Crypto ETFs and ETPs: What Real Institutional Adoption Actually Looks Like Now | EBC12

Does this work? Yes, it works. Well , thank you for this wonderful introduction. Um, you know, we were looking at this panel either before lunch or after lunch, and you just realized that nothing was going to work out today . So, uh, I'm glad it's after lunch, so we have the energy to go through this panel, okay?

Welcome everyone. Just to start, to lay the groundwork for... lay the groundwork for... uh, we'll just do some introductions, and then I'll talk a little bit about the ETF industry as it is now, and then the cryptocurrency ETP industry. So thank you.

I'll start with you, Bruce. Um, I'm glad to be here. Thank you for inviting me to this panel. Um, my name is Nitesh Sharma. I am the head of international digital asset strategy at BlackRock.

This means that from a BlackRock perspective, we look at digital assets along three broad lines. Crypto asset ETPs, where we structure exchange-traded products that provide exposure to crypto assets through crypto assets through ...uh. ETP. Stablecoins, where we structure money market funds that can be reserve assets, reserve assets for regulated stablecoins, and tokenized assets, where we tokenize our instruments, making them available to a wider audience who access these exposures on the blockchain.

Thank you for inviting me. Hi, I'm Daval Joshi Skeeta, and I'm responsible for digital asset research at WisdomTree Europe. So, WisdomTree WisdomTree Europe. So, WisdomTree is a global issuer of exchange-traded products. We have products spanning all asset classes, and total assets under management now stand at just under $200 billion .

In the crypto . In the crypto space here in Europe, we have 12 products, eight ETPs for single coins and four ETPs for crypto baskets. And in the US, we have a lot of tokenized products. So I am very, products. So I am very, very happy to share my experience.

Hi, my name is Andrew Forson. I am the President of DeFi Technologies and the Chief Growth Officer of our wholly owned asset management subsidiary, Valour. Valour is a predominantly European crypto ETP issuer. Recently, we have also moved into hedge moved into hedge funds and other institutionally oriented products. Um, our core market is mainly the Scandinavian countries of Northern Europe, and we currently have over 100 digital assets underlying ETPs listed on exchanges as far afield as London, Switzerland, Stockholm, Brazil, and Euronext.

And our company DeFi Technologies also has a leading brokerage company called Stillman Digital. And this is interesting because one of its main goals is to facilitate large wholesale purchases by traditional institutions in the digital asset space. I am pleased to be here . Thank you very much. Hello everyone, my name is Keen Gilbert.

I am the Head of Institutional Relations and manage Lido Institutional. So, Lido is the largest liquid staking protocol and the largest DeFi protocol. So, it has 25 billion TVL and about 9.5 billion ETH. So I'm very happy to be here today.

Thank you. My name is Torsten Hanke. I'm our general counsel, so I'm the only lawyer here on the panel. Er, at VanEck since 2014. Uh, VanEck is a global asset management company that has a strong presence in the crypto space as well in the crypto space as well , actively managing funds in the US managing funds in the US , as well as crypto ETNs in Europe since 2020.

And, uh Europe since 2020. And, uh , yes, we're also looking at similar related areas right now, as well as ETF tokenization and other things. But, uh, yes, the ETN business in Liechtenstein is a key element of our, uh, presence in Europe right now. Good. Thank you.

And it's okay to be the only lawyer here on the panel, Carson. We will not press charges against you . Uh, just for context, what we're trying to accomplish with this panel today. Well, first of all, ETFs have been a huge success in the investment industry investment industry . We reached, uh, 23 trillion in, uh, global assets, uh global assets, uh , this year.

Uh, assets double every 5 years. Uh, we, uh , Bloomberg Intelligence, are looking at about 50 trillion by 2035, right? And they grow so quickly because of liquidity, transparency, and value. And that's why they were a natural shell for cryptocurrencies, to bring liquidity and transparency to this market, right? And in fact, in Europe we have had access to cryptocurrencies through notes since 2019, but it wasn't until 2024, when BlackRock launched a Bitcoin ETF in the US, that it really took off in terms of cryptocurrency ETPs.

