← CRYPTO 101
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- [00:00]
Ophelia Snyder
Foreign.
- [00:09]
Podcast Host
We are joined by Ophelia Snyder. She is a co founder of 21 shares, which is an ETP platform and one of the crypto spot ETF providers. They're also a multi billion dollar asset manager in the space. Ophelia, welcome and it's good to have you.
- [00:25]
Ophelia Snyder
Thanks for traveling me.
- [00:27]
Podcast Host
Yeah. This is an interesting one. You know, most of the people out there are familiar with the explosive growth that all of these different crypto ETPs and ETFs have had and 21 shares is one of the leading groups behind it. And in regards to that, I mean, man, you just had probably some of the most significant headline news ever. You just had, I believe it was the largest exit of any woman in history. And you're just coming off of that, right?
- [00:57]
Ophelia Snyder
Yeah, it's the, the sale of 21 shares to Falcon X was the largest exit by female founder in crypto. So it's a big moment.
- [01:07]
Podcast Host
First and foremost, congratulations. I hope you have a fantastic trip planned afterwards. I'm not even sure there's a, a kind of vacation that can match that energy, but hopefully you're scheming and planning and you know you're, you're going to pay yourself back a little bit for something like that, right?
- [01:24]
Ophelia Snyder
Yeah, it was. So I spent seven years building that business with one of my best friends and it was fantastic. And now taking so much deserved rest and also spending a lot of time digging into some pretty esoteric parts of crypto.
- [01:41]
Podcast Host
Yeah. And well, I mean after something like that, you certainly don't have to be here, you don't have to be speaking to anyone anymore. So we really do appreciate your time and we value it because the kind of knowledge and experience that you get from, from building something like 21 shares over the course of the last seven plus years, I mean, it's incredible. And again, we love to see it, we love to speak to it, and we love the opportunity to speak to all the ETF providers of which we've gotten to speak to quite a few now. And it's interesting. And so I think people have a lot of questions about the current state of crypto and what's going on and we'll dive into all this stuff, you know how before we even begin, I mean, can you just walk us through 21 shares and kind of the role that it's had in crypto and what made you so interested in gravitating towards that?
- [02:29]
Ophelia Snyder
Yeah, so I have a very peculiar honor of actually having been introduced to crypto by my mother back in 2013, and my mom completely understood why crypto needed to exist and why Bitcoin needed to exist. I came from, from holiday from, for like, from college. And my mom sits me down, we're watching some documentary, and she's like, you know, Merck spends too much money hedging. Globalization is here to stay in terms of supply chains, but we are in a geopolitical anomaly and everyone's getting along, but that's not going to last. And so Swift is going to be a problem. It's pretty remarkable thing to say. Back in 2013, have you heard of a thing called Bitcoin? I'm like, no, I have not heard of a thing called bitcoin. Now, the part of this story that kind of brings us to 21 shares is while my mom completely understood why bitcoin needed to exist, there wasn't really a way for her to buy it. She was never going to set up a wallet. She couldn't figure out why some company whose name she'd never heard of needed to kyc her, why her existing bank or brokerage couldn't give her access, why her financial advisor couldn't deal with the taxes, and on and on and on. I assumed somebody would come along and fix this. No one did. About five years later, my co founder and I were talking about this because his mom was having similar issues, but in Egypt. And we realized that there was a gap in the market and we needed to figure out how to build a product that our moms could actually buy. And there was nothing for us to put them in. Right. They'd ask us, like, what can I buy to get exposure? And the answer was, well, actually nothing. And so that's actually how 21Shares was born, was this idea that we wanted to make crypto accessible to everyone. It didn't need special infrastructure, doesn't need to be separate from everything else you are doing. It can actually be part of, you know, an integrated portfolio and an integrated strategy. And I think that's pretty mainstream of a thought these days, especially given how much of an explosion we've seen in ETFs. But I think that is a byproduct of that reality. People want their crypto to be part of their overall investing landscape, not its own, you know, super special separate thing. And I think ETFs have been the portal for doing that. And that's actually why we built 21 shares in the first place.
