Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. There's a huge amount of investor interest in cryptocurrencies. But, how do you invest in the crypto space without holding the currency itself? We've spoken previously to ETF (Exchange Traded Fund) manager, BetaShares. Last week, they announced plans to launch a crypto- focused equities ETF. The BetaShares Crypto Innovators ETF aims to give investors access to the companies in technology underlying cryptocurrency assets. Alex Vynokur is the CEO of BetaShares and my guest this morning. Alex, welcome to Fear and Greed.

Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. There's a huge amount of investor interest in cryptocurrencies. But, how do you invest in the crypto space without holding the currency itself? We've spoken previously to ETF (Exchange Traded Fund) manager, BetaShares. Last week, they announced plans to launch a crypto- focused equities ETF. The BetaShares Crypto Innovators ETF aims to give investors access to the companies in technology underlying cryptocurrency assets. Alex Vynokur is the CEO of BetaShares and my guest this morning. Alex, welcome to Fear and Greed.

Great to talk to you, Sean.

Great to talk to you, Sean.

First, a quick 101 on ETFs for anybody not familiar with ETFs. Can you just take me through how an exchange traded fund works?

First, a quick 101 on ETFs for anybody not familiar with ETFs. Can you just take me through how an exchange traded fund works?

Absolutely. It's still the most popular question we get asked. So our business BetaShares, was formed just over a decade ago, to focus on developing the ETF infrastructure and the ETF ecosystem in Australia. Exchange Traded Funds are pretty simple. They combine the diversification and the cost effectiveness of index funds with the convenience and accessibility of share trading. So exchange traded funds can be bought and sold on the ASX, just like any other share, but they tend to provide access to a variety of indices. If I was to give some examples, NDQ is a NASDAQ 100 ETF. So when you, as an Australian investor go into the ASX through one of the online brokers, or if you're using a financial advisor and you talk in NDQ and if you buy it, you will have exposure to a hundred companies, which form part of NASDAQ 100. So we're talking about Apple, Google, Amazon, et cetera. So ETFs effectively give an investor very convenient access to diversified portfolios at a cost- effective price point.

Absolutely. It's still the most popular question we get asked. So our business BetaShares, was formed just over a decade ago, to focus on developing the ETF infrastructure and the ETF ecosystem in Australia. Exchange Traded Funds are pretty simple. They combine the diversification and the cost effectiveness of index funds with the convenience and accessibility of share trading. So exchange traded funds can be bought and sold on the ASX, just like any other share, but they tend to provide access to a variety of indices. If I was to give some examples, NDQ is a NASDAQ 100 ETF. So when you, as an Australian investor go into the ASX through one of the online brokers, or if you're using a financial advisor and you talk in NDQ and if you buy it, you will have exposure to a hundred companies, which form part of NASDAQ 100. So we're talking about Apple, Google, Amazon, et cetera. So ETFs effectively give an investor very convenient access to diversified portfolios at a cost- effective price point.

Right, now we're not a financial advice show, but what I like about ETFs, is the fact that if I want to buy tech stocks, I don't know which one to buy. And what you've just said, then you buy the NASDAQ 100. You've suddenly got a little bit of everything, which unless you're a true expert, I think, diversification's the way to go.

Right, now we're not a financial advice show, but what I like about ETFs, is the fact that if I want to buy tech stocks, I don't know which one to buy. And what you've just said, then you buy the NASDAQ 100. You've suddenly got a little bit of everything, which unless you're a true expert, I think, diversification's the way to go.

I absolutely love talking about diversification, Sean. The interesting thing is that amongst financial professionals, if you look at the statistics over one- year, three- year or five- year ten- year period, active fund managers, in other words, people who specialize in picking stocks. Amongst active fund managers on average, 75% tend to underperform the index after fees. What it really shows you is that even professionals are not able to pick stocks consistently. And that theory has been proven out in practice, as I was saying, over long periods of time, diversification makes sense. And I think what really makes sense is really focusing on the big picture. I often talk to experienced investors and often talk to inexperienced, sort of younger investors who are getting started. And the one thing that always rings true is the fact that you've really got to focus on time in the market as opposed to timing the market. And timing the market is really hard. Picking stocks is really hard, but getting the big picture right, absolutely makes sense. And I think where the ETF industry has evolved over time is that, we now have a range of what I would call thematic exposures, which really resonate with clients because you do not need to be an expert in picking out individual stocks in that theme. So if I was to use just for a second cyber security. Cyber security is a phenomenal long- term megatrend. And if you talk to most investors that would voluntary agree that it's a great long- term space to be invested in. And if you don't know which stocks to pick and very few people would, and ETF can provide a very convenient access for instance, to that thematic.

