five so high funds never end in chilling with the pudgy penguins anywhere they stay together
so invite your friends in chilling with the pudgy penguins immunity's the best we'll forget
to mention chilling with the pudgy penguins no trouble in the huddle so invite your friends
in chilling between the coolest in the game we slide and we glide off through the block
chains we service for the fam we don't do this for the fame but if vibes always high and they're
always free claim killing all day no worries no stress no strain with the best how you feeling
so blessed so community is top notch over all the rest but it's not a competition we got love for
the next no matter any weather yet we gotta stick together huddle up run it up yeah penguins do it
better wear three entities pudgy's been a trend center through the bear and the bull diamond
hand collectors hit the ice inside take it all in stride the whole pudgy squad right by your side
og penguins still pudgy stoops who got the rocks for the crew chilling with the pudgy penguins
pop so high funds never end in chilling with the pudgy penguins anybody to stay together so invite
you friends in chilling with the pudgy penguins immunity's the best don't forget to mention chilling
with the pudgy penguin no trouble in the huddle so invite your friends in chilling
hello hello welcome to chilling with the pudgy penguins tonight we have a very special
guest mr hunter horseley from bitwise how's it going hunter what's going on i love that music
i'll send you a link to the mp3 it's uh from our good friend dan the lost boy
uh oh is that your first time hearing it hunter yes yes dan the lost boy what a what a talent
i know right he's got a couple of bangers on one's out on spotify and uh but yeah man thanks for
joining us uh big couple of last weeks for you right oh my gosh yes what a what a whirlwind uh
but it's so fun to be with this crew i love uh i love the huddle and uh in the pudgy penguin
community and um so it's fun to fun to be with a uh with a group of uh with the two of you and
and a group of others uh in the community yeah and you're not some a bandwagon penguin fan you've
been a penguin holder uh longer than uh one of our dear friends jeebus i'm i'm pretty sure you
bought your i know i dunked on him what did he uh what did he find was it like an hour
yeah i think i think you found it before him so you're you're og og oh music to my ears so
before we get into the uh the bitcoin etf questions i got a few of them
what allured you to the penguins like what caught your eye well i would also just say if anyone
talks to jeebus uh it would be fun if we would all accuse him of being a a bandwagoner on uh
on my uh my discovery of the pudgy penguins um in 2021 um uh sorry will you say that again i'm
still just thinking yeah you're good um so i got a bunch of bitcoin etf questions of course but
like oh right on what it what allured you to the pudgy penguins like what caught your eye because
you caught it very early on ah um well yeah i i appreciate that i don't know if i if i was uh
the earliest is a pretty a pretty simple thing um i have two different answers to this the first
is that uh they're cute chubby penguins um and i love that and uh aesthetics matter and vibes matter
and uh penguins have immaculate vibes um so uh i loved that that energy um uh and that's the
simplest thing to say um the second answer is maybe a little bit more abstract but um i've i've
been in the the crypto space now for six or seven years and uh operating in the crypto space
you uh experience sort of these two ends of the spectrum almost um the schizophrenia of the space
which is that on the one hand uh web3 and public blockchains are seeking to do something very
serious and important in many cases new financial infrastructure new plumbing a new um a new approach
and architecture to uh trust between people um there are big serious ideas in there and big serious
projects and then simultaneously you know a lot of people who are working in the space
be it developers or people building projects um are just you know normal silly sometimes not serious
people um and uh and if you're in the space for long enough you sort of witness that both are
happening at the same time so i loved that in my mind penguins kind of manifest in uh and
exemplify the fact that the space can be both serious but can also be whimsical and uh and cute
and fun at the same time i want to say you gave the exact same answer in the uh pin tweet i just
put up at the top one we're all where i will ask you like the exact same question uh so it is
pretty funny like people want to bring you on and talk about bitcoin ets first thing they talk about
hey tell us about these penguins but it is it's it's pretty funny too because like not only
does the penguins have the the silly whimsical fun factor to them like there's so many builders in
the space that rock these and so you kind of get the best of both worlds yeah totally and and i
think that's something that i've you know i'm i'm not uh i'm not an nft expert and i'm also not uh
um you know not the mayor of this community or the most important person in this community but
something just as a member of the community that i've appreciated is um i really feel like
the group of people um has a good energy towards each other uh and i think that that's wonderful
you know the people people seek out um positive communities all over the internet they might seek
that out on facebook they might seek that out with a group of friends on telegram or in a discord
server um and uh and i feel like pudgy penguins is kind of uh a membership in a in a really
positive uh engaged community and and that that really stands out to me as well um and something
something i love about it awesome i've been hogging the mic i'd be remiss not introduce my co-host
actually agents what's going on agents no dude you're not you're not hogging the mic at all i'm
i'm like listening to to hunter speak over here and i i think about the early days of pudgy
penguins first off it would be hilarious if you just relentlessly trolled genius by telling him
that he's copy trading yeah i think i think it would be like a nice check to the ego bring him
down a peg or two i love jeebus but uh i think that's absolutely hilarious that you beat him to
the punch by one hour yeah um but but seriously i think about the early days of pudgy penguins
and there was a meme going around and it's like imagine you will ever be truly welcome into the
elite chambers of finance without owning at least one pudgy penguins and it was all just a
meme back then and then fast forward you know two and a half years and and uh and we're here
and like the the most prolific people in the space like just the biggest guys have penguins so
blows my mind blows my mind uh what a journey so we're really happy to have you here man which
i gotta ask you what what attracted the two of you uh to become uh uh members of the penguin
community i copy traded a guy who copy traded me this so thank you thank you hunter what a legend
yeah one thing that really attracted me is that penguins back in the day were just a huge group
of memers right and so i love making meme videos and it really attracted me like to just how silly
the community was so started making meme videos and have ever since and um really have learned a
lot about the space just from holding a penguin because i've yet to meet a dumb person holding a
penguin they're all like pretty good uh pretty good people uh but what's your what's what's your
favorite meme right now uh favorite meme right now uh pretty much anything that uh Dateless Darian
down there in the audience puts out is uh automatic gold uh good follow hey hunter i want to get into
this a little bit uh again before we get to the the main topic bitcoin ETFs you had said that you