We currently have about 150-160 billion cryptocurrency ETPs in the world, right? Most of them are in the US, and most of them are in BlackRock products, right? But we saw an influx since the launch in 2024 of 50 billion, and again 50 billion in 2025. However, this year we actually saw a negative outflow, a negative outflow, except for August, which turned, ahem, the flows back to positive. So, today the purpose of this panel is to look at what institutional adoption of cryptocurrency ETPs actually looks like now that the dust has settled, meaning the launches have been made and the flows have stopped.

We are going to look at why this is the case and what the future holds for cryptocurrency ETPs. Perhaps not only for institutional, but also for retail use of cryptocurrency ETPs. Here in Europe, as well as in the US, okay? So, Torsten, I'll start with you, because we're talking about structures, in different regions. European crypto ETPs European crypto ETPs are debt securities.

They are not UCITS funds, right? Therefore, many mandates cannot hold them. Is UCITS ineligibility a limitation or just an excuse not to buy cryptocurrency ETPs? This is a very good question , especially for a lawyer, because, um, um, there are long discussions about what crypto ETNs and crypto ETFs are. And a cryptocurrency ETF would be impossible in Europe because UCITS requires at least, uh, three different similar assets.

So, a Bitcoin ETF as a UCITS would be impossible. In Europe you cannot create a UCITS. And uh, in the USA it's possible. This is also possible in Switzerland . We see, for example, gold ETFs in Switzerland, but that is why in Europe the first ETNs entered the market in 2015.

So the proposal was much earlier, for example, 9 years earlier than in the US. But, uh, of course, they didn't automatically attract as much, uh, uh as much, uh, uh , demand as in the US. And, and, uh, the simple reason for this, of course, is that if we had a UCITS ETF, a Bitcoin UCITS ETF, that would immediately be eligible for all institutional investors, pension funds, insurance companies, anyone who already distributes money in UCITS, just because it's a UCITS, it would be obvious in many ways to just say, " just say, " Okay, this is a different underlying asset." We may have to go through a new product development process and get Bitcoin approved, but this wrapper is already approved and we're happy with it , we know the governance, we know the quality of the wrapper, and that's why we're going into Bitcoin because, um, we have a setup with, um, you know, let's say, uh, reserved assets of an insurance company. We invest in UCITS, ETFs, anyway, and just add a Bitcoin ETF, but, uh, ETNs are just a different creature.

This is another, this, this is a security; It's a debt instrument, structured maybe a little bit differently because you have exposure to bitcoin, not money bitcoin, not money , but ultimately it's a debt instrument, and this debt instrument has different, for example, counterparty risk and a different structure, and it doesn't have the same, for example, global wrapper quality as a UCITS. UCITS, as we call it, the investment triangle, you have a depository bank that controls everything that the issuer does, that the , you know, asset manager does, and that doesn't exist in, in, in ETNs. And so ETN is a wrapper that, you know, hasn't attracted the same demand as ETFs in the US. That's a good reason, I would say, yes. This is not necessarily an excuse for institutions not to invest in cryptocurrencies, but in Europe it is simply their regulatory challenge.

Right? Good. And Nikhil, in the States, cryptocurrency ETPs are ETFs, right? But it seems like in terms of the current situation, you know, since the launch of IBIT, which American brokers and advisors are still limiting this, um, um, access to Ibid and your product, right? And what would motivate them?

What would convince them to actually offer them? So, um, and first of all, a great premise for a discussion on how ETFs have generally provided access. This has been a story for ETPs and ETFs in the crypto and ETFs in the crypto space because they have allowed investors to gain access to or express their demand for crypto demand for crypto exposure in a familiar, intuitive wrapper. This is what the ETPs essentially allowed. Ahem.

Well, initially this demand was self-regulating was self-regulating . Um, and over time, brokers and wealth platforms started providing this access through execution only for their investors. As this situation has developed, most leading firms, or many leading firms, have begun to look at advisory mandates in terms of how they might allow advice on Bitcoin ETPs or Bitcoin exposures within their advisory frameworks. And that's the answer to your question: when you get an advisory mandate, the incremental change becomes different because then you're actually trying to form beliefs about what the size discipline is, what the suitability requirements are, how that fits into your advisory system in the way that you typically advise your investors about the size of their portfolio, where assets fit into their portfolio, et cetera. The framework for institutions is not very different, although the nuances are different, which goes back to some of the points that Torsten raised earlier, namely: once you have that belief, you determine how it fits into your operating model, your governance system, your overall approval process, and your entire operating model.

