Bitwise & Superstate Take ETFs Onchain

And what could be a landmark shift for the $10 trillion US ETF market B Wise is partnering with fintech firm a superstate to tokenize shares of its longest staking ETF and it is a first of a kind move to put actual ETF shares directly on the blockchain rails, and investors would get a choice stick with traditional DTC book entry or opt for on chain record keeping powered by super states registered infrastructure.

Now here to break down the mechanics as well as the ongoing migration on change is Robert Laner superstate CEO and co-founder.

Robert, great to have you back on the show.

Thank you so much for joining me.

So this partnership allows investors to hold actual funds, ETF shares on chain rather than through a rapper.

So tell us how this dual record keeping system works between traditional DTC as well as super states transfer agency infrastructure.

Yeah, it's a great question.

And so, you know, traditionally, securities are held in many places.

They're held at transfer agents, they're held at CSDs, um, they're held, you know, at broker dealers.

What we're proposing with BitW is to upgrade the record keeping, such that a security that's an ETF like BSO can be held at DTC.

Well, simultaneously, a record can be held on chain in the form of a token.

And the on-chain token.

Record of the security is more useful.

It can do different things.

It's more transferable between, you know, brokers.

It's more transferable between individual investors, and eventually it can become usable in DI protocols and new use cases that are otherwise unavailable to a system like the DTC.

And Robert, for our viewers out there, we all know that the ETF market is highly efficient and it is a multi-trillion dollar industry.

But when it comes to the specific operational capital or distribution incentives that are driving an issuer like Bitwise to develop an on-chain share option for their funds, walk us through this.

Yeah, well, it's actually really exciting.

You know, the prospect of a tokenized ETF is one in which the speed of ETF participation just increases rapidly, right?

We can take things to the point where an authorized participant, you know, somebody in the business of creating and redeeming the ETF shares, can have them fully settled, you know, in Seconds, you know, and usable and transferable on a blockchain.

Um, and that's really exciting.

Um, you know, we see the whole process from beginning to end, from, you know, authorized participants making shares to eventually, you know, individual investors who hold the shares, all of this speeding up and all of this being possible because of tokenization.

Yeah, and I do want to get your take on transferability as well as interoperability.

So when it comes to some of the hurdles there that are limiting what needs to happen, give us your take and what needs to actually go on here.

Yeah, so an asset like BSO is the perfect proving ground for a tokenized ETF.

Um, the reason I say that is because, you know, the product itself is offering exposure to Solana, the L1 token.

And by bringing that ETF onto Solana, you know, we think that there's a, you know, an entirely new investor base.

Um, what makes this possible?

Tokenization, right?

We've proven this out at Superstate with other issuer sponsored securities where we partner with, you know, an issuer, um, and we work with them so that the official record of the shares is a token on the blockchain.

Um, you know, this is expanding it to a new asset class, ETFs, where this hasn't been proven out yet.

Um, we've proven this out with private funds, we've proven this out with public equity.

And now we're really proposing to this for the first time with an ETF.

And that's something that the SEC enables.

Um, really, it's no different than the, you know, tokenization of any other type of security.

It's just bringing this to a new frontier of tokenization.

Yeah, and I'm sure you speak to many stakeholders out there.

So who else do you expect to follow BitWise's lead and how quickly could on-chain record keeping become a standard option across the broader ETF landscape?

Well, I think everybody is going to be following BitWise's lead, right?

I think, you know, we're going to see every asset manager that.

As a popular ETF suite, wanting to bring them on chain.

We're gonna see this from everyone from BlackRock all the way down to the smallest ETF sponsors.

The reason for that is we're gonna be opening up ETFs to a new investor base, and we're gonna be providing new use cases that don't otherwise exist, right?

The ability to, you know, transfer an ETF as collateral to, you know, a counterparty instantaneously is really quite exciting.

And so, You know, eventually I think everyone's gonna be following BitW's lead.

We're here to support them.

We're gonna see other approaches to tokenizing ETFs.

I'm excited for all of the experimentation that's gonna be occurring.

Yeah, and finally, Robert, before I let you go, Superstate is directly at the intersection of Tradfi as well as decentralized infra.

So what are you hearing directly from Wall Street institutions about actually migrating core assets on chain?

Well, we're seeing a lot of excitement.

There's a lot of pilot programs right now at most of the banks, most of the custodians, most of the broker dealers.

Everybody is trying to dip their toes into the water right now and try to make, you know, some forward momentum with real use cases.

We're here to be the first, we're not going to be the last.

Well, we will have to leave it there for today, Robert.

So thank you so much for weighing in and joining us this morning.

I appreciate your time as well as all of your perspective and insights.

Thanks for having me back.