I absolutely love talking about diversification, Sean. The interesting thing is that amongst financial professionals, if you look at the statistics over one- year, three- year or five- year ten- year period, active fund managers, in other words, people who specialize in picking stocks. Amongst active fund managers on average, 75% tend to underperform the index after fees. What it really shows you is that even professionals are not able to pick stocks consistently. And that theory has been proven out in practice, as I was saying, over long periods of time, diversification makes sense. And I think what really makes sense is really focusing on the big picture. I often talk to experienced investors and often talk to inexperienced, sort of younger investors who are getting started. And the one thing that always rings true is the fact that you've really got to focus on time in the market as opposed to timing the market. And timing the market is really hard. Picking stocks is really hard, but getting the big picture right, absolutely makes sense. And I think where the ETF industry has evolved over time is that, we now have a range of what I would call thematic exposures, which really resonate with clients because you do not need to be an expert in picking out individual stocks in that theme. So if I was to use just for a second cyber security. Cyber security is a phenomenal long- term megatrend. And if you talk to most investors that would voluntary agree that it's a great long- term space to be invested in. And if you don't know which stocks to pick and very few people would, and ETF can provide a very convenient access for instance, to that thematic.

I think that's a good segue into crypto focused ETFs. So the BetaShares Crypto Innovators ETF, explain it to us. What's quite interesting now is, it's not about the cryptos, it's about the mechanics behind the cryptos.

I think that's a good segue into crypto focused ETFs. So the BetaShares Crypto Innovators ETF, explain it to us. What's quite interesting now is, it's not about the cryptos, it's about the mechanics behind the cryptos.

We've been spending a significant amount of time at BetaShares thinking about the world of crypto. And one thing that is very clear to me is that the blockchain technology and the innovation that's powering the world of crypto is a truly, truly disruptive technology. Arguably the most significant piece of technological innovation since the internet itself. But in everyday language, and in terms of what's making the headlines, of course, it's mostly the cryptocurrencies. People talk about Bitcoin, and that's probably one of the most talked about topics on social media, on Reddit, et cetera. And of course there is a large array of cryptocurrencies. There are non- fungible tokens, NFTs, which are on many people's minds now, but the technology that underlies it is truly interesting. And from our perspective, one of the things that we've found quite attractive, because again, we as a firm think about investment. We don't necessarily think about trading and a lot of people who invest "in cryptocurrencies", they tend to try it quite often. And the approach that we have taken in developing this new ETF, the BetaShares Crypto Innovators ETF, is really that picks and shovels approach, which is to say, yes, there's arguably a real gold rush in NFTs and in crypto mining of cryptocurrencies. And we know, that in times of gold rush, yes, you can absolutely strike it lucky. You can find a significant deposit of gold, but a proven way to make money in gold rush times is to actually sell the picks and shovels, supply the infrastructure and essentially this is what we are focused on with the new CRYP ETF.

We've been spending a significant amount of time at BetaShares thinking about the world of crypto. And one thing that is very clear to me is that the blockchain technology and the innovation that's powering the world of crypto is a truly, truly disruptive technology. Arguably the most significant piece of technological innovation since the internet itself. But in everyday language, and in terms of what's making the headlines, of course, it's mostly the cryptocurrencies. People talk about Bitcoin, and that's probably one of the most talked about topics on social media, on Reddit, et cetera. And of course there is a large array of cryptocurrencies. There are non- fungible tokens, NFTs, which are on many people's minds now, but the technology that underlies it is truly interesting. And from our perspective, one of the things that we've found quite attractive, because again, we as a firm think about investment. We don't necessarily think about trading and a lot of people who invest "in cryptocurrencies", they tend to try it quite often. And the approach that we have taken in developing this new ETF, the BetaShares Crypto Innovators ETF, is really that picks and shovels approach, which is to say, yes, there's arguably a real gold rush in NFTs and in crypto mining of cryptocurrencies. And we know, that in times of gold rush, yes, you can absolutely strike it lucky. You can find a significant deposit of gold, but a proven way to make money in gold rush times is to actually sell the picks and shovels, supply the infrastructure and essentially this is what we are focused on with the new CRYP ETF.

So that blockchain technology, totally appreciate what you're saying. What a leap forward it is. I presume that's nowhere near as volatile either as cryptocurrencies themselves. Bitcoin's at 58, 000 US, but it could be 30, 000 US in six months time. It could be 30,000 US in six weeks time to be perfectly honest. Presumably the companies behind the cryptos, are nowhere near as volatile.