have been in crypto for about six years um i'm assuming you came from a traditional finance
background and i just want to kind of hear a little bit about your journey what got you into
crypto what started this this adventure really that led to you know bitwise and the bitcoin ETFs
what brought us here sure uh having to chat about whatever is interesting um uh i was actually at
facebook uh previously so not at a financial firm um and instagram uh and then before that i was at
at the worton school for to study business um which is a school that that sends a lot of people
off into finance and um you know i think one of the things that makes the web 3 space or the
public blockchain space the crypto space or whatever you want to call it such an engaging
um industry and ecosystem to be a part of is that it attracts people from a lot of different
perspectives and disciplines um it attracts people with financial backgrounds it attracts people
with a cultural perspective um and it attracts people with technology backgrounds so
uh i um i was was looking at it from from a tech background and um there's a thing that happens in
uh in the tech industry only every so often which is you have the introduction of a new computing
platform which is not something that you know i think most of us probably don't use the phrase
computing platform on a daily basis but everyone is familiar with them uh you had the pc in the
80s and the 90s which was a sort of preposterous proposition that uh everyone would have a main
you know a mini mainframe in their home and when people said why would i need that the best
that steve jobs and bill gates could could offer up as a vision were that you would use this computer
for recipes and to balance your checkbook which is of course uh not uh the fullness of what we use
computers for today but that was a huge uh new computing platform in the 90s you had the internet
into the 2000s you had the move to a cloud architecture for software services and then
mobile and so i think for a lot of people who come from a technology background you see
public blockchains um a world computer or you know is one way of describing um some of them
and you say wow this could be a new computing platform and it has interesting and compelling
uh capabilities that are different than other platforms um and that doesn't guarantee that
it'll have an impact on the world and be useful and meaningful but it does mean it has the
possibility and when a new computing platform takes hold uh there's usually a lot of opportunity
for um for valuable new things so i think that's a reason that a lot of people in tech
are almost intuitively drawn towards the space even if they can't um completely verbalize what
it is about the space that that they have so much enthusiasm for i think that that pattern is is
almost tacit for many in tech and and that was one of the things that um you know i saw in it
and um and got me excited and there's a lot more i could say there but um maybe i'll just i'll leave
it at that so i don't go on for too long no man i i love it it's almost like the uh there are no
there are no new continents left to discover but still have this urge to push the boundaries and
find the new stuff like that exploratory urge inside of uh a lot of us so it makes a lot of
yeah yeah could i actually could i actually say something on on that topic uh go for it man you
mentioned no no new continents to discover um when uh when i was at facebook for a period of time
i worked on facebook groups um and i recognize that that these days facebook doesn't have the
best reputation with everyone but um uh facebook groups people might be immediately familiar with
that and others might not you know facebook groups are the ability uh to set up a private page
that people can request to join and then people can post and message each other and share things
there and one of the things i witnessed was how incredibly powerful facebook groups were
you know i think maybe a billion people were using them there were hundreds of millions of them
and there were groups for so many different things there are people coming together
who had a significant other on a third tour of service in the military there were people
who had corgis and lived in the same city and were just corgi owners there are people who had
medical conditions that their doctors couldn't couldn't identify but they knew that they had
something and they found each other all sorts you know everything you can imagine people who
collected cactuses i remember that was a really active group and one of the things that that i
witnessed was how meaningful and important these groups were to people and an emergent property
was that these groups would often form their own constitutions there would be a pinned post
at the top of the group with a set of rules that the administrator cultivated based on either
their specific vision or a combination of views from the community and then the administrator
or maybe a few administrators would enforce those rules and a thing that would happen from
time to time would be that there would be a dispute and the administrator was the arbitrator
and would boot people out of the community luca what's up hunter how you doing
the mayor has arrived i'm doing man you're if i'm the mayor you're the president
no that you know that's not true but i'm glad to be here and and love uh love this community
so it's fun to be with uh with a group huggy penguins had some inflows but not 500 million
dollars in flows so i think you're mr you're mr president until that changes
man i'm i feel feel uh really grateful it's it's been an incredible incredible few days how does
it feel how's that process like how's the energy in the office i mean is it what you expected did
you expect more did you expect less like what's this in line with your expectations
you know it's so hard to know what to expect when when launching a product it's you know it
almost feels a little bit like a like an election or something you you get feedback you you have a
sense for for the quality of the product you're building and uh the way it can be useful to
people but you really don't know until the thing starts trading and in the case of the
bitcoin etfs um 11 uh very experienced and many of them some of the largest financial firms
in the world um offering offering products so i didn't know what to expect i you know our our
intention was to craft a bitcoin etf um that we thought was the very best product for both
the investor and the ecosystem so we came out with the lowest fee uh on bitb is the the
ticker of the product we came out with the lowest fee um we also came out uh donating 10 of the
gross profits from the funds uh to three uh open source bitcoin development non-profits that
contribute to funding the developers who uh work on projects um and contribute to bitcoin core
um which is sort of unsung work that's important and that every bitcoin owner and investor benefits
from uh but but these developers you know need resources to be able to do that work
and so we partnered with brink and open sats and human rights foundation so that if bitb
and bitcoin etfs became large and successful that would contribute back to the ecosystem which is
i think good for the ecosystem and good for uh good for investors who want want you know
if they're investing in bitcoin want it to do well so we were excited about the product we crafted
we have an incredible portfolio management team with six years of experience we knew we can
know we can steward clients assets uh safely but you really don't know how it's going to go
um so we were you know i think blown away and grateful that that bhp came out as
the largest bitcoin etf on day one uh today we're the the third largest uh it's black rock fidelity
