what that cost is.

Greg King [00:02:03] Sure. We came out with what we think is more ETF like pricing a forty nine basis points management fee. There’s some additional costs in in the trust to do with custody fees, et cetera, which we don’t expect to exceed 30 basis points for twenty, twenty one. So you’re looking at all in seventy nine basis points or less for this type of exposure. Up until this point, investors have only had one other fund option to choose from, and that’s a two hundred basis points. So that’s a material savings in overall fees for investors. We also, as you mentioned in the opening, chose to partner with fidelity to custardy the assets. In terms of Bitcoin products this is a big deal. People are worried about where are the bitcoins and where do we store them? And so, of course, we don’t self custardy. We selected what we think is the premier provider of custody’s services currently in the US. It’s Fidelity, a seventy five year old company. Mainstream investors know that brand. They’re familiar with Fidelity from their mutual funds and a lot of other products. And so we felt very comfortable in choosing them to be the ones safe, keeping those assets in our trust.

Nicole Casperson [00:03:11] And as you said, investors and the industry in general have been buzzing about approval for regulated Bitcoin exchange traded fund in the US. So what do you think is holding us back and how can we move beyond this hurdle?

Greg King [00:03:24] Many of us been watching this very question for several years. And about three years ago, the SEC wrote an open letter to the industry, citing a number of concerns around approving any Bitcoin related product. And they talked about valuation concerns. They talked about liquidity concerns. They talked about custody concerns, and they talked about market manipulation concerns. I think that three out of four of those have been addressed, by and large, by the market. There’s much more liquidity. People know where to go to value Bitcoin at any point in time. There’s great custodian services that are now available. I think what still worries them, and this is actually true of other commodities as well, such as oil, but is the fact that this is a global asset that trades not just in the US markets, but in fact the majority of Bitcoin trading is offshore and there’s really no way for the SEC to monitor those trading activities. Plus they’re twenty four, seven. And so you can have big moves happening out of Asia on a Saturday night in the US. And that’s just not something that I think they’re used to. And they’ve been very cautious in coming up with a regime that they’re comfortable with. So we’ll see what happens this year with the new chairman.

Nicole Casperson [00:04:38] Yeah, absolutely. And my last question for you, which is the big one, when do you think we might see the arrival of a Bitcoin ETF in the US?

Greg King [00:04:49] I think that with the change in regime, with Mr. Gensler coming in, you will see an increased focus on dealing with cryptocurrency related questions. So in my mind, there’s no doubt that we will see some progress in the crypto space on a number of fronts as it relates to particularly the Bitcoin ETF. If I had to pick a year, I would say 2022.

Nicole Casperson [00:05:14] All right, there you have it.

Greg King [00:05:17] That’s as close as I’m going to get. Is a whole year. 2022.

Nicole Casperson [00:05:20] Fingers crossed, we know that investors and advisers are asking for it. It’s all the rage right now. And so let’s see if your predictions are right. Thank you so much Greg for joining us. It was great to chat today. And thank you so much to our listeners for tuning in. And be sure to check out more great videos on three questions. I’m Nicole Casperson. See you next time.

See also: Give investors what they want — a Bitcoin ETF