Luke: Juan, welcome to Break Technologies. How are you doing today, Luke? Thank you for

Juan: having me. I’m having a fantastic day. Just finished a panel earlier on institutional adoption and just enjoying being here.

Luke: Excellent. Yeah. So we’re here at Rare Evo. What was the key message you were gonna sharing in your session?

from bit Wise’s perspective?

Juan: Yeah. One of the big messages is that institutional adoption. Is really a new structural wave of demand that is outpacing the supply of Bitcoin. And we see nonstop to it. We are seeing institutional adoption come from the ETFs via. Investment managers and other institutional investors, pension funds, endowments that are starting to onboard.

We expect wirehouses such as the Morgan Stanley’s of the world to approve the ETF soon. And that’ll bring in a new wave of demand. We’re seeing the corporate treasury companies by starting to buy en mass and really be another structural bid to, to Bitcoin. And then we see the [00:01:00] onboarding onto the Ethereum ETFs as well.

We, we’ve seen Ethereum have a big run. This year, especially in the last two months. Mm-hmm. And the inflows into Ethereum, ETFs really take off. So we’re excited about where things are going and the adoption, the institutional adoption.

Luke: Fantastic. It’s been a lot happening the past two years.

Right? Like,~~ Bitwise a senior investment strategist what trends are you watching? You do that again? Everything’s looking good. I’m just gonna get rid of this outta your way. Oh. Oh, got it, got it. Is it better? And then you’re, you’re thinking, Dan, you want take it ~~

Juan: off? Yeah.

~~Just to read that question. ~~

Luke: ~~Yeah, I’ll just pick it up on that one. Okay, cool. So a, ~~as bitwise a senior investment strategist what trends are you watching most closely right now,

Juan: really watching the developments and tokenization? Yeah. We are seeing many of the world’s largest asset managers who in the past couple years were piloting tokenization initiative has really moved to production and launching products.

And we’re seeing the TVL of tokenized to funds really rise at a, at a very rapid pace breaking 25 billion now. And we’re excited about the opportunity ahead. Real world assets are in an addressable market of 500 trillion in upwards by some estimates. Massive. And we’re only at 25 billion.

Yeah. And. You saw Larry Fink in [00:02:00] his shareholder letter. Talk about the tokenization of everything. You seeland te at Robinhood talk about them getting into building a tokenization platform to bring stocks and other assets on, on chain. Coinbase is doing the same, so. Some of the big largest companies in the world are building tokenization platforms and we think there’s a lot of room to run there.

Luke: Yeah, it’s super interesting ‘cause you gotta have tokenization, giving people exposure through crypto to like real world assets and things like that. And the other side, like you, we’ve got these ETFs around the crypto space that have been emerging, getting popular. You know, how from your point of view have crypto ETFs influenced adoption among influ institutional investors?

Juan: They’ve really transformed the landscape. You know, what’s interesting about crypto versus other asset classes? Is that usually it’s the case that it’s the government or corporations or investment managers, institutional investors, that adopt something first and then individuals get access to it.

And with crypto it was completely flipped on its head, right? It was a retail niche phenomenon that is now finally getting to the institutional adoption [00:03:00] phase. And that is in large part because of the ETFs. Prior to that, the professional investors were. Pretty much not able to access Bitcoin because of compliance requirements.

Mm-hmm. But the ETF format of the ETF wrapper is really something that enabled institutional investors to get access to, to Bitcoin, and now to Ethereum. And more products to come in the future. So that’s really what’s opened up institutional adoption to, be possible and to gain traction.

Luke: Awesome. Yeah, no. where do you see institutional demand moving next? Like beyond ETFs or is it more ETFs or,

Juan: we’re excited. There’s, you know, this SEC has really turned the, the tide in terms of regulation. Yeah. And. Regulation has become a tailwind for the industry.

And if you saw Atkins speech on, project crypto last week, yeah, it’s really going to open a new set of possibilities for products and for innovation. And we’re excited of course of more by, by more spot ETFs. There’s applications for XRP, for Solana, for for many a chainlink, [00:04:00] many others.

That’ll be great for investors. But beyond that, it’s gonna allow innovations for new types of products that blend. traditional assets and crypto into an ETF that create different investment strategies and that is going to provide differentiated exposures for investors to onboard the asset class.

And we think that’s great.

Luke: Yeah, I mean, there has been such a course change in, regulatory landscape. We see it, I mean, just being a, even a browser and search engine with a token and all that. Like, and how, you know, it was almost just difficult to even try to get market fit with how the regulatory environment was.

Are you seeing more discussions, things warming up, like on the institutional side with this new administration and with these new policies and, and these changes on the regulatory side and the clarity? Is the Stablecoin Act giving you any help or are you guys looking more forward to other regulation that’s on the roadmap?

