YouSaid · the spoken record

Michael Sonnenshein

lines on the record: 53
first: 2021-03-11
most recent: 2021-03-11
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Hopefully, I have a lot more life lessons to learn, and I'm still relatively young, but I would say I wish I learned earlier, I don't know, I'm gonna have to plead the fifth on this one. I think I'm still learning every day.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say if you don't ask, you don't get. You are your biggest advocate. So that's not to say that I haven't had the fortunate opportunity to work for some amazing folks and have amazing people in my life personally and professionally, but no one can look out for you as well as you can and never be afraid to advocate for yourself because no one's going to look out for you as well as you will.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think a lot of people believe that we're all in this crypto casino and everybody is just passing around the buck and making all this money and this is all just one big Ponzi scheme when really these are serious assets and actual asset class, something that is to be taken seriously and is being taken seriously by the investment community as a whole. I'd say given how much passion and time and energy I have and will continue to devote to this business and this asset class, that one can be pretty irksome.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Know, I always look back at Flashboys. I always kind of think about that being a turning point in price discovery, market dynamics, things like that.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think that we will certainly be making pretty material investments around both technology that will create some automation and improve our investor experience, as well as our brand. We've known to be a pretty innovative and leading edge advertiser and working on quite a few fun things to continue to be hopefully a well-received actor in the digital asset space. If you ask me where prices will be or what AUM will be, your guess is as good as mine.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, here's where I hope my business is in two or three years. What makes grayscale amazing is its people. We are now 30 people strong. Our headcount is certainly continuing to grow and will continue to grow. And so I am a firm believer that our people come first and they're everything. Of course, second only to our investors and those entrusting us with their investments. So I hope as we grow our credo of transparency and being reliant on one another and inclusive doesn't get diluted as our headcount grows. I hope and I'm confident we will continue to bring additional products into the market that will continue to provide new offerings and access for investors as they think about allocating to digital assets.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, whether it's Paul Tudor Jones or it's Elon Musk, either and or both those types of folks' participation in this asset class and on a very public level provides an unbelievable amount of air cover for more folks to participate in the space as well.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think if you ask me maybe 18 months ago, I'd tell you we had a handful of institutional investors. I'd say today we're proud to have every kind of institution out there as a client, maybe except for sovereigns. We're dealing with institutions as investors, investors that were probably a pipe dream for us 18, 24 months ago. have all capitulated from the career risk of getting involved or being the guy in the investment committee that raises their hand and says well why don't we put 50 basis points into crypto or you know and capitulate it to the career risk of not being the person that raises their hand and so i think everybody is waking up to the potential of the asset class and certainly the participation of well-known investors well-known entrepreneurs”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or digital assets should not be in everyone's portfolio, but should at least be considered by everybody, depending on their risk tolerance and time horizon and various factors like that”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or Bitcoin, like the anti ESG investment, and I need to be concerned about that these days because Bitcoin mining is heating up the world and melting the Arctic and all that. And we kind of drill into Bitcoin mining and the fact that it's more often than not done with renewable energy sources. And that's another big misconception that's out there. I mean, at the end of the day, Ted, I'd say my seven, eight years being in this industry, Anybody who has really done the homework, I mean, really read up and really looked at Bitcoin and the SASA class as a whole. I've never seen somebody really get in there and then come back out on the other side of that and just not be completely amazed by it. Now, that doesn't also mean at the same time it's for everybody. We think everybody should be educated on it considering it, but the same way that we all don't include certain assets in our portfolios for a variety of reasons.