As crypto, blockchain and decentralized finance become a larger part of the investment landscape, it helps to have someone working for you who has been a part of both worlds. Dave Abner, who is currently an advisor across both the ETF and crypto spaces, is one of those people. His experience ranges from Bear Stearns to WisdomTree to Gemini and he joins the ETF Think Tank to offer his perspective on both industries and how advisors can make clients feel more comfortable with crypto.
Abner is originally a capital markets guy but feels coming into the ETF space with that background has been incredibly beneficial. Without capital markets, he says you just have a concept. When a potential issuer approaches with an idea, they need to have questions answered about how to bring that idea to market. There’s a long history of capital markets people that have gone on to work in ETFs.
Part of Abner’s experience includes a focus on Europe. He says one of the biggest mistakes investors can make is comparing a single market, such as the United States, to a multiple market region. Europe has more than a dozen unique markets with different identities and sometimes those countries do not necessarily like to play nice with each other. It is incredibly complex, and many come with very different factors.
Two of the biggest issues facing the blockchain/crypto spaces are infrastructure and regulation. Abner says that without infrastructure, you have nothing because things are constantly moving and changing faster and faster. Crypto desks already operate at warp speed and run 24/7. If there are any updates that need to be made to the system, they need to be done on the fly. The Nasdaq, for example, is only open during specific business hours and can make updates/upgrades over the weekend.
Are regulators looking at the exchanges as a way to control things or slow things down? Abner says that if you work at a crypto shop, the real enthusiasts say history doesn’t matter and they’re going to rebuild the entire system, but that’s not the way evolution happens. You can’t tear down one system and build another. There’s huge demand for blockchain infrastructure.
One of the things that prevents bigger and faster adoption of crypto is the confusing terminology, something that Abner believes comes from trying to establish a whole new financial system instead of building off of the existing one. The big question is how can we bring tokenized assets from the defi world to traditional asset markets to help make things more global? There’s a big generational shift happening and there’s a massive base of retail investors that simply aren’t comfortable with crypto. Even small allocations to crypto are difficult to sell for traditional market folks. Most want a traditional financial advisor to take care of this for them.
What’s the latest with the Grayscale Bitcoin Trust and the launch, conversion, discount to NAV, and lawsuit? Abner says he has no inside information or insight, but he thinks there’s a chance that there could be a traceback to activity that shouldn’t have been taking place and that could help prevent GBTC from becoming an open-ended fund. This also partially explains the huge discount. Everybody thinks it’s because of the sellers, but there’s also a perceived lack of value as well. Abner thinks something might be going on in the background.
Other key takeaways:
- Abner acknowledges that WisdomTree didn’t believe crypto was going to be big at first. Eventually, the company was able to launch a spot Bitcoin ETF in Sweden in 2018.
- Abner is a proponent of 24/7 trading because he thinks it’s about what’s good for investors. Most people only look at the markets after they’ve come home from work. Why should they only deal with it when the market is closed?
- Abner says that he kind of agrees with Gensler that much of the infrastructure exists within traditional finance. This isn’t something totally new and does need to exist outside of it. It’s just going to take some time to think it through because these things move slowly.
- Abner isn’t as excited about crypto ETFs as others are. He gets that the advisor community is waiting for a managed solution, but he just doesn’t know how adoption would be or how that would build assets into a Bitcoin ETF. The Bitcoin futures ETF is actually working quite well.
- Abner’s thoughts on the filing for a 2x Bitcoin ETF… People should have tools available and it’s OK to use in some cases. Bitcoin is just volatility and it’s a matter of choosing which tool you want to use for that volatility.
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