So that blockchain technology, totally appreciate what you're saying. What a leap forward it is. I presume that's nowhere near as volatile either as cryptocurrencies themselves. Bitcoin's at 58, 000 US, but it could be 30, 000 US in six months time. It could be 30,000 US in six weeks time to be perfectly honest. Presumably the companies behind the cryptos, are nowhere near as volatile.

Significantly less volatile, which is not to say there is no risk and there's no volatility. Of course, there is risk. All equities, and we're talking about here, a portfolio of 30 global companies, which are powering basically the crypto ecosystem that this particular ETF provides exposure to. So of course, all equities have volatility and risk, but you're absolutely right Sean. It's significantly lower volatility, that investing in cryptocurrencies directly and the sort of companies that we are talking about and the sort of businesses that we are talking about are companies that are operating across a range of industries. Be it exchanges, be it custodians, be it manufacturers of equipment that is used in crypto mining or in the digital asset ecosystem. So they tend to be businesses which have a lot more going on than simply investing in the cryptocurrency directly.

Significantly less volatile, which is not to say there is no risk and there's no volatility. Of course, there is risk. All equities, and we're talking about here, a portfolio of 30 global companies, which are powering basically the crypto ecosystem that this particular ETF provides exposure to. So of course, all equities have volatility and risk, but you're absolutely right Sean. It's significantly lower volatility, that investing in cryptocurrencies directly and the sort of companies that we are talking about and the sort of businesses that we are talking about are companies that are operating across a range of industries. Be it exchanges, be it custodians, be it manufacturers of equipment that is used in crypto mining or in the digital asset ecosystem. So they tend to be businesses which have a lot more going on than simply investing in the cryptocurrency directly.

Okay, stay with me. Alex, we'll be back in a minute.

Okay, stay with me. Alex, we'll be back in a minute.

I'm speaking to Alex Vynokur, Chief Executive Officer of BetaShares. So are these mostly US- based companies? You said, there's 30 of them there. Are any of them household names?

I'm speaking to Alex Vynokur, Chief Executive Officer of BetaShares. So are these mostly US- based companies? You said, there's 30 of them there. Are any of them household names?

Yes, some of them might be familiar. Coinbase is a good example. Coinbase is an exchange. It also provides institutional custody services, prime brokerage, and is essentially regarded often as the Google of crypto and it's a significant publicly listed company, which is listed in the US. So that's one example, some of the other names that might be familiar is Galaxy Digital. Galaxy Digital, is a multi- service organization that is focused on investing in digital assets and blockchain technology industries. They provide trading and asset management services and advisory services. So again, those sorts of businesses are one step removed from owning cryptocurrency directly. And what we're finding, I would say, Sean, is that there are really two types of investors that are attracted to this type of ETF. One is a traditional equities investor, who does not feel confident enough and does not feel that it's appropriate to invest in cryptocurrencies directly. And this ETF can provide a really convenient way and also a compelling way for people to obtain exposure to the space without investing in crypto directly. And at the same time, there are a lot of investors who are interested in this ETF who actually own Bitcoin or Ethereum or Dogecoin. They already own cryptocurrency, but for them, this is a way to diversify from the risk of holding cryptocurrencies directly into equities. So those are really the two key categories of investors that so far have found us of interest.

Yes, some of them might be familiar. Coinbase is a good example. Coinbase is an exchange. It also provides institutional custody services, prime brokerage, and is essentially regarded often as the Google of crypto and it's a significant publicly listed company, which is listed in the US. So that's one example, some of the other names that might be familiar is Galaxy Digital. Galaxy Digital, is a multi- service organization that is focused on investing in digital assets and blockchain technology industries. They provide trading and asset management services and advisory services. So again, those sorts of businesses are one step removed from owning cryptocurrency directly. And what we're finding, I would say, Sean, is that there are really two types of investors that are attracted to this type of ETF. One is a traditional equities investor, who does not feel confident enough and does not feel that it's appropriate to invest in cryptocurrencies directly. And this ETF can provide a really convenient way and also a compelling way for people to obtain exposure to the space without investing in crypto directly. And at the same time, there are a lot of investors who are interested in this ETF who actually own Bitcoin or Ethereum or Dogecoin. They already own cryptocurrency, but for them, this is a way to diversify from the risk of holding cryptocurrencies directly into equities. So those are really the two key categories of investors that so far have found us of interest.

Okay, and I suppose, the way I look at cryptos, is still not clear. Obviously, they're volatile, you've got China cracking down on it and that's the biggest market. It hasn't been accepted by Central Banks, et cetera. The technology behind it though, The Central Banks, for example, they all accept blockchain technology is a leap forward. And so the thing which is sort of interesting is even if cryptos don't work out, they're still an asset there.