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are fewer and fewer these days. I think one of the ones that I do come across a lot which frustrates the hell out of me is when folks say, well, okay, come on, Michael, Bitcoin has failed because I'm not buying a cup of coffee with it. And this preconceived notion of Bitcoin as currency. And to that, we say, listen, in the developed world, Bitcoin is at a minimum in today use case. It's digital gold, it's speculative in nature, and it may not be anything in our lifetimes other than a digital store to value. It certainly has the potential to be all kinds of other things, but it has certainly in very many investors' minds outshining gold, so to speak, because it's more divisible, more portable, and is actually scarce. So that one is one that comes up frequently. I think some folks often say, well, isn't digital currency kind of like?”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Less than 10% of the market cap of gold. And I think one of the other things that I'd be remiss and I'd share with you and those listening is this idea of scarcity. I think when a lot of investors in 2020 thought about the governmental response to COVID and the economic slowdown necessitating fiscal stimulus and this idea of perpetual money printing and dilution of fiat currency, there was suddenly this draw or appetite for scarce assets, verifiably scarce assets. And saw a lot of investors really glommed onto and were attracted to Bitcoin's verifiable scarcity and felt that that attribute alone made it quite investable in their portfolio.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think it depends who you ask. I think many investors liken an investment in this asset class to that of like an early stage technology investment. And so for them, it may kind of occupy the riskiest end of their portfolio. It's a medium to long-term time horizon. It carries a fair amount of volatility with it. And it's early days. Some investors are carving out some of their gold allocation and moving it into digital assets like Bitcoin. We don't find it the least bit coincidental that we saw some of the largest outflows on record from gold funds in Q4 last year when Bitcoin started making all-time highs. So that rotation is real and underway. And I think even though Bitcoin has moved quite dramatically, there's a general perception that there's still plenty of room for growth left in it despite the fact that only probably occupies maybe”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“That would be broad based. And so we started seeing a larger uptake for the digital large cap fund where people could accomplish just in fact that, giving themselves a broad-based view and exposure to the asset class.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Investors are really coming to the plate, I'd say, more knowledgeable than we've ever seen them. I would still say for the most part, investors' first foray continues to be an investment in Bitcoin. But 2020 saw two new groups from our standpoint. One was the emergence of the Ethereum only or Ethereum first investor, which was just really interesting. I think kind of going alongside the proliferation and interest that we've seen in DeFi or decentralized finance. And then two, we saw the emergence of people that I think from an investment standpoint finally appreciated that Bitcoin and this asset class around it as a whole were here to stay and that they knew they wanted exposure but knew that they couldn't find the winners and avoid the losers. And we're looking to make like a singular allocation.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, a lot of the public market trading is presumably being done by non accredited investors. So there's a big group of the investment community that may not qualify to buy the shares directly from grayscale at NAV. And two, I think there's a lot of activity as well in tax advantaged accounts. And so investors looking for digital asset exposure in their IRA or Roth IRA or profit sharing plan or whatever it may be and because these are in fact securities, both through the private placement as well on the public market, this has been a really seamless mechanism for investors to gain digital asset exposure in those types of accounts since buying Bitcoin or other assets directly in those accounts is pretty much prohibitive at the moment.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“What seems to be an ever growing demand, and that has also probably driven some of the premium valuation where they trade”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, in pretty much all instances, to your point, on the public market, these products have persistently traded at premiums to their net asset values. And it's important to share, one, we don't trade in the public market. We are not market makers. The market is kind of dictating the price of where these shares trade day to day. But ultimately, we believe that price discovery is driven by a variety of factors, one certainly being that these are some of, if not the only digital asset-based securities out there. And so investors looking to allocate don't have many options of how to get Bitcoin or Ethereum exposure alongside Apple and Google and the other assets they own. And two, that it's really a function of supply and demand, that despite the growth of these products, that there remains not enough supply of shares on the market to satisfy.