What VanEck Is Looking at in Public Equities

Summary

Markets Daily Crypto Roundup: What VanEck Is Looking at in Public Equities

Podcast Information:

• Title: Markets Daily Crypto Roundup
• Host/Author: CoinDesk
• Description: Tune in as CoinDesk runs down daily action in crypto markets and some of the most important recent industry developments.
• Episode: What VanEck Is Looking at in Public Equities
• Release Date: May 23, 2025

---

Introduction

In this special edition of Markets Daily Crypto Roundup, CoinDesk hosts a discussion with Pranav Kanade, Portfolio Manager at VanEck, during the Avalanche Summit in London. The conversation delves into VanEck's strategic focus on public equities alongside digital assets, exploring unique investment opportunities in the evolving financial landscape.

VanEck’s Dual Focus: Digital Assets and Public Equities

Host: "You lead VanEck's digital asset Alpha Fund, right?"

Pranav Kanade [01:26]: "Correct."

VanEck occupies a distinctive position by managing both tokens and public equities within their Alpha Fund. This dual approach allows them to tap into opportunities that are often overlooked by traditional financial participants and the crypto community alike.

Key Insights:

• Unexplored Opportunities: VanEck identifies a niche where public equity players can leverage stablecoins to optimize cost structures, particularly focusing on reducing interchange and banking fees.
• Strategic Portfolio Tilt: The firm has recently adjusted its portfolio to capitalize on these less explored areas, observing that many altcoins may underperform in the current market climate.

Strategic Investment in Public Companies

Host: "Can you tell us some of the equities that you're looking at?"

Pranav Kanade [02:31]: "Unfortunately, I cannot come out on a call like this or event like this and talk about some of our holdings. But I think the way we approached it, if I were to sort of share the approach, is we kind of mapped out all the players and then generally kind of started with the belief that much of the adoption from these public companies will come from founder-led businesses..."

Approach to Equity Selection:

• Founder-Led Businesses: Focus on companies where founders or CEOs are making decisive moves to integrate stablecoins and optimize business operations.
• Global Perspective: Emphasis on U.S.-based and international companies engaged in cross-border payments, catering to audiences seeking affordable dollar access.
• Long-Term Winners: Identifying companies poised for significant long-term growth as they adopt stablecoin technologies and benefit from improved margins.

Public Market Trends and Institutional Horizons

Host: "Are you looking at sort of small to midsize or you're looking at large companies?"

Pranav Kanade [03:37]: "Yeah, yeah, we're looking at some of the larger players because you know, I think that's where like the less explored opportunity is. If I think about what's happening in the public equity markets, much of that market has gone to passive, you know, ETFs and index type products..."

Key Points:

• Focus on Large Companies: Targeting larger public firms where opportunities to integrate stablecoins and enhance business models are more pronounced.
• Extended Time Horizon: Unlike large hedge funds that concentrate on short-term outcomes (three to six months), VanEck adopts a multi-year perspective, allowing them to harness transformative changes in business operations due to stablecoin adoption.

The Future of Stablecoins in Traditional Finance

Host: "You know, you said altcoins are probably not going to do as well as they did before. If we bring it back to a more crypto focus. What are you looking at there? Where do you see the upside when we look at what's going on specifically in crypto?"

Pranav Kanade [04:26]: "Yeah. So, you know, one of the things we say in our team is stablecoins are clearly the product with some PMF here that's going to continue to work the next Thing likely that's going to come on the backs of that is tokenizing tradfi assets, bringing them on chain."

Insights on Stablecoins:

• Product-Market Fit (PMF): Stablecoins have established a solid PMF and are expected to remain integral in bridging traditional finance (TradFi) with blockchain technology.
• Tokenization of TradFi Assets: Anticipates a surge in bringing traditional financial instruments like T-bills and U.S. equities onto the blockchain, facilitating broader access and efficiency.
• Exporting U.S. Capital Markets: Envisions expanding U.S. capital market access globally through stablecoin utilization, especially benefiting regions with limited banking infrastructure.

Challenges and Structural Issues with Altcoins

Pranav Kanade [05:00]: "We think part of the reason the altcoin market is structurally kind of in a bad place is there's not that many pipes into the space. There's not an easy way for pools of capital to access this."