and then bitwise and i think that that is just uh such an amazing thing and um i really
appreciate investors um you know choosing choosing our product they have so many choices
black rock fidelity and bitwise it's like the punk apes and penguins version of etfs
yeah how crazy is that to get mentioned in those same questions as well and that same sentence
that's nice pretty insane but kudos to you hunter because it's definitely the most crypto
aligned etf of them all and i have an appointment on friday with wells to move my ira into the bit b
i kid you not so i'll let you know when that's done wow wow well thank you thank you i'm grateful
for that and um yeah it's it's an amazing thing i'm also so happy you know i think that um
bitcoin etfs and traditional firms coming into the space is an amazing milestone and and
step of progress for the ecosystem for bitcoin but at the same time you know i'm i'm happy that
bitwise can be a industry native firm um and that it doesn't become entirely traditional financial
firms who are the leaders and spokespeople for our space so um but that's that's only
possible when investors make the choice to uh to invest in in our fund so thanks thank you luka
what's next for bitwise i mean this is this seems is this like the ceiling or where where is
the ceiling here oh my goodness no there's this is um this is the beginning uh i think it's it's
kind of hard to wrap my head around because i've been in the space for so long and i i know you
have to um but uh for most investors uh this is really the first time that they can access bitcoin
and uh and and crypto as as you know um as part of that so you know even though bitcoin's been
around for 15 years now for most investors you know if bitcoin is going to be or crypto is going to be one
to five percent of how they choose to invest their money um it means that they they can't bend over
backwards uh and the peace of mind and access that comes with an etf really means that for
most of them it's it's the first time it's really been feasible to consider investing in the space
and the role that bitwise plays i i sometimes joke that i feel like we're the the teaching
assistant or the ta um of the crypto space we work with investors and investment professionals to
answer their questions and help them develop a view on if if uh they can um take advantage of
opportunities in the space and i think you know i feel that that work is sort of um
entering a new chapter now where there are a lot of investors who are able to consider it for
the first time so i think that there is a long long ways to go even in just 2024 alone in the
last two weeks the number of meetings that have been set up the number of people who've reached
out who want to evaluate the space for the first time has been extraordinary um so i i think
again you know for everyone in this in this group um uh you've been paying attention to the space
for a while um so it's it can be hard to imagine but uh i think that for many investors and many
people um the story sort of began on on january 11th um of 2024 and uh and so i'm really really
excited about the opportunity to help more people see the opportunity that's uh that's brewing here
and if you don't mind i would you know in the spirit of you mentioned teaching
do you mind just giving like a little crash course on like how an etf actually works does bitwise hold
you know 10 000 bitcoin and you know how many people buy is divided by shares like just run
run through uh you know for the for the smooth brains like myself just break it down for us and
take us to school really quick yeah no yeah sure sure and i know you're brilliant so uh uh
but uh i will uh i'll give a high level um when an investor goes into their
brokerage account robinhood or schwab or they ask their financial advisor to buy uh shares of batb
they uh they send cash to buy the shares they get uh the shares that cash then comes through uh
what's called an authorized participant i'm gonna gloss over that uh for the moment but it's a
group of market makers um like change street and virtue who then take that cash
and give it to the fund they give it to the etf uh in exchange for shares which they're
going to hand back to the investor that bought them um the fund so the bitwise bitcoin etf
then takes the cash and our portfolio management team who's uh extraordinary jennifer daniela
fong harsha um uh goes out and uses the cash to buy bitcoin on behalf of investors
there are a few different ways that bitcoin etfs approach this some of them buy it through
coinbase uh for our etf the primary way is to uh get quotes for the best bids from
over-the-counter trading firms which often have deep liquidity and great prices
and then we'll execute at the best price today we bought tens of millions of bitcoin
with just one basis point of cost a single basis point um you know you compare that to
on coinbase i think the fee is uh 100 basis points one percent um we then take the bitcoin we put it
in a regulated um uh third-party custodian who holds it in cold storage and in that way
the shareholder who bought bi to be in a brokerage account or bought it through an advisor
now owns a share that is backed by uh the same amount of bitcoin which is being professionally
held um and of course the same works in in reverse i will also mention that one of the things that
people like about bitcoin etfs and etfs in general is that in addition to sort of the
the convenience of all those things being handled the professional trading
the convenience of a brokerage account or doing it through financial advisor
uh there are other elements of the way an etf is structured that that give investors a lot of
peace of mind so for instance uh there is a um a service provider called an administrator
in the case of our etf bank of new york melon that confirms that all of the assets
um they confirm the books that all the assets are what um uh that they're being recorded correctly
and that all of the assets are there and if you think back to things like ftx um that's valuable
to people that there's a third party confirming that everything is as they say it is there is
then an auditor in the case of our etf kpmg who audits everything to make sure that it is true
and um being recorded correctly and then of course it's a regulated product it's a product that has
to get approved by the scc and has to conform to very specific procedures and i think that that
stack of things you know at the bottom you have a uh a professional regulated qualified custodian
holding the bitcoin and cold storage above that you have an administrator checking everything
above that you have an auditor verifying everything you have bitwise monitoring everything and then
you have um uh a regulated uh etf wrapper that limits what can be done um i think that that
all uh contributes to what make etfs in general so popular and in a space like crypto where
sometimes it can feel um riskier uncertain to use an app or or a different solution
makes it so valuable for many people that doesn't mean it's the only worthwhile or useful way to
invest in bitcoin self-custody solutions can be fantastic for people brokerages can make sense
for people but for many others uh it really really adds a lot of benefits that allow more
people to participate in the space honor you've been in this space like you said uh six years
now and um going into traditional finance how has the sentiment been since i mean it's a little
over a year since the ftx fallout happened until like we had an actual bitcoin etf how has the
sentiment been um since this etf got passed has it has it shifted are we back is it still kind of
like after the whole ftx thing yeah yeah it's a great question also i see that uh satu g pal uh