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So all of these products are available to be purchased at net asset value by accredited investors on a daily basis, directly with grayscale. And so any one high net worth individual, family office, hedge fund, asset manager, pension, endowment can always come to grayscale and buy shares at net asset value. But to your point, Ted, one of the things that we've done that's been pretty innovative is that rather than offering your traditional redemption program for a different fund, what we ended up deciding to do was pursue public market listings for our products. So six out of the nine grayscale products have public quotations. And so investors can buy shares directly from grayscale at nav, wait a statutory holding period, and then they get liquidity in their investment by selling their shares into the public market.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Done much to try and reinvent the wheel at the end of the day, grayscales an asset manager. We just invest in crypto rather than stocks and bonds. And so we have a transfer agent. We have no shortage of external law firms, accountants, auditors, you name it. And so we're really trying to just develop and take the best practices from the incumbent asset managers and just apply it to a new asset class.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so our authorized participant does all of our sourcing and trading for us as our sister firm called Genesis. They're a broker dealer based here in New York. And because we operate such a regulated business, we need to source our assets from a highly regulated business. So their counterparties have to be folks that meet their AML and KYC obligations as a regulated entity. We work with the Coinbase custody trust company as the custodian for our products assets and hold those assets in deep cold storage vaults, which is a solution that works really well for our business and the deposits there are on segregated addresses, carry an insurance policy are really as void of susceptible threats or hacks or anything of the sort. And then we work with more traditional players and have not really”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Trading tools, tax lot reporting, order management systems. I mean, a lot of that infrastructure and a lot of those on-ramps were not in place back then. And you're dealing with a market that is much, much more robust and did not have a lot of these dynamics at play two, three years ago.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“So on the underlying technology itself, not a ton. And that's actually okay. I think the development community around digital assets, Bitcoin, et cetera, is as robust as it's ever been. But there's also as much as a lot of these talented developers are looking to innovate and continue to challenge the status quo, find vulnerabilities, improve upon these protocols. There's also still this shared appreciation that 12 years into Bitcoin, we thankfully haven't really broken it. We haven't really messed it up. And so it's kind of the old adage of if it ain't broke, don't try and fix it. But while that has remained relatively stagnant, and that's, I'd say something I'd argue is a good thing, the dynamics of the market have changed tremendously since 2017. The development of derivatives, lending and borrowing.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is why we have a business. And so I think it's, first of all, about maintaining or developing a new mindset around these assets and then to developing further distinct set of tools that you may not realize or have never utilized before to think about valuation.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's tough. We certainly do our piece, we hope, to provide educational resources around protocols. We were so often hearing investors' enthusiasm and excitement for investing in these protocols, but when it would come time for them to figure out, well, what's my price target? Or what do you mean there's no cash flows? And this is not Coca-Cola, this is not Google. And so we started to have to realize that investors should be thinking about valuing these assets in a way that is distinct from the way that they may look in valuation for more traditional assets where they might be able to do a discounted cash flow for Coca-Cola. But for Bitcoin, they actually don't even know it, but they can look at the blockchain itself and they get a tremendous amount of data that can be leading or lagging indicators or create certain signals that can be extrapolated out and associated with value, accretion, or depletion. And so it's not easy, but neither is this asset class.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“In any of these protocols, I suppose if someone is looking to invest in them, they need to try to figure out if the protocol will get used more and more and more and therefore accrete value to the token. How do people go about doing research on whatever they think the value is today and what it might be in the future?”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“To access and trade in is their legitimate price discovery and pricing mechanisms? What's the integrity of the underlying blockchain? Is it fraught with vulnerabilities or is this something that is legitimate and stable and is kind of being adopted on a larger level? For us, we're pretty scrutinizing. And so there are certainly a lot of very promising digital asset protocols that we would love to launch products around. But unfortunately, the venues where they trade or the instability of the underlying blockchain or even further nascent nature of them may make them at the moment disqualified for a grayscale product, but we would probably say at any one time have 20 to 30 different product ideas on the shelf.