- [04:42]
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- [07:56]
Podcast Host
the single most overlooked thing in all of crypto is it's accessibility these days. I was in a similar boat. You know, some of the listeners probably know my backstory. Around the same time of 2013, I did a report on it. I was in high school at the time and the common question I got was, well, why don't you just go and get some? And it was like, all right. For someone who's 18, you know, under 18 at the time, not legally allowed to go open an exchange account, even if I was. You're. You're. People tend to think that it's as easy as it was today in 2012, 2013, Bitcoin was not easy to get your hands on. You couldn't go open up, you know, a Robin Hood or, or, I don't know, a Coinbase account or anything. You know, now you can do it anywhere. With all these different ETFs, it was so much harder, not to mention kind of sketchy. And so I remember having to have a talk with my parents about this. It was the opposite. And they were like, you are out of your mind. You know, here they are, they're, you know, lower classmen in high school coming and telling them to get this, you know, magic Internet thing. And they just thought it was crazy at the time. But, you know, that is the single most overlooked thing, is looking at how crypto was accessible and how accessible it was over a decade ago and looking at how far it's come today. And people take that for granted. And, you know, as we look at it now, the, the space has completely changed. And I think it's because of what groups like yourself, 21 shares have done. And I think one of the unique focuses that you all have had is this focus on practical infrastructure, saying, hey, let's kind of, you know, maybe not avoid the hype, but say let's like, let's make our primary focus on the infrastructure side of things because that is what's going to matter and that is what has been the most successful. If you look at any of the players who have said, let's build out practical, sustained, like long term infrastructure for the space, those are all the people who have succeeded the most. You can look at Circle, you can look at 21 shares, you can look at Coinbase, you can look at a lot of these players and that's where there has been the most success so far. And it's come a long way. So I always got to throw that in there for the listeners because they always want to like kick us a little bit and say, oh, but it was so easy. And it's like, wait a second, it wasn't as easy as everyone makes it out to be be.
- [10:15]
Ophelia Snyder
Not at all. I mean, I remember when we first got started, it was almost impossible to get service providers to do things like accounting services, which for funds of any kind are really important. So normally the playbook for creating an ETF is step one, have an idea for what the investment thesis is. And step two, call, you know, one of the big four, bank of New York State street and tell them, hey, I want to launch an etf, can you, you know, make that happen for me? And then they do basically everything else and you call the market makers and they say, yeah, okay, we'll trade your thing if we can get a pricing file from your accountant. And that's usually it. The, the difference here was you actually had to do all the infrastructure buildup because, well, the, the big four names in sort of fund administration didn't want
- [11:04]
Ali Jackson
to work with you.
- [11:04]
Ophelia Snyder
None of the smaller names knew how to build, you know, ETFs at that scale. Nobody would touch crypto. There were no actual custodians that could offer this kind of servicing. It was very difficult to find somebody who could do it, let alone somebody who could do it at that level of operational complexity. And you actually had to do it all by yourself, which was really quite something. We actually had to essentially reverse engineer an etf. We didn't know how to do it. So you just read everything you could and then tried to piece it together, like piece it back together because nobody would actually help you or support you. And now that's, you know, it's a foregone conclusion that there are dozens of custodians there. You know, every accounting firm is bidding for this work, every like audit firm is willing to audit your books, which is a requirement for doing this. No auditors would sign up to do this. Back then you were talking about a very complicated piece of infrastructure that needed to be built. And it was actually, we actually ended up having to build a lot of it in house and we built proprietary systems and filed patents for them so that you could actually operate a product that had spot create like subscriptions and redemptions into these products and actual physical Bitcoin behind it. That was completely unheard of at the time. And I think everybody kind of glosses over that and forgets like how difficult it was to stitch together something which today literally takes one phone call and you know, one phone call in like three to six months of work. But it's not a complicated thing. At the time it was incredibly difficult to do. And pushing through that is part of why you see, you know, 20 unchurch in such a leadership position today is pushing through that. Doing it now is much more difficult in some respects.
- [12:41]
Podcast Host
I know, I would completely agree. And it's, it's, this is again why we love bringing on builders and people who have been leaders in the space is because you always get to look at things through a different lens than I think the average retail person does. Like even myself, I'm saying, oh, my experience was, oh, it was difficult to go and buy Bitcoin. Your experience was saying, hey, behind the scenes, how can we get accountants? How can we get maybe data or service or all these other back end things that are just like the lowest parts or some of the most core foundation parts of infrastructure to even make the ETF possible, not to mention the regulation and the technicals and all these other things. There's all these other moving puzzle pieces from an institutional standpoint. And even then they were probably looking at you saying, we don't know what this is, we don't do that. There's a risk, compliance, yada yada. There's probably all these other things which is, it's fascinating.
- [13:32]
Ophelia Snyder
A great example of that is the Italian market for crypto ETPs and ETFs opened last week, essentially maybe a little
- [13:41]
Podcast Host
bit longer from the time that people are listening to this.