This is a kind of approval procedure in leading consulting companies and institutions. Now, at the heart of both of these questions is a belief in the asset thesis itself. Where is the place of cryptocurrency, specifically Bitcoin in this case, as you mean Ibit, where does Bitcoin fit into your portfolio or into your balance sheet in terms of tactical or strategic allocation? Now, if you look at the price dynamics of Bitcoin over the last 10-12 months, the data suggests that some of these institutions trying to build this power of persuasion have been mixed. This did not really question the fundamental thesis or the characteristics of the underlying asset itself, as we wrote about in a report we published very recently.

We have rethought the thesis for Bitcoin, meaning it continues to be a single-person asset, it continues to have this predetermined supply , it continues to be completely separate from geopolitical, macroeconomic, fiscal factors. So, the fundamental characteristics have not changed, but the idiosyncratic movements idiosyncratic movements may have. And that kind of creates a barrier for institutions that are used to building that power of persuasion, embedding it into their advisory frameworks and essentially offering it to investors. So, I would say it's not stopped, or, uh, it's continuing as a process, but maybe it's slowed down because the evidence is mixed. And this continues to evolve.

Okay, it's only a matter of time, I guess. Yes. This is a solution, yes. And, uh, this is for, uh, De Ville. Here, in Europe, uh Ville.

Here, in Europe, uh , I have examples. ING in Germany, Boerse Bank, they added cryptocurrency ETPs this year, right? But in the UK they are restricting access to retail, right? Do you think, uh, in Europe, because cryptocurrency ETPs are more retail-oriented , has that accidentally hindered some institutional adoption? Not at all.

So, most institutions manage portfolios for retail clients. Therefore, the message that goes out to the market that goes out to the market must be attractive to both retail investors and institutions. Retail investors need to understand why it makes sense for them to have a small portfolio in cryptocurrency. And then they need to understand that cryptocurrency exposure through an exchange -traded product is a much safer way than direct cryptocurrency exposure cryptocurrency exposure . And once they are convinced of this, they will start asking institutions to have these cryptocurrency exposures for them in their portfolios.

And I meet many clients all over Europe who look me straight in the eye and say, “I don’t believe in cryptocurrency, but my clients are asking for it. So tell me about the products you have.” And that's when I start talking about how a crypto ETP is no different from a gold ETP. The only difference is that gold is physically stored in a secure vault, while Bitcoin or other cryptocurrency is securely stored in cold storage with a custodian. But all of this takes a lot of time because you have to educate investors on why they want to have cryptocurrency in their portfolios.

Then you need to show them that there is a difference between Bitcoin and everything else, and help them understand what everything else is, and that they shouldn't touch most of it. And once they know what they want, they interact with their portfolio managers. And for their portfolio managers, it's a long, very long process of product implementation, they need to get compliance approval, do all the due diligence due diligence , do risk management analysis. So, it's a long, multi-step process multi-step process that we help clients go through. Okay, looks like we have a theme here.

It is also a matter of time in terms of investor acceptance. Just to wrap up, what about the current issues in cryptocurrency ETPs, uh cryptocurrency ETPs, uh , Andrew. Um, you mentioned , Andrew. Um, you mentioned that you have, uh, well, you know, 100 products, 74 assets, right? Do you think this breadth of coverage, uh, will help or hurt institutional trust institutional trust ?

For example, uh, having so many products, so widely. Yeah, uh, that's an interesting question because there are two ways to look at it. One way to look at this is that we should all focus on Bitcoin as a representative commodity for the digital asset space. But there's another way to look at it in terms of understanding that this is an asset class where every token, practically every token, ironically every token, ironically Bitcoin being the smallest of all the tokens, every token has its own utility. And we are in a situation where the actual rails of modern finance are largely based on technology that you can access through digital asset ETPs.

However, from an investor’s perspective, the only way to gain access to the tokens that form the foundation of modern finance may be through digital asset ETPs. So there was a lot of jargon here. There were a lot of statements about infrastructure, this, that, and the other. So let's look at this with a real-life example. Stablecoins.

do not exist simply as an independent class or separate form of currency. They actually exist, each one of them, in a decentralized ledger. Why is this important? Well, it's important because it's the same registry that these tools exist on, regardless of whether you're in Asia, Africa, North America, or Europe. You use DLT, and that DLT will have a token.