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“A challenge. We're just far and away the largest manager in the space. And so there's quite a bit of scrutiny paid attention to the decisions we do and the decisions we don't make. I think more than anything, we look at practical considerations around certain tokens and whether or not to launch a product that could very easily be overlooked. And so we're looking at, well, what's the origin of a token? Is it possible that it was launched as a security? Or is it in fact something that falls outside of the idea of being a security, in which case it can be packaged into an investment fund? We look at the degree to which there is or is not centralization within a single asset itself. Who is it controlled by? Who are the decision makers within the ecosystem? We look at the regulatory status. Has it been recognized anywhere? Is there an addressable market that we're able to”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so the product itself is a rules based methodology that is then reflected in an index. And so it seeks to give exposure to the upper 70% of the digital currency market and then holds those assets on a market capweighted basis. Now, given the way that we operate our business, there's a lot of disqualifiers as well. We have to have addressable markets. We have to have sound custodial solutions. And so today that product is a market cap weighted basket of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, but over time, and it does get reevaluated quarterly, there's nothing that would prevent the product from owning 10 or 20 assets or suddenly going down to only owning two assets. It's all about providing market coverage and hoping that over time, investors will always have exposure to those assets that have the greatest network.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Money can move around institutions faster and more seamlessly. So those are high level, broad strokes, some of the protocols that our products revolve around”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Much wealth you store, etc. Not everybody needs to know everything. And I think a lot of folks don't yet fully appreciate that over time, they may in fact be paying a premium for that privacy. And we're living in a world of credit card hacks and identity thefts and you name it. And so I think that something that is definitely attracting a lot of folks to invest in that theme. And then for a little bit different seller lumens is another product was launched by folks that were originally involved in the creation of the XRP protocol and a lot of what is being done on that network has really has to do with financial institutions speaking to one another, thinking about Nostro and Vostro accounts and the deposits that different financial institutions have to maintain with each other and trying to alleviate and re-onshore a lot of those cash balances so that”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Faster transaction times that really are trying to poke at that vulnerability within Bitcoin. Not dissimilar is a cousin from there, which is Litecoin, which again is similar, but also looking to improve upon that transactional throughput and the speed at which transactions are confirmed on the network. I briefly touched on earlier Zcash and Horizon. These are also interesting in that they're kind of moving towards this idea of privacy and privacy preserving assets. And so I think a theme that we've long believed in, and that has certainly been taken up by our investors, is this idea of privacy, that the world around us is a world of rapidly dwindling privacy. And when we say privacy, we're not talking about financial privacy that leads to nefarious activity or legal activity. We're talking about every single transaction.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“And payoffs associated with them. And so starting to see a lot of things being built on that. And pretty much anything that is being built on Ethereum can just as easily be deployed on Ethereum Classic. Very, very similar code bases with a couple of just different underlying philosophical distinguishing factors between the two protocols that really are tied to supply and governance and things like that. Bitcoin cash is different than Bitcoin. It's a fork of Bitcoin. I call it a sibling. A lot of similar attributes, but again, looking to improve upon Bitcoin with higher transactional throughput. So one of the main flaws that is often looked at in Bitcoin is the fact that there's so much activity taking place on the network that transactions don't happen as fast as people want them to. There's a blog jam at any one time. And so one of the characteristics of Bitcoin Cash.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So Ethereum is a distinct digital asset from Bitcoin and all the other assets folks have heard of. It is a protocol that is really meant to be a gas, if you will, to power decentralized applications, things like smart contracts, a lot of decentralized finance is being built on top of Ethereum. And so the idea around Ethereum is that it is going to again be a gas that powers applications and so investors are thinking about owning pieces of that gas as more and more applications are getting built on top of it. So thinking about essentially what we're going to think of as programmable money, things that cannot be disputed like they are in human to human interactions, but rather programmable outcomes that are based on mathematics.