- [13:44]
Ophelia Snyder
But okay, so I don't know, like mid February, the time people are listening to this. And I think we took our first meeting with Console, which is the regulator who manages that market in 2019, maybe 2018. That's how far back some of this work goes. And I think you're actually seeing that everywhere. A lot of what's happening right now as like, increased regulatory clarity. You're seeing a lot of momentum on the regulatory side, but I think people kind of forget how much groundwork was laid to actually get us there. And you're looking at what is ultimately, you know, years and years of work that's finally coming to fruition. I think that gets lost quite frequently with the narratives around crypto and especially market pricing. A lot of these sectoral trends compound over years. They're not kind of flashes in the pan. And I think one of the things we're seeing a lot of is that increasing institutional adoption and that can cut both ways. But that is a product of, you know, 10 years of work from all sorts of different firms, including 21 shares. But that is a relatively new thing.
- [14:57]
Podcast Host
What have you seen from the institutional side? Because again, as the retail traders over here, as the retail investors, we see the headlines that hit the news. We don't always get the full look into what's happening behind the scenes, but we see these headlines around crypto adoption, crypto regulatory bills. We see these, these hot terms come up. Tokenization, RWAs stablecoins, DeFi. It seems like there's a big push for that. What have you seen behind the scenes? And is a lot of that real?
- [15:31]
Ophelia Snyder
So. Well, yes, a lot of that is real. But I think what's interesting is to. You need to look at the, the whole continuum here. Okay, so you go back a few years. We were fundraising for like an early round of capital for 21 chairs. And I think one of the only rounds of capital we really ever raised because the company was largely profitable, but and sat with an investor who could not believe that it was difficult to buy a crypto etf. Like, actually it's really difficult to buy it. It's like, no, there's no way. I'm, you know, I, I have all the wealth management services. I can buy anything. Of course I can buy this. Like, you can't but try because they were asking us, you know, how do you think about what demand is going to look like over time? I'm like, well, there is a lot more demand than there is access. And that's what the key problem is. Just didn't believe us and calls up his bank and, you know, ultra high net worth should have access to every product in the world. And bank won't buy it. For him, like flat out refuses to execute the trade. And that was the world six years ago. And I think that's something people forget so easily that that was the world six years ago. When you think about today, when you hear, you know, Morgan Stanley and Vanguard are allowing crypto ETFs on their platform, that is still just the very beginning. That is actually allowing somebody to purchase through them. Right? So I have an account, I want to buy a Bitcoin etf. I now can buy a Bitcoin etf. It's actually that binary. When you hear them adding this to the platform, that's what that means. That doesn't mean that their advisors are going to recommend it. It doesn't mean it's going to be in their managed portfolios. It doesn't mean it's going to be in their packaged investment products. It's very early still in terms of adoption. And I think that's just, that's still at the access level. I think some of the other points you're raising are much more around the application level, like can we actually get real utility out of this? And you're starting to see some really exciting and interesting proof of concepts by a lot of large financial firms. I'm really excited about what DTCC is doing, which has to do with the way securities, like real world securities settle and clear. And that's really exciting and kind of core financial infrastructure for US securities markets. You're also seeing those PoCs and you're seeing more and more experimentation both with stablecoins, with DEFI applications, with on chain applications and on chain data. And I think that is a, that is just beginning. In the same way, a lot of the foundational work for access and a lot of foundational work for the regulatory moves we're seeing today or maybe five years in the past. I think these are the beginnings of that next wave of institutionalization which will look like real applications that institutions are operating. My dream is that most people will at some point interact with blockchains and have no idea they're doing it much in the same way. Most people don't know how an ATM works, but it doesn't really matter.
- [18:24]
Podcast Host
I was about to say the same thing. The end goal is to have people using it and not even know it or have the need to not know it. Right? That is the end goal. Because if you look at anything else in the world, what other piece of tech do you say? Oh, you have to understand everything behind the technology and this and that to be able to use it. No, you don't. That's not how cell phones work. That's not how the Internet works. That's not how your computer works. You know, sure, you can. Specialize and know how to build a computer and use it. But like the average person goes and buys one from a store and you don't need to know how to do all these different crypto and blockchain things to be able to utilize blockchain. And I think that's where a lot of the real power, and I think that's also where the next kind of wave of adoption comes from, is saying, how can we kind of empower everyone with this without them all having to be crypto savvy?
- [19:18]
Ophelia Snyder
And look, I think the best example of that is an atm.
- [19:21]
Ali Jackson
Yes.
- [19:21]
Ophelia Snyder
I think everyone on the planet has used one. Right? Yes. Like, let's assume the two of us go on a trip right now, we're going to go to Tokyo and we're going to go and we're going to put our cards in an ATM and we're going to put a pin in. And magically, this bank that actually has no relationship to the place where our money is, is going to issue us a physical bearer asset in real time.