And if you want to be able to benefit from the underlying token of this DLT, you will need access to hyperliquid, or polygons, or solanum, or ethereum, on which this token is based . This is a completely new asset class. So you'll learn, most of us, if you have an MBA or any job in finance, that the real magic in finance is diversification or the idea of ​​a portfolio. So any portfolio manager portfolio manager looking to assign exposure to the digital asset class will likely want to do so on a broader basis. And these days, the digital asset space is not what it was when we were just starting out, when there was an ICO starting out, when there was an ICO , and it was growing a thousandfold.

The digital asset space actually includes projects that make real money. I mean, hyper liquid is probably one of the most profitable companies. And then there are companies like Tether, which also have significant influence, for example, in the area of ​​sovereign debt. So, yes, I think that breadth of exposure is good for the industry. Hmm.

Thank you. To talk about the current situation more technically, uh, King, uh technically, uh, King, uh , you guys are the main leaders in cryptocurrency in the States, especially in the ETP space. Of the 18 billion that are placed through Lido, uh placed through Lido, uh , how much are ETPs and corporate treasuries worth compared to local cryptocurrency holders? Yes, that's a good question. Uh, I think the best example we can talk about is Bella's product, WisdomTree.

So, uh, WisdomTree has launched the first 100% staked ETH ETP Lido. So this product, and I'll be honest, I think it's grown about 35% in the first 8 months of the year, which is great. The product initially had a seed capital of $50 million, which again shows the dedication of the people behind it and their belief in what liquid staking is. But overall, the biggest advantage of this product is that it has 100% it has 100% staking. So, the vast majority of crypto or ETH crypto or ETH staking ETPs in Europe and the US only have 50-60% US only have 50-60% staking.

And the reason for this is native staking. So they actually leave a significant portion unstaked for redemption or liquidity purposes. Therefore, most such crypto ETPs typically operate on a T+1 or T+2 ounce redemption basis. But given how Ethereum works with withdrawal queues, this time frame can increase significantly from T+1 to T+2. But the main advantage of liquid staking and Lido, and what we can offer can offer , is the instant redemption mechanism.

So, in effect, you can exchange your stETH for ETH or stETH for stablecoins stETH for ETH or stETH for stablecoins and you will get 100% odds again. And from an investor's perspective, this means higher returns. From the perspective of an issuer like WisdomTree, this is a better product. So overall, I think from a cryptocurrency or institutional perspective, ETP (ETP wrapper) perspective, ETP (ETP wrapper) is fantastic. And we're pretty optimistic once we launch the ETF, hopefully with VanEck, because they filed an S-1 last year, we're very optimistic .

And I just want to add to that. So, you hear us talking about Bitcoin, which uses a Proof of Work consensus mechanism. And then we have Ethereum and Solana, which use Proof of Stake. If you, your clients, or someone you know in the industry wants to invest in blockchains, which, as I said, are the future of finance, they want to finance, they want to , for example, move to Ethereum by investing in ETH. I highly, highly, highly recommend looking for a product that provides the highest staking rewards after fees.

And I say this so that when you invest in stocks, you look at the dividend yield. When you invest in fixed-income bonds, you look at the coupons you look at the coupons you receive. When you invest in blockchains with a Proof of Stake consensus mechanism, you need to pay attention to the consensus yield or staking yield that you will receive. And if you don't do that, you 're leaving money on the table, which is nonsense. So for each of you who want to invest in ETH, SOL and some other blockchains, staking is a key point to consider when choosing a product.

Good. But that's part of staking. But overall, WisdomTree, you don't have nearly 2 billion in assets in cryptocurrency to be on both sides of the Atlantic, do you? So, who are the European owners of your products now? Are they considering?

And are they considering staking, for example? So, we have a wide range of European clients. Uh, my job is to job is to travel all over Europe, which I love, and I love being in Barcelona today. But I spend a lot of time in Switzerland. So it was customers from this region who took notice of our product when we first launched it in 2019.