the incredible head of engineering at bitwise has joined so what's up pal
great to see you pal's pal's been uh i was the first person to join the bitwise team six years
ago um uh the sentiment in 2022 was brutal brutal i traveled around the country meeting with clients
um and it was brutal for two reasons number one crypto was a three-car pile-up you know
committing every sin the asset class was down uh massively but then also you just had these
blowups uh ftx block five celsius three arrows luna uh one after another and they didn't even
all happen in the same month it was just you know one um tragic scenario after another
and that destroyed a lot of trust uh you know most people don't have the time or capacity to
evaluate whether uh celsius or ftx is running the risk management of their balance sheet correctly
committing fraud so everyone started looking over their shoulders and saying how do i know
that you know i i thought that what i was deciding to do was invest in bitcoin or digital asset
but now i'm paranoid that that not you know not the what of uh i've invested in but the how i've
invested may not be safe um and many of you were probably there for that it was uh it was a truly
crazy year um and uh you know i'm proud to say that we avoided all of those blowups for clients
which was exhausting but uh protected our clients assets and stewarded through um that period
the other thing about 2022 which depending on how focused somebody is on the the crypto space
and the web 3 space is that everything was down so the nasdaq was down the smp was down
gold was down real estate was down i think it ended the year down maybe you know the vanguard
real estate atf was down maybe 20 percent or thereabouts the ag was down the broad bond index
was down so for an investor you know they could have had five percent in in bitcoin but in some
ways bitcoin was sort of the least of their problems um in a bear market you know where where equities
are down bonds are supposed to protect you and in 2022 everything was down at the same time
um and crypto was the one that you know every investor knows is supposed to be volatile but most
investors did not expect bonds to be down 15 percent so it was uh a brutal year i think for
most investors um and uh and you know what we've done over the last six years we've been through
multiple cycles multiple bear markets is our our policy is always that we we show up and try
to be helpful and provide information and answers and a point of view um uh in those moments um
so that's what we did in 2022 in 2023 i think that the sentiment um and i'm just sharing my
perspectives i'm of course very curious in everyone else's perspectives but from my perspective
in 2023 um of course bitcoin and uh the space did not die um but i think that many people
uh were just a little worn out by the combination of the markets broadly and crypto specifically in
2022 and then all of the tragic and in some cases deplorable developments with many of these
platforms and so going into 2023 i think some people said wow i guess it didn't die
but uh i just got other things going on now um or you know maybe i'll look into it again at some
point in the future uh and there was a i would say a general sense of apathy um in through 2023
as is often the case in the first year after uh a bear market year which is 2022 um through
2023 i think that people uh settled you know it's almost uh maybe a bad analogy but um
if you imagine people sort of coming out of the trenches at the end of world war one
you know they don't immediately transition into uh partying um and being great optimists they're
worn out so um that was sort of the beginning of 2023 and then you know i think through the progress
of 2023 um people started to re-engage and have space and say okay this thing really is durable and
in some ways has proved its durability um through 2022 and i'm not you know it's not incredibly
urgent but i do want to i do want to look into the space more and and think about if there's
something to do and so we had a lot of new clients and new investors taking advantage of
the space last year um and of course the year ended up being up quite a bit um and have great
performance which always uh is um you know gets investors attention so that was uh 2023 i think
that the the approval of spot bitcoin ETFs uh january 11th the beginning of 2024 has taken
things to another level um we do a survey of financial advisors every year we've done it for
six years and uh in the most recent survey which we published at the beginning of january
88 percent of financial advisors who control tens of trillions of dollars in the u.s to help individuals
accomplish the financial goals 88 percent said that they had been waiting for the scc to approve
a spot bitcoin ETF to engage with and invest in the space so i think that that moment arriving
which you know for for some was even surprising down to the last day um has uh has elevated um the
attention on thinking through the opportunity here um even beyond the growing the growing momentum
in 2023 i uh i appreciate the breakdown hunter and my my next question is is when did you think
this actually was going to go through like did you know ahead of time obviously i don't know
if you can tell me that but like did you have a hunch before or did you did you figure out when
the rest of us figured out um yeah uh there's a funny a funny element of the of the ETF island
process is that the issuers can't speak freely and so there are a lot of analysts you know trying
to interpret what's going on um and in some cases the issuers actually literally know what's
going on but just can't can't comment on it publicly i think james seafart eric balchunis
have have been great at covering it from the outside looking in for a while
so we we have filed many times over the years we've been working on it for
maybe five six years i think that the pivotal moment um from my perspective luca was in q3
i realized i'm giving a series of long-winded answers so uh i apologize um keep cooking you're
good oh you're good bro you're good um uh so so for most ETFs are what's called a 40-act ETF
and a 40-act ETF has one filing and that filing goes effective after 75 days and that's maybe 95
97 percent of ETFs in the us the bitcoin spot ETFs are a different type of ETF that people
call 33-act ETFs and the way in which this is relevant is that there are two separate filings
that have to be made and have to go effective for a 33-act ETF to launch there's what's called a
19b4 and what's called an s1 the 19b4 is the thing that if you follow the ETF filings
you likely read about when you saw the scc delays or the scc um uh needs more you know uh
requests more time the 19b4 has a 240-day clock on it and that clock is broken up into four windows
of 45 days 45 days 90 days and 60 days and that produces the articles and the headlines that say
you know the the filings are delayed uh or what have you um uh and so that that's generally
the focal point there is another filing though uh called an s1 and the s1 also has to go effective
in order for a 33-act ETF to launch the reason i'm taking this very circuitous route in answering this
question of you know when did we have a sense is that um for many years as we'd worked on bitcoin
uh the scc staff had only engaged with the 19b4 and uh had not engaged on the s1s and what we came
to understand was that their feeling was they didn't want to waste time on the s1s you know
they're they're uh a group of people who like everyone else have families and other things
going on and they have a finite amount of time in their day and they don't only look at the
crypto space so they didn't want to waste time on the s1s if they had a sense they likely were
not going to approve the 19b4s so uh to bring this to a sort of a conclusion um and and square away my