- [19:42]
Podcast Host
Yeah.
- [19:43]
Ophelia Snyder
Against the promise of some bank thousands of miles or hundreds of thousands of miles away is going to, you know, give them their money back. And I think that's something that we take so easily for granted and nobody thinks about how crazy that is. And I think blockchains will eventually fall into a very similar category. And I like the example because it's got a bearer asset to it. Right. Like this stuff also applies to bearer assets. I think people sometimes have like a mental block around that where, you know, they want to see the gold in the vault. But at the end of the day, for the most part, it doesn't, it doesn't really impact how you're going to use these financial products. Yeah, that's not the most important thing.
- [20:20]
Podcast Host
I would agree. I, I would completely agree with that. And it seems like we're going to get to that place one way or another. Right. Does it happen today, tomorrow? You know, probably not. But again, we see us getting there. You know, I would say sooner rather than later. And the adoption rate that we've seen in recent years feels like it's looking like a hockey stick. You have a little bit of a slower start, but in recent years it's gone parabolic and now people want this. And to go back to a point that we were talking about earlier, the eat the crypto ETFs I would argue have been the most successful ETFs or some of the fastest growing ETFs in all of history. People want this Institutions want this. And I don't think that you can have something, have a growth and success rate as large as it has been and then try to argue against this. I think it just fuels the fire. And even looking into the current day here, you know, we'll get into this topic of what's going on with, with crypto right now because I think people are a little bit more concerned anytime there is a drawdown. I think it's natural to, to have this. But one final number that I saw in regards to this was that people were getting a little bit nervous about ETFs and saying why are there so many outflows? Why is there this and that? Well, I saw a number that said around 90% of holders are holding strong. And that made me think, why is there such a focus on the 10% ruling the 90%? If 10% of sellers or 10% of ETF holders are the ones exiting and selling and causing the outflows? It's, it's. I wish that the headlines would be a little bit Revised to say 90 of holders are holding strong notes, you know, the opposite.
- [22:05]
Ophelia Snyder
But, and look, I think one of the things crypto has to get used to, and I think it's something as an industry we are not used to, is it used to be that crypto is fundamentally uncorrelated with financial markets because there are almost no links between the two. Right now you're getting to a place where that lack of correlation is actually being driven by other things because you actually do have access. There are two different problems, right? One is something has no attachment to something else because there's actually no real connection between the two versus something that's part of an integrated system. And Bitcoin especially, I think alter in a slightly different position today. But Bitcoin especially is becoming part of the traditional financial system, which means it's going to be much more heavily impacted by, you know, right this second AI has a stronger narrative. In a previous iteration of crypto that probably wouldn't have mattered because most of the people who were participating in that market were very focused on that market as a singular entity separate from how they think about the rest of the finance. That's changing with the arrival of all these new investor types. That's not necessarily a bad thing, it's actually quite a good thing. But I think it's something that as an industry we're not used to. 21 years was maybe in a different position. And so my perspective is somewhat different because we've always been kind of sitting at that crossroads of, you know, needing to explain to, you know, a family office why they should allocate to this instead of to corporate bonds. But I think for the rest of the industry, that's relatively new, but that is actually the trade offs. And as you're seeing more interest in other narratives and other parts of the market, higher rates, more excitement around AI, more excitement around data centers, more concerns about geopolitical risk, you're seeing people reallocate their portfolios. And now Bitcoin is part of that reallocation and that rotation of capital. Sometimes that's going to be fantastic and sometimes that's going to be more complicated, but you're going to see a little bit more of a relationship there. Not necessarily a correlation, but a relationship between how people view their overall portfolios and overall allocations driving the way they choose to invest in crypto markets.
- [24:16]
Podcast Host
Well, I'll tell you what, we're stoked for it. We agree with you. There is so much to come, which means that, you know, we're going to have to continue to stay in the loop and, you know, hopefully we'll have you back here soon. But once again, thank you for joining us and we really appreciate your time. Where can people find you if they want to go and see what you're up to nowadays and what you're going to be doing in the future? Where can they follow you along at?
- [24:40]
Ophelia Snyder
You can find me on Twitter or on LinkedIn. Right now I'm reading and writing a bunch of stuff about infrastructure and crypto and how to think about building in this space and where markets are going. So that's where you can find me.
- [24:54]
Podcast Host
Awesome. Well, once again, thank you for joining us and we appreciate your time.
- [24:57]
Ophelia Snyder
Thank you.
- [25:10]
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