Now other countries are starting to catch up with Switzerland. So, Germany is there, France is starting to show some interest, as well as the Scandinavian countries Scandinavian countries . I like to single out the UK because I live in the UK, where the FCA, or Financial Conduct Authority , only allowed the listing of Bitcoin and Ethereum exchange-traded products on the London Stock Exchange after the products launched in the US. So, the UK was years behind the rest of Europe, but when they allowed the listing of these products on the London Stock Exchange, they restricted trading to professional investors only. And now they have finally allowed retailers to trade these products as well, but they still limit exposure to only Bitcoin and Ethereum.

And here I will repeat the comment of a participant in the discussion: diversification is good. Therefore, no investor should limit themselves to just two tokens out of the many available. And investors should especially be encouraged to pay attention to cryptocurrency baskets cryptocurrency baskets . Because most of you, when you invest in stocks, you don't try to identify individual securities that will be successful over time. Most of you, when you invest in fixed income bonds, you don't choose individual bonds to buy.

So why should you be forced to identify individual tokens that could be successful in the cryptocurrency space in the coming years? A crypto basket would be the solution to this problem. While the crypto basket is being created by professionals who avoid investing in things like meme coins because I tell everyone that no one's money should be touched, you should touch any meme coins available. They are intended for entertainment purposes, not investment purposes. Thank you for the public service announcement.

Um, Torsten? Yeah, just a comment, maybe because, uh, it's really hard to understand who your investors actually are, uh, because it's an exchange-traded product. It clears like a central depository, and, you know, at the end you have your sales teams. They have certain know-how. They, you know, deal with some brokers and distributed asset providers, but it's really hard to understand who your customers are, but I think most of our customers are still our customers are still , you know, in the retail space , when you talk about the end investor.

So, in between there may be asset management companies, brokers, private banks, but at the end of the day, most of the time it's the retail investor. But we are also seeing more and more institutional demand, and the best part of that is the big discussion across Europe about thresholds for ETNs in UCITS, where there is a discussion going on right now, and it looks like next year we will have at least a 10% threshold for all UCITS in ETNs, and that will open up space for institutional, er, investment space, I would say. Right now it is not harmonized at all . For example, you know, in Ireland we have 0%, in Luxembourg we have 10%, in Germany we have 100%. There are no restrictions, and it is different in each country it is different in each country .

This is a very important aspect for institutional investors, as most institutional investors still invest, perhaps through UCITS or very similar instruments, such as Spezialfonds in Germany , special investment funds, single investor funds in Luxembourg, etc. So Luxembourg, etc. So , apparently, it's opening up quite quickly now, also, um, the issue of the acceptability of cryptocurrency ETNs for institutional investors. Hmm. I agree.

It is difficult to determine who the end investors are for exchange-traded products, that's for sure. But, um, Andrew, you mentioned that, um, Valour here is more focused on the Scandinavian markets and so on. Are you able to interact more directly with institutional clients, or do you also focus on retail clients? Yes. Well, there are, um, institutional ones, like corporate ones, and also institutional ones, like vectors, or private equity departments that deal directly with clients.

Honestly, the approach is that we usually communicate with broker-dealers. Of course, we have some events or outreach for retail customers, but it's such a young industry that I think all of us here are focused on making it easier to access . Isn't that right? Ultimately, the entire crypto ETP industry, and frankly , the entire ETF ETP industry, is based on facilitating access to the underlying asset class. So we have to first, uh have to first, uh , overcome the educational barrier.

So for a lot of investors who aren't crypto- who aren't crypto- savvy, uh, I think last time I was here, I told an anecdote about my mom asking me, uh asking me, uh , how she could get into investing in Bitcoin, and if she should go online and get a wallet. And I thought: " I thought: " Does she know what a wallet is?" Yes, yes. She, she, she, she, she, she, said that the wallet and bitcoins. And I thought, "This is a scam just waiting to happen."

And uh, she's in Canada, I'd be in Europe on the phone trying to explain to her how to deal with empty phrases and such. Well, that's the beauty of all our products. You can find them by ISIN, right? Standard investment identifier. So, we're ultimately saying, " ultimately saying, " Look, you're investing in these things just like you would in stocks, but you're getting access to this whole new asset class new asset class ."

And increasingly, we can now discuss, “ discuss, “ Okay, every time you hear that DTCC is going to tokenize securities on a certain chain, here’s how you can get that access.” So, this is a discussion we are having on a retail basis. On an institutional basis, it is essentially a question of: “ it is essentially a question of: “ How do you want to be positioned to take advantage of modern finance?” And I think this is an important discussion. Well, this is a good introduction to the development of the cryptocurrency industry.