answer here in q3 um the scc called and started to engage on the s1s and teddy basar who's the
president here almost fell out of his chair after not having had any you know comments and engagement
on the s1s for many years um and to us that was a sign uh that something was different and that
they may actually be working towards uh considering approving these because an s1 would need to be
uh developed and there would need to be engagement if they were going to approve one
but they had never done that so um that was a really a really strong indicator to us and
then through the course of the fall the dialogue got very in-depth very frequent uh weekly in
some cases and it became more and more apparent that they were really trying to help uh develop
these into approval um you know products that could potentially be approved um but but that
was probably the you know s1 feedback in in q3 was probably the um the most significant indicator
to us that's fascinating when they approve the uh when they start talking about the eth
s1s you just give me a wink hunter maybe just a little facetime and give me a wink
i know what that means wow yeah you you put that you put that together that that is a uh
that's a good takeaway to have yes what was the whirlwind of emotions like uh for you guys
hunter whenever the sec tweet went out i don't know if you can speak on it but
i know crypto twitter side of things people are like what the heck is going on because it was
redacted a few minutes later by uh ginsler yeah i i honestly you know i i don't know how
you all feel but i sometimes feel like this space is the craziest space you know the most bizarre
things you would never imagine happen um and being in the space for six years i'm i'm pretty familiar
with the craziness but uh even for me that was just a level of craziness i could not have
imagined um you know the the the account getting getting hacked uh was it a day or two days before
um the uh the deadline for an approval uh it was uh did it fake you out did you believe it initially
or did you not even get keyed in until guns are already corrected for i think all of us were
were were so primed to imagine that an approval might be uh forthcoming that yeah for five or
ten minutes i thought um i thought that wow did they just did they just choose to do this on
on twitter first um which of course doesn't make any sense uh and uh but it took me it took me uh
you know five or ten minutes to come to my senses and then and then as you come to your senses you
start to notice all all sorts of other things uh like the fact that they use the bitcoin hashtag
which is uh not not quite uh not quite typical of a regulator um and uh and then of course the
the account had had liked all sorts of dj crypto tweets um which was also a bit suspect uh not to
mention the most obvious thing which is that they they don't post approvals on twitter first
um so uh so i think it should have been pretty apparent yeah hunter run me through this
process though because this seems a little like maybe i'm maybe i'm misinterpreting the flow but
you know it seems like there's a lot of moving parts of this etf i mean you just gave us the
breakdown it seems like there's like five parties like all integrated to make this happen from
like traditional market maker to the otc desk to the auditors yeah you know so you you you get the
moment they hit the deadline they announce that they say etf is live i mean are you guys
scrambling to find your partners and like set this whole thing up is it already kind of set up just
ready to kind of yeah button to be pushed it seems like you know it doesn't seem like something easy
to pull off you like just pull off an all-nighter that night or how does that yeah um uh that's a
great question and uh i think you've you've seen it in the uh identified that there are a lot of
things that have to come together um to launch one of these products you know a lot of the
focus is on the regulatory filings but you need um qualified custody you need admin you need audit
you need tax you need legal counsel you need trading partners you need eight keys um and and
so on and so forth uh that the the answer is that that all gets um prepared in the weeks and months
leading up um so there were no service providers coming into place in the last 24 hours or
anything like that most of that was was lined up and in fact um the scc had said maybe on i think
it was december 29th that they wanted all of these service providers to be described in the filing
so um there was a bit of scrambling by the issuers uh in the lead up to december 29th
which is of course during the holidays um uh to make sure that all those things were in place but
but fortunately thank goodness uh not so much of that uh in the 24 hours before or so and
hans are just curious because there's a little bit of alpha here that i didn't like put in my
personal toolbox that i think maybe our community could but when they start entertaining
the s1 is that public information like do they upload it to the scc.gov site
or no a normie like me would never be able to figure out if they're entertaining s1s or not
yeah um yes so so the the dialogue is is not uh is not public um but a thing a thing that um
that is public is when uh an amended s1 is filed um again that that that isn't tantamount to
uh to a product having to be approved but um amended s1s usually are the result of dialogue
with the scc staff on um ways of uh honing the s1 um so that would be usually not always but
usually indicative of um some dialogue and progress there though again you know um anything can happen
with filings and uh that was the journey of the bitcoin ETF filing but it's not not certain to be
the same journey for future filings very fascinating so burco who actually manages the pudgy penguin
treasury on uh and max leverages it on binance you hear that burco you can uh i see the thing
i'm sweating now yeah don't say the quiet part out loud luca i'm sorry i gotta say it while burco's
here uh our great our great treasury manager um but no that's fascinating thanks for uh answering
those questions hunter i uh it's uh what a ride dude i can't even imagine yeah well i gotta say
i gotta tack a disclaimer on that for anyone listening back to the recorder burco is not
leverage trading the uh the the pudgy penguins treasure yeah just the wrong just the wrong
royalties well done well done agents
so hunter i wanted to um to ask you i mean this is kind of
uh all right this is getting a little heady but when the bitcoin ETFs got approved i saw a lot
of chatter from the bitcoin crypto purists like the guys who live by the white paper you've been in
six years you've come across these guys we need a totally decentralized uh system and they said
you know this is not what satoshi envisioned what are your what are your thoughts on that do you
think like satoshi satoshi just couldn't predict what blockchain technology would be used for
what do you say to any detractors who are like not involved in the stock market at all
yeah i mean i i think it's i think it's a valid perspective and in some ways
what makes uh bitcoin and web 3 such a powerful and exciting idea is um when people actually have
a wallet and can interact directly with uh with a dap uh or with uh with a blockchain um
you know part of what makes bitcoin a powerful idea is that people have self-sovereignty
over their assets and they can walk across a you know a border and escape uh um a a regime
or a country that's melting down um and uh sort of have that individualistic control so i think
that those things are big ideas and attract i think all of us uh to the significance of the space
my my view is that um it's additive uh my view is that you know some people use cash some people