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the lion's share of it. So, if I look at AUM across the product family, Bitcoin or the grayscale Bitcoin trust is now probably occupying, let's see, call it about 80, 82% of our AUM, which has actually been coming down in value. It actually used to constitute a larger percentage of the grayscale product families AUM. When we look at, for example, the grayscale Ethereum Trust, that's now occupying a much larger share of the pie. It's over $5 billion now, that product, and that now has emerged as a largest Ethereum fund in the world. And so after that, it tapers off quite quickly, but it's great to see momentum in our other products like the digital large cap fund, like Litecoin. Bitcoin cash. These are products that are now in the hundreds of millions of dollars of AUM. And I remember a not too distant time ago.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“We did launch an Ethereum product as well, which became now our second largest product, which is awesome. And then throughout 2018, we kind of went on a product creating spree. We launched our first and only diversified offering, the Grayscale Digital Large Cap Fund, which is a basket of large cap digital currencies that are held on a market cap weighted basis. And then we continue to launch more single asset products, one for Bitcoin Cash, one for Litecoin, one for a protocol called Horizon, which is also a privacy preserving product. And then we also launched a product for stellar lumens. And so today we have a total of nine different products. And certainly for us, one of the focuses for 2021 is continuing to expand the grayscale product family. So with eight single currency products and one diversified offering, certainly can share that.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, chronologically, so we started with Bitcoin in 2013. So that's our long only passive Bitcoin fund, grayscale Bitcoin trust. It was a while before we launched our second and third funds, which I believe were for Ethereum Classic and for Zcash. So Ethereum Classic is the original Ethereum after there was a split in the Ethereum community between Ethereum and Ethereum Classic after the DAO hack. Zcash is a privacy-preserving protocol and has many overlapping attributes with Bitcoin. However, it is an asset that allows for a little bit more anonymity between sender and receiver and transactional details. In 2017,”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“It varies. I mean, the blockchain in Bitcoin is a global network, so there's nothing to prevent you from owning a Bitcoin that was one time owned in another jurisdiction. But if you wanted to ensure, for example, that assets hadn't passed through an OFAC nation or something of that sort, that is certainly possible given this technology and the analytical tools available.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's all been possible because the on-ramps and the off ramps have become quite regulated and quite overseen the same way that money service businesses are. So if there's some activity illegal that goes on in Bitcoin, eventually those coins are going to make their way to a wallet or to a transaction at an exchange or an order book or a service provider or a merchant processor, at which point a transaction is going to be tied to somebody's name, bank account, bank name, et cetera. And the blockchain transactions are immutable. And so the transaction can be traced all the way back no matter how many hops or transactions ago it was. And so ultimately, there's always going to be backward-looking source that's going to be able to be identified.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Had been a part of illegal activity before. And so if you were going to give me a dollar, I wanted a clean dollar from you. That is the power that the blockchain allows us to have, the oversight that we have to the point where there are clean or tainted coins. And it's just such an unbelievably powerful tool that I don't think yet is fully appreciated. may not be using your name to represent yourself. You may be represented by a string of letters and numbers when dealing in or transacting in Bitcoin, but it is a very, very poor mechanism for doing anything nefarious.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things. And so some of the companies that we work with that provide blockchain surveillance and monitoring are companies like Chain Analysis and Elliptic that actually can determine whether individuals, whether coins, whether certain transactions are associated with any kind of nefarious activity. Think about that. I could take a dollar from you, Ted. I could go deposit it into my bank. I have no idea if that bank is going to do anything with that dollar, not do anything with that dollar. I have no idea what transactions that dollar has ever been a part of. It could have been a part of a drug deal. It could have been a part of terrorism. I have no idea what it's ever been done before, but it's worth a dollar and you gave it to me and I'm going to go deposit in my bank. Now, what if I told you that I don't want your dollar because when I looked at your dollar, I knew for a fact that your”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Digital currencies like Bitcoin are in fact the worst, and again, I'll repeat, the worst mechanism for you to use if you would like to do anything the least bit untoward, nefarious, legal, you choose your own word. Every transaction in Bitcoin, the best way to think about it is that it leaves a digital breadcrumb behind. And so while you may operate in Bitcoin or on the Bitcoin network in a pseudonymous capacity, at some point your identity is going to be revealed at one of the on-rams or the off-rams. And that is why law enforcement is so unbelievably engaged with this asset class, because unlike folks who may be doing the far-right activity with cash with digital assets, the blockchain and that digital breadcrumb example again allows them to catch bad people doing bad.