Starting with you, Torsten, you see, Andrew mentioned the tokenization of DTCC securities, but we also see that the clear act is now dead for about the next 3 years. The EU DLT pilot reform runs until 2027. Now that we've done that, we have this great regulatory diversification, right? Will this be good for tokenization and what does it mean for the industry it mean for the industry ? I wouldn't even call it regulatory diversification.

I would just call it 26 different modes. This is a mess. This, I would say, is the biggest pain point for tokenization in Europe. This is roughly the same as with crypto investments or crypto ETFs. So a cryptocurrency ETF like cryptocurrency ETF like Bitcoin in the US means that every investor who has that 401k plan can automatically invest in it.

And in Europe we just get a new pension regime like in Germany and crypto ETNs are excluded. So you can't even use them in your retirement scheme. So I would say that in tokenization, everything is very similar. In the US, you have, as you know, an exemption letter from the SEC to the DTCC that says you can tokenize now for all people in the US, all regions, all countries, all products. And in Europe, we're looking at, you know, the blockchain law in Liechtenstein and the no- logic law in Ireland, and then there's, you know, the supervisory agent in Luxembourg, the electronic securities law in Germany.

Everyone is doing something different , but there is no solution for tokenization, such as an ETF. We see, of course, some mutual funds, such as money market funds, being tokenized; but if you want to, you know, create scale in this industry and you want to also allow secondary market trading, you need some harmonization where everyone uses, let's say, a tokenization platform on the same legal basis. Only if this is harmonized will there be scale in the market. Otherwise, we will not exist ; it's going to be difficult unless, you know, maybe BlackRock and, you know, some other players collaborate and say, "We're using the same address for the securities and the address for the tokenization platform, which are at the same address," and then there could be scale and it could work, but it's going to be difficult. Hmm.

And as a follow-up , Keane, you know, now that we're talking about staking products, you might also be talking about VanEck, do you see more competitors coming up to do the same thing that you are doing from a staking perspective? Obviously, there are already other organizations doing the same thing as you, but with the increase in staking, do you think it will attract more investors? Are they coming for profit, or are they just looking for a place to store their cryptocurrency? Yes, I think it depends on the specific institution. So, what is their strategy?

For example, with Bitcoin, it's a scarcity game. Whereas if you are an investor and want to get involved in Ethereum, it is an asset product. So we strongly believe that you should not hold unstaked ETH. This doesn't make sense. So we always tell clients to stake as much ETH as possible.

So as much ETH as possible. So , I think about 35% of about 35% of all ETH is staked at the moment. There are currently approximately 40 million ETH in staking. From our previous work, we assume that about 19% of them are institutional. So, from their perspective, and again, as Andrew mentioned, diversification is really important.

And this is also one of the key arguments in favor of Lido. So, for context, nothing is actually staked at Lido. Lido staked at Lido. Lido is a middleware . So, on the backend, we have 800 different node operators.

These are node operators. These are , for example, Figment, Kiln, P2P, Chorus One. And we also have what is called a staking community module. These are individuals who manage their own infrastructure. Therefore, it is extremely important to have diversification.

And it's really funny, when I talk to institutional clients, I always talk about diversification. If I were talking to a crypto audience, I would talk about decentralization. So the language you should use is very different. But again, the type of customers we deal with want to go further than just having ETH locked in their own staking. This is not the most capital-efficient approach in the world.

This is where Lido and the Liquid Staking Protocol come to the rescue, this very approach to capital efficiency. So, you invest your ETH in Lido and in return you get stETH or stETH. So you can take that stETH, use it as collateral, borrow against it, and then you also have the advantage of instant liquidity instant liquidity . So, I think it's kind of a journey that customers will continue. They will start with their own staking.

They will dip their foot in the water. But when they realize that there are so many additional benefits to liquid staking, they will move on to the second stage. And then probably in the future, you might have a restacking. I think institutions probably haven't reached that stage yet, or at least I don't think crypto ETPs where restacking is coming close. But yes coming close.