Key Challenges:

• Limited Access for Institutional Capital: Current infrastructure does not sufficiently support the seamless flow of institutional capital into the altcoin market.
• Regulatory Hurdles: The potential introduction of multi-token ETFs with stringent rules could streamline access but may exclude less compliant or speculative tokens.
• Future ETF Integration: Predicts the emergence of regulated, rule-based multi-token ETFs that could aggregate select tokens, enhancing credibility and investment inflows.

Opportunities and Implications for Retail Investors

Host: "So in the future we're buying an index fund that has bonk in it or has dog with hat or whatever because it's fit a rule set that makes sense."

Pranav Kanade [06:17]: "Maybe not those tokens. Right. Because those things are good."

Implications for Retail Participants:

• Enhanced Access: Retail investors may gain easier and more regulated access to a diversified basket of tokens through ETFs, simplifying investment decisions.
• Focus on Quality Tokens: Emphasis will likely be on tokens that meet specific criteria for inclusion in regulated investment products, favoring fundamentally strong projects over meme coins.
• Alignment with DEFI Ethos: While DEFI promotes open access, the regulated approach may provide a balance between accessibility and investment quality, benefiting both retail and institutional investors.

Deep Dive into the Stablecoin Opportunity

Host: "What do you think that the average viewer at Home isn't understanding about the opportunity in stables... two years, five years, 10 years down the line."

Pranav Kanade [06:43]: "Yeah. So the biggest one, especially in the United States, really is explaining to people what are the benefits of stablecoins?... If you just think of those two components, which is chargeback and fraud risk as well as points programs, that's a very opaque landscape. Right. The banks make all their margin in that opacity."

Comprehensive Analysis:

• Cost Efficiency: Stablecoins can significantly reduce transaction costs by eliminating high fees associated with traditional banking and credit card systems, which currently take up around 3% of every transaction in the U.S.
• Transparency and Savings: By operating on-chain, stablecoins offer greater transparency, reducing chargeback and fraud risks, and potentially lowering costs for both consumers and businesses.
• Disruption of Traditional Banking: The adoption of stablecoins threatens the profitability of banks, especially in credit card operations, by offering a more efficient and transparent alternative.
• Global Impact: Particularly beneficial for the unbanked populations outside the U.S., where stablecoins can provide access to financial services that were previously inaccessible or too costly.

Future Outlook and Conclusion

Host: "I want to come back to the altcoin point... What do you think that means for the retail investor or the smaller market participant?"

Pranav Kanade [08:33]: "I don't necessarily think it means anything negative. I think, you know, folks are going to be able to access these protocols and use them. I think it's all a function of regulatory. So that's more of a regulator question..."

Final Thoughts:

• Regulatory Landscape: The future accessibility and integration of altcoins into mainstream investment products will largely depend on regulatory frameworks.
• Encouragement for Founders: Pranav encourages crypto project founders to maintain focus on building robust, fee-generating businesses, as institutional capital may increasingly recognize and reward sound fundamentals.
• Optimistic Future: Despite current challenges, the long-term outlook remains positive with expectations of increased institutional involvement and the maturation of the crypto investment ecosystem.

Host: "Pranav thanks for joining us. We hope you enjoy the rest of the event."

Pranav Kanade [09:27]: "Cool. Thank you."

---

Conclusion

In this episode of Markets Daily Crypto Roundup, Pranav Kanade of VanEck provides insightful perspectives on the intersection of public equities and digital assets. By focusing on stablecoins and their capacity to transform traditional financial systems, VanEck positions itself to capitalize on long-term opportunities that extend beyond the volatile altcoin market. The discussion underscores the importance of regulatory developments and the potential for institutional capital to drive the future of crypto investments, offering a roadmap for both investors and industry participants navigating the evolving landscape.