Juan: No, absolutely. we’re very excited by the legislative progress genius Act that’s now been passed into law, and we think that’s going to enable the commercial adoption of stable coins to be, to become mainstream. We’ve seen [00:05:00] now that this that, that the bill has passed. We’ve seen the major banks, JP Morgan, bank of America, Citigroup, all exploring stable coins or, or finding ways to adopt stable coins.

Amazon has talked about that. Recently Shopify announced a partnership with Coinbase. Chain Link announced a, a partnership with MasterCard, so. You are really starting to see the inklings of the mainstream commercialization of stable coins. But beyond that, there’s the CLARITY Act, which is a broader market structure Bill.

Yeah. That still has passed in the house and now needs to go through the Senate and be signed into law after that. But we’re very optimistic about it. And we’re excited because that. We’ll really clarify the rules of the road mm-hmm. For defi protocols which will not only onshore more defi onto in, in the us, but also allow them to innovate

Luke: Yeah.

Without

Juan: being afraid of, you know, being sued and, and other penalties. Yeah. So we’re excited about the innovation coming out of that.

Luke: That’s fantastic. Yeah. No more having to rely on a hundred year old, you know, orange [00:06:00] Grove regulations on, on the correct. What is one institutional trend that you’re tracking that you think most people aren’t really focused on

Juan: in terms of institutional trends?

We spoke about tokenization earlier. Yeah. An emerging trend is the ETH treasury companies. Okay. We’ve seen a big run with with the Bitcoin treasury companies over the past year. And that’s still growing really quickly. You know, quarter over quarter between Q2 and Q1. The number of publicly traded Bitcoin treasury companies grew 50%.

Wow. Quarter over quarter. And it’s only seems to be accelerating, but now, recently, just in the last month or two, we’ve seen the emergence of these Ethereum Treasury companies. I think that’s a fascinating trend. The Ethereum, the second biggest, second largest crypto asset. It’s, it houses the majority of tokenization, TVL, the majority of.

Stablecoin transaction volume. So it’s a powerhouse. Yeah, and I think for traditional investors having. Companies that hold eth on their treasury and then that then stake that, that Eth that is going to provide an [00:07:00] income stream for mainstream investors via the publicly traded companies that I think is going to be very attractive.

And then these companies are going to be come more crypto native as well. There’s gonna start doing more things on chain. And I think that’s gonna be fascinating for for spurring more. Growth in the defi sector and new ways that traditional investors in, in Wall Street interact with on chain activity.

Luke: Are we gonna see more? Probably crypto treasury companies kind of emerge and, this kind of grow as a sector from what you’re seeing? Or, or are you seeing this, I mean, it sounds like some new ones just came on for Ethereum, right? is it a pattern you think will repeat itself elsewhere too?

Juan: TBD? Uh, Yeah, I think, for sure it seems like it’s here to stay for Bitcoin and Ethereum. There’s been a handful of other asset treasury companies for Solana for XRP. Yeah, I believe. And some others. We’ll see if those run as well, But at least for Bitcoin and Ethereum, it’s clear that it seems clear that they’re here to, to stay.

Luke: It’s exciting. It’s exciting. what tools or infrastructure do these treasuries need to scale responsibly? [00:08:00]

Juan: Well, that’s, you know, the, the interesting thing about that is that the, that creates a secondary beneficiary effect to all of the companies that are building in the ecosystem. Many of the publicly traded companies you know, there’s a custody that to, to hold the bitcoin and and e and other and other treasury assets.

So that, you know, Coinbase is a big beneficiary of that. Yeah. Uh, There’s the staking solutions, institutional grade staking solutions. So, Kraken again, Coinbase at Bitwise, we, we have an on chain institutional on chain Juan Leon

solutions provider that we bought last year and we’re working with with many companies as well.

There’s the treasury management solutions. In order for, you know, companies realize they now hold all of this Bitcoin, all of this Ethereum on their balance sheet. So how do they monetize it? Right? And so there’s options overlay strategies there’s staking, there’s lending that can happen.

Luke: I mean, that seems like an untapped, like a relatively untapped, like something that totally could be huge.

Juan: Yeah. Going to be huge and it’s just getting started. Yeah. we are [00:09:00] just starting to work with companies on this and it’s a huge area of growth. You know, for these companies that hold Bitcoin on their balance sheet, if they can make an extra five, 10% a year from options overlays and other types of asset management strategies, that’s.