But yes , that's definitely the path they're going down, and they want to have different node operators or vendors that they can work with. Wow, restacking sounds like my dinner last night. Good. Never heard of it . Okay, so again, either decentralization for retail, or for cryptocurrency crowdfunding, or diversification for institutional crowdfunding, it seems like it's still moving toward the same goal, which is you're increasing the efficiency of that particular place in the staking market, right?

Yes. Yes, absolutely. Good. Thank you. Well, we still haven't touched on where we are now.

We saw a huge influx, a relatively huge influx into crypto ETPs in 2024, 2025, which has now stopped, right? So why is that and what do you see in the future? So, I'll start with you, Amikill, okay? Uh, you have the largest, uh, cryptocurrency ETPs in the US, right? Um, at this point, or ever...

what do you think the flows have stopped, and would that mean you'll ever launch a fifth, uh, product in the US? Um, do you know what test it is? What, uh, would motivate BlackRock to launch its next, uh, cryptocurrency ETP, given the situation? I mean, this is investor demand, right investor demand, right ? And going back to this whole plateau point that you mentioned, uh, we mentioned this before in terms of where beliefs are driving this in a way.

And if you look at the flows that have happened this year, uh, and over the last 10 months, you can clearly see that if you look at the Bitcoin market to start with, because it's also the deepest market among ETPs, uh, there's a clear divide between the cohort of investors that are in the Bitcoin market structure. OK. There 's obviously a cohort of investors who buy and hold, uh, continue to embrace volatility in market cycles, and continue to hold it over the medium term because they see it as a portfolio diversifier within their own portfolios. OK. Uh, then there is this market structure of investors using Bitcoin for trading processes.

This could be for hedging, relative value arbitrage, etc. Now, if you compare that to the flow of funds into ETP, it was something like that. Because if you look at the price dynamics of Bitcoin from October to October of last year to the middle of this year, the 50% this year, the 50% correction in the price of Bitcoin does not really reflect the equivalent of an outflow of funds out of the ETP. So most ETPs overall did not experience such a large outflow. Our own ETPs in the US experienced outflows in the single digits.

And our ETP in the EMEA region, which is important to mention here, we have an ETP with spot exposure to Bitcoin, has not experienced any outflows at all since its launch until now. Hmm. So, what this essentially tells us about is this aspect of " this aspect of " volatile" demand, where institutions that get exposures through ETPs decide or continue to hold those exposures even during periods of market volatility, because, again, going back to that moment of conviction, it comes from a moment of conviction to hold them in your portfolio for a certain outcome that you want to achieve. Actually, to add another point about the bet, it's the result you want to achieve. So when you actually get exposure to Bitcoin, you're actually looking for exposure to an asset that you think will diversify the positions in your portfolio with a certain allocation that can provide you with some kind of increased risk-adjusted return, depending on how it has performed over the past 10 years.

The belief in ETH is a little different because then you essentially get a belief in how, as we mentioned earlier, the financial market infrastructure is starting to build on this new rail. So you get the beliefs about stablecoins, tokenization, DeFi that are starting to grow. And then you make a decision, do I believe this will grow with this protocol? Based on that, as an investor, how do I want to get exposure to it? Do I want to get spot exposure in a convenient wrapper, which again is an ETP, or do I want to gain economic benefit from this protocol by getting staking exposure into it?

So, it really depends on the results that investors want to achieve. As this is reflected in our behavior, and our vision is that we are looking at launching our ETPs in a discerning manner, looking at assets that have similar market depth. They have experience. They have some ecosystem support. So until now our ETPs have been focused on Bitcoin and Ethereum.

Our future vision really depends on whether we can find similar characteristics in assets from other protocols, on which we will then test investor demand. Can we build the same quality of market around this because it doesn't end with the product launch. The next step is the actual scaling, which goes back to the point of education. Can you explain the product in a way that a sales consultant can explain it to a customer so they can supplement it within the consulting system? Can you create market quality around it as an ETP, where there is a bench of authorized participants that creates primary liquidity primary liquidity so that the spreads that investors face when accessing the ETP are narrow?

Can you then plug it into the operational and governance model of the bank or the capital platform, which will make it look like another regular asset rather than a new asset, because then it merges with the behavior. So this whole process actually boils down to scaling ETP. So our decision-making process is based on all of these frameworks kind of coming together before we actually get to it. But the bottom line is that customer demand comes from conviction. Good.