Okay, and I suppose, the way I look at cryptos, is still not clear. Obviously, they're volatile, you've got China cracking down on it and that's the biggest market. It hasn't been accepted by Central Banks, et cetera. The technology behind it though, The Central Banks, for example, they all accept blockchain technology is a leap forward. And so the thing which is sort of interesting is even if cryptos don't work out, they're still an asset there.

Now, this is a key point you've just made Sean. I would say, in this particular ETF, investors in these companies do not necessarily have to be bullish on Bitcoin or Ethereum or any single cryptocurrency. And I'll give an example. If we just take for a second, a company like Coinbase, as we mentioned is really sort of the Google of the crypto world. If you draw a parallel between that and say the ASX itself, The Australian Stock Exchange, you would say, we have companies like BHP, like Woolies, like the Big Banks listed on the ASX. You do not necessarily say that if one of those companies lose a significant amount of value or even if the market overall, falls in value, such as what we've seen during the GFC, you wouldn't necessarily say that the ASX itself, the exchange is going to go out of business. There's always going to be a business in the exchange, basically, no matter how volatile, whether the individual companies go up and down, so that's just a very small example. Say in the context of something like Coinbase, that business is much broader than simply about any individual cryptocurrency and the same parallel, you would basically be able to draw in relation to a significant number of constituents of this particular ETF. And in going back to the technology point, Sean, what we're seeing today is that the blockchain technology is really making significant inroads across a very wide spectrum of industries. So again, just going back to the ASX itself for a second, you may have seen that ASX is now embarking on a significant project of replacing the chess system, which is basically the clearing system that allows our stock trades to clear. Now, they are replacing that with the blockchain technology. The German Exchange, Deutsche Börse, had actually just announced that they're going down the same path. We are seeing global trade and logistics move from paper- based onto blockchain, more and more. We're now seeing initiatives in foreign exchange to consider using blockchain technology to enable transactions. So what's really exciting from our perspective, is the technology that underlines the digital asset economy. And that has potential arguably, which is going to be more impactful than the cryptocurrencies themselves.

Now, this is a key point you've just made Sean. I would say, in this particular ETF, investors in these companies do not necessarily have to be bullish on Bitcoin or Ethereum or any single cryptocurrency. And I'll give an example. If we just take for a second, a company like Coinbase, as we mentioned is really sort of the Google of the crypto world. If you draw a parallel between that and say the ASX itself, The Australian Stock Exchange, you would say, we have companies like BHP, like Woolies, like the Big Banks listed on the ASX. You do not necessarily say that if one of those companies lose a significant amount of value or even if the market overall, falls in value, such as what we've seen during the GFC, you wouldn't necessarily say that the ASX itself, the exchange is going to go out of business. There's always going to be a business in the exchange, basically, no matter how volatile, whether the individual companies go up and down, so that's just a very small example. Say in the context of something like Coinbase, that business is much broader than simply about any individual cryptocurrency and the same parallel, you would basically be able to draw in relation to a significant number of constituents of this particular ETF. And in going back to the technology point, Sean, what we're seeing today is that the blockchain technology is really making significant inroads across a very wide spectrum of industries. So again, just going back to the ASX itself for a second, you may have seen that ASX is now embarking on a significant project of replacing the chess system, which is basically the clearing system that allows our stock trades to clear. Now, they are replacing that with the blockchain technology. The German Exchange, Deutsche Börse, had actually just announced that they're going down the same path. We are seeing global trade and logistics move from paper- based onto blockchain, more and more. We're now seeing initiatives in foreign exchange to consider using blockchain technology to enable transactions. So what's really exciting from our perspective, is the technology that underlines the digital asset economy. And that has potential arguably, which is going to be more impactful than the cryptocurrencies themselves.

So when does BetaShares Crypto Innovators ETF launch?

So when does BetaShares Crypto Innovators ETF launch?

We are expecting this ETF, to hit the market over the next couple of weeks, Sean. So watch that space.

We are expecting this ETF, to hit the market over the next couple of weeks, Sean. So watch that space.

Alex, thank you for talking to Fear and Greed.

Alex, thank you for talking to Fear and Greed.

Terrific. Good to talk to you.

Terrific. Good to talk to you.

That was Alex Vynokur, CEO of BetaShares. This is the Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer, enjoy your day.

That was Alex Vynokur, CEO of BetaShares. This is the Fear and Greed Daily Interview. Join me every morning for the full Fear and Greed podcast with all the business news you need to know. I'm Sean Aylmer, enjoy your day.