use a credit card some people use venmo some people use a wire um and some people use ach
and in different contexts um each of those things can make sense um and uh you know surprise many
people themselves use multiple they don't say i only use cash um or i only use venmo um and so i
think similarly a bitcoin ETF is a a new vector a new dimension through which people can participate
in the opportunity of bitcoin and for some people it'll be the only way that they've been able to
participate for others you know maybe they want to hold bitcoin directly in a self-custodial
solution um but in their tax advantaged IRA account um they either have to choose not to hold
bitcoin or they can hold a bitcoin ETF and a bitcoin ETF is really enabling there um or maybe
you have a family member who's just not comfortable with that apparatus of a self-custody solution
and a bitcoin ETF gives them the peace of mind to get to participate um so i think it's uh i think
it's a a great thing for the space and a great thing for people who care uh in some cases care
the most about bitcoin and what the space is is um makes possible because i think it allows people
to engage with bitcoin in in other contexts even if they do it a different way um uh in part and
they use a bitcoin ETF uh as well and i think it allows a lot more people to um who maybe would
only use an ETF to engage with bitcoin and that can be a foray uh to learning about the space
and then if they become interested they can pull further into the space spend more time on it and
i think all of us have seen the journeys of people in our lives who start by buying a little bitcoin
and next thing you know they own a little pudgy um because uh it was uh it was a way to begin
engaging in learning so um i think it's quite complementary i think it's additive um and uh
and i think it's a huge step forward um a huge bridge uh that allows a lot more people to walk
walk across um and then you know different different people will engage in different
ways but i think it really expands the aperture hunter we have you and luka on the stage here
and we're asking you all the questions i think this would be an awesome opportunity to hear you
ask luka a question since you're a fan of penguins dude yes yes just one question okay no i want to i
want to ask uh i want to ask luka a question and uh um luka the the the thing right before you
you came on that um that i was chatting a little about is i i had worked at facebook previously
and spent some time working on facebook groups and saw how important those communities were and
and how sometimes they they they struggled with um with um establishing norms or rules or
arbitrating disputes etc and um i guess i was curious to ask you your philosophy uh as uh
in many ways i would say the leader of this community and uh um in terms of what is the extent
to which you you know think about how you want to lead the community forward versus cultivate
what's emerging from the community itself um in a in a cultural way um uh given the
the communal nature of uh of pudgy penguins as a as a group of people yeah it's a fascinating
question i think it starts with the character itself i think it brings a certain personality
type that is easily that that's you know when i when i think of somebody who owns a pudgy penguin
it seems like a you know one of my thoughts there's a couple thoughts that come initially
to that but one of them i think is a one personality type that i think comes as like reasonable and so
you know with that it's kind of important to know that you can't control other people's behavior
and you know this is also like a decentralized you know organization in in some shape way or form
and you have to let people do what they want how they want to obviously from a leadership
perspective i have to do my best by trying to lead by example uh you know there's been times where
you know i i would love to engage in the twitter debates and the twitter beefs and i don't and i
think uh that you know i try my best in that respect uh but ultimately i think the best one
is just communication right like there's there's little room and i look at this almost like an
intimate relationship like the more you communicate the more likely you are to you know you know figure
out you know those debates and have that discourse in real time versus letting people fester you
know an unreasonable expectation i think also from you know a pudgy penguin standpoint we've been
pretty clear on our expectations since day one and so when we work towards that goal and that
north star and that north star doesn't change it kind of you know the values in which you're
trying to create with the brand kind of filter out the people who don't align with those values
and the people who align with those values kind of stay and build a deeper camaraderie
so i think if i were to like break it down in three facets it'd probably be the penguin
kind of creates that natural filter just by the nature of the pfp it's like typically good-hearted
you know reasonable people who are part of the community the second one wouldn't be you know
communication just having that open you know line in which you are constantly you know having that
discourse in that debate and then the third would just be having a north star that you can either
agree with or not but we've been basically almost two years into this north star where you know
anybody who's left is kind of aligned and believes in that vision which then kind of gives like you
know what what would religion be without you know god like god would be that north star right and so
and you know and the bible the bible is the bible or the koran is the koran or the torah is the torah
obviously this is not as technical or as deep as that but it kind of remains it's kind of the
same principle in a sense so we're over here preaching the the pudgy penguin religion and
it's it's the part that i think my personality type is best suited for so i've been thankful
to kind of find what i thought was a superpower i didn't know i had
uh but ultimately it starts and stops with the with the rest of the group uh it's uh it's an
amazing group i don't think i could have found a better group uh honestly if i'm thinking about
it uh than these pudgy penguin community members um i love i love what you said i'm curious to ask
you um you've been thinking about the space for a while and you've obviously uh been involved in
building and cultivating this community um is there anything that you have sort of been surprised by
or has you've changed your mind on relatives when you first uh sort of stepped into the penguin
community and what you imagine then versus what you sort of imagine and believe now
yeah that's an interesting one i was you know the vision of pudgy penguins was not shaped by me
it was actually shaped by like this first week spread that we had in which i kind of did something
that was a happy accident but it turned out to be perfect you know there was a little bit of
discourse uh when i you know there was two potential buyers me and another guy and some people were
team luca some people were team zack and so when we ended up closing the deal i realized that
i had to win the hearts and minds of some of the group rightfully so it wasn't a democratic process
and so we kind of aligned on the vision for a week i did two to three hours a day for seven
days straight and i basically said like what do you guys see in this uh and so i had a i had a
different vision and ultimately i took what i thought was the best parts of what we talked
about that week and i kind of put it in like a structure and then you know the north star kind
of became the north star you know what i think i learned i learned a couple things one you know
i was really a internet marketer conversion guy before right like i wasn't in the lifetime