So the conviction seems to have either fluctuated , but in March and June there was an outflow in the US, but there was an inflow in Europe. So does this difference in belief depend on the type of investor or their situation? Really, the type of investor situation where they are in the market when they want to get exposure. So, as an anecdotal example, we spoke to European investors who indicated that they would like to gain exposure to Bitcoin when it drops by about 20%. Well, it's not the best starting point, but the point is that you can start to think about how certain investors think about it, almost timing the market and almost averaging over a period of time.

In the medium term, they continue to have beliefs about where it actually fits into the portfolio. So, it all actually starts from there. And once you've said that, you think about whether you want to have a tactical distribution, which is I'm looking at it from a trade perspective from a trade perspective , or a strategic distribution. And when you take that call from a strategic allocation perspective, you're almost telling yourself or building this thesis that there will be bad periods of volatility, and I can tolerate that, accept that, because I'm convinced about the asset itself. So, this nuance arises jurisdictionally, based on conservatism in individual jurisdictions, but the point is in the use case.

How do you actually use it? So, that pretty much settles it all. Do you agree? What do you see in the European institutional market's adoption of cryptocurrency theories? I completely agree with what was just said and I like to see European investors behaving wisely.

They are using price corrections as a good buying opportunity, and as mentioned, European products have not experienced the outflows mentioned earlier. This outflow occurred in the United States. But in the US, we also saw a large flow of money into these products after their listing. Here in Europe, investors have had the opportunity to invest in these products for several years. They are slow but attentive.

They have a plan, and they act on that plan. And if they decide to allocate 2% of their portfolio to digital assets and decide on a rebalancing frequency, they stick to it. And I always encourage them to avoid any social media hype or stories from sources, and to avoid panic buying or panic selling. Simply having a plan, sticking to it, and executing it over the long term is what European investors do, and I am proud of all of them for that. Thank you.

Okay, so I'll just summarize. I'm going to summarize going to summarize . We currently have about 160 billion in global cryptocurrency ETP assets. Torsten, what level do you think we will be at by the end of next year, let's say in 3 years ? Twice, three times, twice?

Yes, one question is how much people will allocate, say, to ETN or cryptocurrency, but another question is how, you know, Bitcoin will show itself in the end. So, I would say that maybe it will triple. OK. Interested? I think artificial intelligence has probably sucked a lot of money out of cryptocurrency.

So, potentially, if this AI bubble bursts, yeah, at least twice. OK. Andrew? Yes, I would say it will grow, but for a different reason. I mean, how many people in this room think that think that any of our governments will improve their management of inflation or public budgets public budgets ?

Hmm. Uh, if you think that way, then I think investment in Bitcoin should probably decrease because it's the only algorithmic instrument that is inherently deflationary and inflation-proof. Good. Tobias? I will say that in 5 years it will be five times more, that is, five times more, and I take into account both the flows from investors who have been considering this for several years, and the market itself.

Good. Nihil? I'm terrible at predictions, so I'm not going to make any predictions. Uh, but I would like to see an improvement in the quality of the market compared to market compared to where we are today. So, spreads are getting tighter, market quality is improving, deeper in both the primary and secondary markets, and for hedging workflows.

So, options markets in the space that is deeper in the US, starting to develop in Europe, starting to deepen, that's what I would like to see. The second point I would like to see is the results. So, ETFs, I mean, you've been looking at this topic for a long time, starting as broad stock exposures but moving into addressing specific issues. Crypto ETPs initially provided spot exposure, but over time, investors have viewed them as a solution to achieving specific outcomes. So if you can build on these results, growth will come naturally .

So this is the future I would like to see. So, we have the right ecosystem right ecosystem , we have the right spreads, they are likely to grow...Okay, but there are no numbers. There are no numbers. Okay, fair enough.

Okay, well, I guess that's what I would say, the conclusions that we still don't understand why it stopped. I think what we've identified we've identified could be structural, could be market, could be the investor themselves. What we do know is that flows are not necessarily acceptance. We see a lot of streams coming in streams coming in . So it seems like there is a part of the industry that is now using cryptocurrency ETPs not as investment vehicles or allocations but as trading tools, which is also good for the overall environment, right?

This ensures liquidity in general. Um, but on that note, I really thank my panelists Nikhil, Deville, Andrew, Kane, and Torsten. Thank you for your time on this very informative panel. Thank you.