That’s huge for them, especially when you’re

Luke: trying to find market fit in something new. Especially think about AI and all these other things that are out there where, you know, you’ve got a lot of hype, but not quite a lot of market fit yet. Yeah, absolutely. I think

Juan: what’s, what’s fascinating for me, really to think about how this space is gonna grow is we have 120 or so.

Publicly traded companies holding crypto assets today and there’s 5,000 publicly traded companies in the us. Yeah. So really the penetration rate of crypto treasury companies is only 2% of the, the available market. And I think eventually every company in one shape or form, whether it’s. You know, one or 10% or all of their balance sheet.

But every company’s gonna have crypto on their balance sheet. So every company’s gonna be a defacto treasury crypto treasury company,

Luke: even thinking about 120, when you think about like a year or two ago, [00:10:00] it seems like a huge jump. I think I commend you guys too. Like I’ve watched Bitwise like weather through the winter with all this stuff and, and now as these things are getting more popularity, like it wouldn’t have happened without folks like you guys like trying to kind of pick up the torch and, get these things out there.

So it’s super cool to see like have there been any surprising sectors or strategies that you’re watching in treasury adoption for crypto?

Juan: Really it’s how these companies are starting to think about their treasury management. Yeah. And really becoming, starting to think about how can they be more crypto native and start building services on chain that blends the world of traditional Wall Street and crypto.

So I we’re so early on that. Yeah. But I think that’s fascinating.

Luke: Yeah. Super cool. Yeah. So, how my tokenization or stable coins changed the way users interact with money day to

Juan: day. I think it’s largely going to be behind the scenes and, and sort of unseen. You know, now this partnership between Chainlink and and MasterCard, you’re gonna be able to buy crypto with your credit [00:11:00] card.

Some of that will be facilitated through stable coins, but. You’re just using your regular credit card, right? You don’t even know what’s happening behind the scenes. The partnership between Shopify and Coinbase, where if you’re a merchant there, you’ll be able to check out and use the base app to, to check out use USDC, but all of it is gonna become pretty seamless.

And I think the exciting part is that because these you know, because stable coins transact on blockchain networks have lower fees have faster speed of settlement. I think it’s just going to make make things cheaper for the consumer. Yeah. You know, these, these 3% merchant fees at the point of sale I think are gonna be brought down 2%, hopefully 1% or less.

Yeah. So I think ul ultimately the, the consumer’s, the beneficiary, and I think that’s a great win.

Luke: Yeah. Huge small business too. I mean, I was thinking like small business. We even had some work on our house and the contractors are coming out and they’re like, look, if you do it this way, we’ll give you a discount even because we don’t have to pay these Fees, you know, for the merchant fees and stuff like that. So it makes a lot of sense. You know, what’s one bold prediction you have for the future of tech that you’re willing to bet on [00:12:00] today?

Juan: I would say that the future is gonna be nothing like we see it today. And I think the entire world is moving on chain.

Yeah. I think that’s what we’re seeing happen over the, what we’re gonna see happen over the next couple years. And it’s going to be a fascinating development when you have. The majority of real of real world assets move on chain and people can unchain use their Bitcoin as collateral for a mortgage mm-hmm.

In order to then buy a house you know, using, using Bitcoin if you want or lending against your Bitcoin in order to get that. So, I think the possibilities are really fascinating. You bring ai, the, the synergies between AI and crypto to the mix in order to optimize your life.

I think I think the possibilities are endless. That’s

Luke: awesome. Yeah. Juan, we covered a lot. Is there anything we didn’t cover today that you want people to know about Bitwise or, or just want to get out there to him?

Juan: Yeah, of course. At Bitwise we are super excited to work with investors in helping them access the opportunities in crypto.

You [00:13:00] know, we’ve been around since 2017. We manage over 15 billion today and have representatives all around the country. So for any, anyone interested in accessing solutions to the opportunities, the investment opportunities in crypto, please visit our website. And if you’re looking for a way to stay up stay updated with the market.

Our CIO, Matt Hogan writes a CIO memo weekly. I write it sometimes as well. It’s a great easy read five minutes that keeps you updated and provides insights on everything going on in the crypto market. So fantastic. Highly, highly encourage people to sign up to that. It’s.

Completely free.

Luke: Awesome. Awesome. Well, Juan, we really appreciate you coming on Great discussion and I’d love to have you guys back to you to check in on things. Of course, we’d love to do it again, Luke. Alright, thank you for having me. All right. Thanks so much.

Thanks for listening to the Brave Technologist Podcast.

To never miss an episode, make sure you hit follow in your podcast app. If you haven’t already made the switch to the Brave Browser, you can download it for free today@brave.com and start using Brave Search, which enables you to search the web privately. Brave also shields you from [00:14:00] the ads trackers and other creepy stuff following you across the web.