Transcript

[Advertiser]

Work takes up most of your time. That's why you should use stamps.com to save time with your mailing and shipping. Stamps.com will simplify your postage needs and add valuable time back into your workday so you have flexibility to focus on more important things. Stamps.com can handle your mailing and shipping needs with rates up to 88% off. UPS and USPS send invoices, checks, certified mail, packages and anything else you need to keep your business running with stamps. If you sell online, connecting with every major marketplace and shopping cart is easy. Plus, you can schedule package pickups through their dashboard and automatically see your cheapest and fastest shipping options from different carriers. With Stamps.com's Rate Advisor, add more flexibility to your workday. With Stamps.com go to Stamps.com program to sign up for a special offer. No contract, Cancel Anytime. That's stamps.com program foreign.

[Host]

Hello and welcome back to CoinDesk Live. We are coming to you from the Avalanche Summit in London. This is a special edition of Markets Daily, and we're joined now by Vaneck Portfolio manager Pranav Kanade. Hello, Pranav.

[Pranav Kanade]

Hey guys. How are you?

[Co-Host]

Great.

[Host]

We're doing fantastic. Okay, I want to start here. You lead Vaneck's digital asset Alpha Fund, right?

[Pranav Kanade]

Correct.

[Host]

I said this to Sam before we came back from break. Pranav is going to give us the alpha. He leads the Alpha Fund. So let's start here. I mean, what are you looking at? What's interesting to you? I know you don't like to follow the trends.

[Pranav Kanade]

Yeah. So we are slightly in a unique position where we can do both tokens as well as public equities in our fund. And one of the opportunities we've generally seen that's less explored by most market participants. Whether it's crypto people or tradfi equity people are just looking at public companies, Internet companies, e commerce players, and asking how much of their cost structure is interchange fees and banking fees. And to the extent they can leverage stablecoins post legislation, how much of a margin uplift can they have in their businesses? And to the extent their businesses can get a bigger multiple as a result of that, you know, what is sort of the upside to their equities? So we've been doing that work for the last several months and we've slightly tilted our portfolio towards that. As generally, we've observed that most altcoins in the market are likely going to struggle. So we think there's better opportunity in this other pocket of the market.

[Host]

Can you tell us some of the equities that you're looking at.

[Pranav Kanade]

So unfortunately I cannot come out on a call like this or event like this and talk about some of our holdings. But I think the way we approached it, if I were to sort of share the approach, is we kind of mapped out all the players and then generally kind of started with the a belief that much of the adoption from these public companies will come from founder led businesses where the founder or is the CEO and is the sole decision maker and is really focused on optimizing the underlying business. And it's especially valuable if these businesses are either in the US and have a lot of cross border payments or international players where they're realizing that their local audience wants access to cheap dollars and they're finding kind of unique ways to give it to them. So we kind of mapped it all out and then ultimately asked who are the biggest winners and who are likely going to win over the long term. And we're just kind of focusing on the biggest winners today.

[Co-Host]

Are you looking at sort of small to midsize or you're looking at large companies? I mean I can think of a Shopify and say, hey, when you unlock stablecoins, this is a big moment. So it's really, it's everyone.

[Pranav Kanade]

Yeah, yeah, we're looking at some of the larger players because you know, I think that's where like the less explored opportunity is. If I think about what's happening in the public equity markets, much of that market has gone to passive, you know, ETFs and index type products. And then you have a handful of sort of large hedge funds. Like I used to work at Millennium, that's a large hedge fund similar to Millennium. There are other players and those folks only focus on what's going to happen in the next three to six months. And what we're looking at here from a stablecoin perspective is something that's going to take years to play out and it's going to dramatically change a lot of these businesses. So just extending that time horizon allows us to really focus on the big, big opportunities there.

[Host]

You know, you said altcoins are probably not going to do as well as they did before. If we bring it back to a more crypto focus. What are you looking at there? Where do you see the upside when we look at what's going on specifically in crypto?