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Code be reset. It's not exactly like calling a 1800 number or clicking a reset button. Digital currencies have some really unique attributes that once you're out or locked out, you're out. That's it.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Another tough one. There are no shortage of world class digital currency custodial businesses out there. I'd say today they're starting to be some division lines between them as to which types of investors or which types of counterparties their systems are better suited for. The same way you see custodianship be better suited, different firms for the RIA community versus the hedge fund community versus the individual investor, retail investor community. And so it's important that investors understand that digital assets like Bitcoin are in fact a barrier instrument. And if you are going to entertain an investment on an exchange and then move it off an exchange to a custodial provider, once again, you're going to want to know, is there disaster recovery mechanisms in place? Has one of these custodians had a breach or a theft or a hack? What happens if you get locked out of your wallet? Can your pass”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Want you to figure out how you want to place a trade, maybe you find someone you can send money to. The question of custody comes up all the time. How do you think about making sure that whatever you own is safekeeping?”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think it comes down to the regulatory regimes that do or do not oversee and administer policy on top of a lot of these trading venues and order books. And so you're looking out for whether or not these are the types of places that are asking for AML and KYC information, provide tax reporting, have certain SOC reporting in place, disaster recovery, what their data retention is, things like that. So again, these are not the kinds of questions that the average investor asks themselves when they make a decision between opening an account at Schwab or TB Meritrate. They kind of feel like both are just as good as the other. And so that's, again, why it's early days for this asset class and why it's ripe for opportunity. And we'll eventually have a lot of these become household names or maybe the Schwabs and the TDs end up acquiring them. But in the meantime, it still can be challenging and unfamiliar to a lot of them.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Over the last couple years, there are some names like Coinbase that are clearly very large in the space. And then there are others, former ones like Mt. Gox, that ended up not being a credible counterparty. If someone's looking into this space, how do you have to think about how you can make sure that your counterparty is someone credible?”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Digital currency exchange or an order book of which there are many and investors are going to need to open accounts and do KYC and how we get into working with some companies that are world class, don't get me wrong, but they're world class, but they are going to be different and distinct from a lot of the familiar territory that investors are used to.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“Start with where, right? Hey, I decided I want to buy some Bitcoin. And to be clear, we're big advocates for the idea and the fact that Bitcoin and digital assets generally have become orders of magnitude easier for investors to access, but they are still being accessed in channels that are distinct from the channels where investors are typically making allocations, stocks, bonds, ETFs, mutual funds. So if you decided you wanted to buy Bitcoin, and let's talk about not buying $50 worth of Bitcoin to play around with it or send it to a friend, but, you know, really making an investment, you'd want to know who your counterparty is. And I can tell you that today is not going to be your broker. It's not going to be a bulge bracket bank. It is not going to be a trade that is facilitated on the New York Stock Exchange. It is going to be with a trading venue.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, grayscale is the world's largest digital currency asset manager. And so Grayscale is to digital currencies, maybe what Pinko is to bonds or Vanguard is to indices. It has been and continues to be our mission to provide access and exposure to the digital currency asset class in the form of a security. Investors have had and continue to have difficulty sourcing, transferring, storing, safekeeping, digital assets directly. And so the grayscale business has been and continues to be born out of the idea that we can facilitate investors' participation in this asset class by doing so in a structure or format that feels really familiar to them. We today have nine different investment products so that investors can be an exposure to the asset class.”
2021-03-11 · Capital Allocators · Crypto for Institutions 2 – Michael Sonnenshein – A Path to Entry (Capital Allocators, EP.181) · IDENTIFIED FROM THE TRANSCRIPT · source