value business i was in the uh get new customer you know new customer buys find new customer again
and i don't and now i understand you know if you really look at the top companies in the world
the apples the teslas of the world like a lot of that is obviously built off of great product
and great leadership but community plays such a bigger role in those businesses and i think
people give credit for and so i actually didn't understand the significance of a really tight-knit
group and the power that that can actually yield uh on the other side of the spectrum i also
you know learned that you know there's there's more to this than i think what i was led to believe
which i led to believe like you know this is a great way to kind of build something up and then
it comes down and what i actually now believe is this is the reinvention of what i think brand
building is really about and i think that reinvention stems from today traditional brand
building is a relationship between brand and consumer and i think the the pinnacle of where
that can go is brand and participants and i i didn't necessarily believe that that was possible
uh i i just didn't think that that's how businesses could work but now i believe
completely to the contrary so though those would probably be my two you know biggest learnings
was one just the importance and significance of community obviously it's the main driver in web
three but it's actually the secret sauce i think for a lot of the titans in web two and then
secondly is this idea that uh you you can this is bigger than just you know build brand
and then make money on what you've built this is a journey which is you know fascinating to like
if you really think about the word journey it's like i know a group of people traveling towards
a destination and that group of people isn't necessarily people that sit on your cap table
and you know your early collectors and early believers and i think that is a really
interesting lens to kind of look at the stuff uh that kind of matured throughout this process
yeah i love i love that and i i love both of those dimensions and i think that they're both
deeply fascinating and i i think the second one is very powerful um and and i think your point
about the the importance of the community and the first one um i think i want to ask you as a
follow-up um uh there you know in in in in tech there are a few different sort of frameworks that
have been written about you you know people may know of the thousand true fans framework about
community building um at facebook there was this paradigm that you uh to solidify somebody's
feeling of usefulness of facebook they they needed to connect with 15 friends as fast as possible
um i think in a lot of social platforms there's this paradigm of one nine ninety where one percent
of people uh produce content nine percent reshare it retweet it remix it and ninety percent consume
it um as somebody who's thought about you know building a community and and observe the community
and is sort of pioneering this um do you do you have any sort of heuristics or frameworks
that have been bubbling for you when when you think about you know i think there's something
like 4000 owners of pudgy penguins today um you know how many people you would imagine will be
sort of in the um the really engaged um uh you know tier of of the community versus sort of
passive and um not engaging as much and and how you think about you know what what is a healthy a
healthy mix um have you developed any any thoughts on any of that no specific framework and i'm only
familiar with the facebook uh 1000 true fans framework but i will say what i think this
you know when starting a brand your first couple thousand customers like is the hard part and
if you have a good product kind of takes from there what i've kind of learned is the nft you
know back to brand and participants aligns incentives in a way that i've never seen before
and so though you have you know you might have you know 5 000 customers on paper quote right
customers you really have you know 5 000 super community members who have every interest to push
this brand forward with you uh and i believe it's the ultimate accelerant or the ultimate
de accelerant or decelerant to brand building right it it can either light this thing and
create a forest fire quicker than you could ever imagine or it can finish you quicker than you
could ever imagine and it's these ebbs and flows that i think are fascinating like when you think
about it pudgy penguin success is very atypical to the traditional brand you know we've only
really truly been building this thing call it 16 18 months you know some of the things that we've
been able to achieve are just haven't been possible you know without this layer and
amazon's a great example right like what happened with amazon we triggered an algorithm that created
this cascading effect that made us tons of money on the back end outside of you know the initial
holders buying right or you know hitting you know gaining your momentum on the gifts and
stickers and then ultimately hitting that algorithm there's actually a unique way to leverage
you know these these this group that is so passionate about this brand and this product
to kind of accelerate and trigger algorithms across different networks and platforms that
i think is fascinating but i will develop a framework i actually have not even it's not
even crossed my mind but i think there is a science to it that i could probably break down
and uh next time we speak i'll i'll have some insight as to what that looks like yeah i love that
i love that i i have two other things i'd love to ask ask you luca if uh agents and pp would
allow me to yeah fine you can co-host pp these are good questions he's putting us to shame
you want co-host hunter you want to come back every tuesday night yeah i want to well you
know yeah again i i think that there's probably a very small group of people who have had the
chance to think as deeply about this this frontier of um web3 communities is luca so it's just it's
really fun to and and i have heard luca speak before and love his thoughtfulness so uh appreciate
the chance to ask you some questions luca one other thing i wanted to ask you that um i i feel
that um uh there are sometimes these normative these sort of basic views on digital versus analog
um some people dismiss fortnite or roblox as a joke because it's entirely digital
um you know some people think that um uh things that are real uh are are of much more value
um in in pudgy penguins you have both um done things in digital and in analog um the the the
toys and characters in um in walgreens and in other stores uh being a very physical instantiation um
as well as of course um pudgy world and um and uh the discord and and other expressions uh that
are digital do you have a point of view on you know whether things that are analog or more valuable
or whether it needs to be a mix um or is it is it less viewed through that lens and it's more
more you know how can we do something that that is compelling to people and it doesn't matter whether
it's physical or or digital we'll do you know we'll do it if it if it's uh if it's valuable to people
i think it's really come it's kind of in line with the the the thing you just said 15 minutes ago
about the bitcoin ETF in the purists and and my take is really this like the upside obviously
lies in the digital right like it's pretty apparent like that that is where the innovation
will stem and that's where the the spread between you know physical and digital collectibles
is 99 to one so to give you some context you know the the collectible business of 440 billion
dollar business 99 percent of that is physical collectibles one percent of that is digital now