[Pranav Kanade]

Yeah. So, you know, one of the things we say in our team is stablecoins are clearly the product with some PMF here that's going to continue to work the next Thing likely that's going to come on the backs of that is tokenizing tradfi assets, bringing them on chain. The why is very simple, which is people outside the United States want dollars. We're exporting the dollars with stablecoins. The next thing is we're going to export the US capital markets as well to the same people. So if you're someone in Argentina and you have a wal and now you have a bunch of, let's just say stables, you naturally would like to probably want some T bills with it or maybe some U.S. equities, those types of things. So when we look at the, let's just say the crypto universe, the token universe, we generally ask who are going to be the winners of that theme as assets get tokenized, brought on chain and ultimately some fintech will enable that for their local customer. But really what's going to be on the back end of that is the question we ask. And some of our token positions are tethered to that. The next, next, next thing we kind of think about is we think part of the reason the altcoin market is structurally kind of in a bad place is there's not that many pipes into the, into the space. There's not an easy way for pools of capital to access this. I believe that one day you'll have ETFs that are multi token that will be somewhat rules based. Right. The way we have the s and P500 which is, you know, 500 great companies that are GAAP profitable for four quarters, those types of rules. I think you'll have similar rules for what makes a good token that will ultimately make its way to a multi token ETF where all the tri fi money can just buy that one product and get access. We think asking what are those types of tokens that could make that make. Make their way into that product one day is a good question to ask. And then finding winners within that because those things will likely get a lot of flows one day in the distant future.

[Co-Host]

So in the future we're buying an index fund that has bonk in it or has dog with hat or whatever because it's fit a rule set that makes sense.

[Pranav Kanade]

Maybe not those tokens. Right. Because those things are good. Yeah.

[Co-Host]

As examples.

[Pranav Kanade]

Yes. Yeah, yeah. Okay.

[Co-Host]

I want to ask, I want to go back to stables for a second. We've been hearing a lot about them over the last two days.

[Pranav Kanade]

Yep.

[Co-Host]

Because the seat you sit in is looking at public markets as well as crypto. What do you think that the average viewer at Home isn't understanding about the opportunity in stables. Not three to six months. But to your point, you know, two years, five years, 10 years down the line.

[Pranav Kanade]

Yeah. So the biggest one, especially in the United States, really is explaining to people what are the benefits of stablecoins? Because we have a great financial system in the US we have great fintech apps. Everyone uses Venmo or Cash app or whatever. And they're like, why do I need this stablecoin thing? But really, if you think of just generally E commerce or even physical commerce in the U.S. the credit card and banking ecosystem takes around 3% of every transaction. Much of that are fees taken by the banks. And now a lot of that is for chargebacks as well as the points programs and rewards programs. But if you just think of those two components, which is chargeback and fraud risk as well as points programs, that's a very opaque landscape. Right. The banks make all their margin in that opacity. So I think a lot of that could be replicated on top of stablecoins and you can give the user the great credit card experience. But running the whole thing on chain one day and there's meaningful cost savings to be had from that. So it's just articulating that to people is sometimes like sort of the struggle in the Western world. It makes a ton of sense for people outside the U.S. especially those that are unbanked. And so this is like a new thing for them. But to the extent folks start to understand that cost savings opportunity, then they naturally ask, well, who's the loser from all this? And the answer is, well, it's the banks, right? Like if you look at any bank's like kind of income statement, their costs are, sorry, their revenue and profit center are the credit cards. So to the extent you can disrupt that via stables, I think it's a big opportunity.

[Host]

I want to come back to the altcoin point. And then we got to wrap up. In this future. You envision where we have ETFs that have like a basket of different altcoins. What do you think that means for the retail investor or the smaller market participant? You know, DEFI is really right now, the ethos of DEFI is that everyone has access. What do you think that means for smaller investors?

[Pranav Kanade]

I don't necessarily think it means anything negative. I think, you know, folks are going to be able to access these protocols and use them. I think it's all a function of regulatory. So that's more of a regulator question. I think what it could mean for projects and founders is if they focus on the right KPIs and they build their business the right way they might not be getting love in the market today. You know I feel like a lot of deep in founders feel that way which is they feel like hey I'm building some great things generating some fees and cash flows and my token trades at a fraction of the market cap as a meme coin. So like why am I doing this? I noticed that sentiment from a lot of founders and what I tell them is you might not be getting appreciation today because it's not a rational pool of capital, institutional capital that can make its way to very easily but that will change in the future so keep kind of doing what you're doing and in this rules based system for capital allocation you might be a big winner one day.

[Host]

Pranav thanks for joining us. We hope you enjoy the rest of the event.

[Pranav Kanade]

Cool. Thank you.

[Host]

That was Vaneck portfolio manager Pranav Kannada.