Ex-Grayscale CEO has a strong outlook for spot bitcoin ETFs and crypto IPOs

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Former Grayscale CEO: crypto will be woven into financial services landscape

After over a decade of working and building in crypto, the former Grayscale CEO Michael Sonnenshein is now looking at the industry with a broader lens.

While he’s mainly advising other businesses in the crypto space, he also sees opportunity to jump back in an executive saddle within the next few quarters, he shared on stage at Messari Mainnet 2024.

(Listen to the interview on Spotify, Apple, or YouTube.)

He and his former team fought the U.S. Securities and Exchange Commission — and won — resulting in spot bitcoin ETFs to be approved in the US at the beginning of the year. Grayscale is home to the second largest spot bitcoin ETF at $14.5 billion AUM, slightly behind BlackRock’s $17.24 billion.

But this adoption didn’t come over night. The road to billions of dollars in AUM was a long one.

Back to 2017 or 2018, the first credit card companies or banks were publicly getting involved in the crypto space, Sonnenshein reminisced. “We’ve come so far from that so quickly and I think a lot of that integration is only going to weave crypto into the fabric of the financial services landscape.“

It’s no secret that this industry is a catalyst a lot of folks are looking out for, but there’s more work to be done, he thinks.

“I’m certainly excited options on top of bitcoin and on top of ether spot ETFs will happen and that can be another catalyst that leads to product creation,” Sonnenshein added. “Things like income producing, leverage, inverse, all the permutations you see around commodities and other types of products.”

Honing in on spot bitcoin ETFs, they are mainly available to retail investors and institutional investors today, there’s other untapped areas that can help the products scale even more: the “middle man” landscape of financial advisors, private banks, wire houses, etc.

“By my knowledge, access to that segment of ETF users has not been turned on yet,” Sonnenshein said. “And when that happens, you can start seeing these types of products not only introduced directly to underlying clients, but you can see them begin to make their ways into model portfolios.”

He expects that over the next quarter or two the middleman adoption will grow and that will help scale crypto ETPs that are out there today.

“I know there’s a lot of teams that are working on those integrations and I know there’s certainly demand on it from that segment of the market and usually those two things come together.”

IPOs and the election

Separately, as it stands, a handful of crypto companies are publicly-traded: Coinbase, Riot, Marathon Digital Holdings, to name a few. But the market is ready for more, Sonnenshein thinks.

“You have investors buying and trading different publicly-traded bitcoin mining businesses and you certainly now have bitcoin and Ethereum spot ETFs,” Sonnenshein said. “But there is a pretty healthy pipeline of unicorn businesses around the crypto ecosystem that would love to come to the public market. I’m confident that is a matter of when, not a matter of if.”

However, there’s other factors at play.

“I don’t think you’ll see anything here for the next few weeks, certainly until this election is decided and we see not only who our new president is going to be, but how much crypto is going to be on their agenda,” Sonnenshein said.

“When we get down to brass tacks [it’s] who will be leading the SEC, will we see further legislation or won’t we,” and other factors, he added. Regardless, he’s “encouraged it’s here to stay and is an issue [being followed in] the election.”

Check out the next section for more details and the full episode.

The latest Talking Tokens podcast 🎙️

For this week’s Tuesday episode, I sat down with Michael Sonnenshein, former CEO of Grayscale and long-time crypto veteran, at Messari Mainnet.

We discuss his 10+ years at Grayscale, his outlook on institutional adoption, spot bitcoin ETFs, the IPO market for crypto, and what he’s up to now.

Talking Tokens episodes are released on Spotify and Apple Podcasts at 6AM EST or YouTube at 10AM EST every Tuesday and Thursday. Listen in!

Make sure to subscribe to keep up with the latest episodes. Feel free to leave a review and tell us your thoughts.

Monitoring blockchains

Looking at some of the biggest developments onchain.

• The Ethena community is reviewing a proposal to integrate Ethereal, a spot and perps DEX, into its Network

• Stablecoin market cap on Avalanche hit $2.31B, its highest level in over 2 years

• Injective surpassed 990 million total transactions, following the decentralized exchange Helix launching an elections market on its chain

Taking on the tokens 

The total crypto market cap increased less than 1% in the past 24-hours to $2.26 trillion. It is up 1.35% over a 7-day period.

As for the largest cryptocurrencies by market cap…

These metrics were taken prior to publication Tuesday morning EST.

Other numbers we’re eyeing…

• $1.2 billion - that’s how much crypto investment products saw in inflows last week, the highest level in 10 weeks, according to CoinShares data (chart below)

Money and people moves

Latest updates on crypto startups that secured funding and industry players who are starting something new or are on the go.

1. ICYIM: Binance Co-founder and former CEO Changpeng ‘CZ’ Zhao is out of jail

2. Crypto Services Provider Matrixport Buys Crypto Finance's Asset Management Unit (CoinDesk)

3. Trump’s Crypto Venture Begins Sign-Ups While Business Purpose Remains Unclear (Bloomberg)

4. Financial services and banking firm State Street Corp. brings in Vanessa Fernandes as its head of Digital Asset Solutions.

Talking points for the road 

Here’s some headlines and topics that you can talk about at your next dinner party, crypto event or on a first date to look smart (results may vary.) 

1. Japan Crypto Review May Open Door to Lower Taxes, Dedicated ETFs (Bloomberg)

2. Ethereum Foundation has sold over $10 million worth of ether this year (The Block)

3. Bitcoin’s Bearish September May Be Its Best Since 2013 Ahead of Bullish October (CoinDesk)

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Please note that this content is for informational and entertainment purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.