we are we're not going to argue the cat the you know what that spread should be but we could
all agree it's not 99 to one because i think digitally collecting has a slew of pros
that physically does not so it's not 99 to one what it is we're not going to debate it but we
know it's not 99 to one and that's where i think the upside lies however it comes down to the point
that you mentioned earlier which is you're either going to sit there and twiddle your thumbs and hope
people learn about seed phrases and custody and the whole nine and you know get onboarded
to the space the hard way or you're going to go and champion and try to get a bitcoin ETF
because you realize that the median iq of people is not as high as maybe yours or the rest of your
groups right and that people need simplicity and that there's a way in which humans interact
which you will not change especially in the early innings of the game that we're playing
and so the game that we're playing is really like where do you meet consumers where they are
why did you champion the bitcoin ETF because you wanted to meet consumers where they were
right or investors where they were so the same thing with pudgy penguins at the end of the day i
i i said something you know a couple months ago in a space and it rains true you know walmart was
an amazing initiative it was huge for the brand you know monetarily though there was you know
nft projects in the bull run every single day making more money you know on their nft mints
then you know pudgy penguins at walmart right like an open thing but really what it does is
it meets the consumer where they are and it creates trust and credibility that i think is
really really important you can either you can take two sides to this to this to this game you can
sit there and wait for the liquidity and twiddle your thumbs and hope that you can survive until
that moment comes or you can try to bring them in i think one approach is a productive and
proactive approach and another one i think is less honorable and reactive and so i i just
thinking about what i know i'm in the business of creating familiarity around the penguin
i'm in the business of you know not creating liabilities for the business and the company
that forced me to do things that i know are not in the best interest of the community
and ultimately as the sales of you know cycles and and trends come in our favor we will be the
most positioned and the most familiar and the most credible brand out of the bunch that people
will migrate to that's kind of been the strategy up until this point and still yeah yeah i love it
i'm i'm i'm all in on on uh on your your leadership and your thinking here and i think a point that
you embedded in in what you said there was also just the accessibility of a physical object to
to start to build that relationship with somebody who maybe has never um used a wallet or thought
about what an nft is but can start to interact with the ip and the concepts and and vibes and
values of pudgy penguins through a physical object which they have interacted with before
i think that that is uh i think that's really brilliant i i think in general a thing that the
web3 space suffers from is that it is entirely sort of conceptual and intellectual and abstract
just to give like a really concrete example of this you know that we have a design team at bitwise
and when we want to create an image that makes someone think of bitcoin or makes someone think
of d-fi what's the image that comes to mind from people you know the only thing that comes to
mind from people of bitcoin is a gold coin or an orange b and uh and there's nothing that comes
to mind from people with d-fi and on the other hand if i said to you how does a clock work most
of you have the image of a clock that's just popped into your mind and you can start to
reason about how the thing works because you have a you have sort of a an analog analog thing to
to uh to work through so i love that that dimension of your thinking on um on the way of
sort of growing the relationship by by going to people where they are versus asking them to leap
into web3 as as the first step i feel i think it really it's a it's a brilliant move um i had one
one one last question for you luca which is uh um in your wildest dreams uh 10 years from now
on whatever time horizon what would be something that uh you know if if pudgy penguins accomplished
it um you'd be blown away uh and and thrilled by what's what's something that you would you know
may not happen it's your wildest dream not your uh your regular dream but um something that that
would be an amazing uh achievement of the community and the ip i think one of the coolest things we
could pull off is putting your nice dress shirt and your nice pair of pants and taking yourself
to your local amc theater getting a you know a thing of popcorn and a soda and sitting down
and watching a pudgy penguin movie i think that would be you know and watching characters that are
licensed from the community you know when you see those box office numbers it's not just you know
the company winning off of that there's other people that are a part of that i i think to me
there's a couple others but that one would be close to my heart i'm a huge movie and tv show
buff most people don't know this about me but like i love my content and uh that would be that would
be a dream come true for me personally i don't think it would be 10 years i love that i love it i
don't think it takes 10 years either i think you could do it sooner and and i love that and uh
i also love uh uh going to the movie theater i do it pretty often so i love that all the more
um but uh yeah that's a great a great uh a great vision well we we know you're a busy guy you've got
uh hundreds of millions of dollars of inflows to manage so i think we should let you go as an
eight to nine slot sorry for being a couple minutes late i'd wrap something up but uh hunter
dude you're uh you're one of the goats we're uh super appreciative for everything that you're
doing for our industry and uh my last question of you is when pengu pfp brother
oh man thank thank you for the kind words i i i toy with the idea but then uh but then uh i remember
i remember the the job i'm i'm supposed to play so uh i don't know we'll see maybe maybe maybe
one day i i'm tempted frequently but so if it won't be a normal thing until we make the normal
thing yes it's hard to argue with you and come after you if you've got a cute little pudgy
it's true it's true i'm sure we'll find a way anyways but uh uh love love the community uh
really admire what you're building luca and uh agents pp love uh love the session thank
you so much for having me on and everyone else um it's really fun to be with you feel like uh
feel like uh you know hanging out with a group of friends so really appreciate it
yeah you're part of the huddle man come to the inner igloo this sunday hunter dude i wanted to
if he liked if he liked the chilling song you got to play the other one
the the pudgy penguin oh dude i had chilling queued up you gotta give me a minute for that
yeah you gotta you gotta get that hunter you're gonna love this all right ask him one more
i'll pull it up let's hear it i gotta run what'd you have for dinner hunter i haven't i haven't had
dinner yet uh so we'll uh that's a working man right there guys that's right
you know that's the north star if i've ever seen one you know why i think you guys vibe the
parallels i draw between hunter when i asked him the question about uh bitcoin purists and how he
feels the etf is additive because it gives accessibility to the product to people who
normally would not have taken the dive and it gives them a very simple onboarding to their
first step in crypto it's very similar luka to uh to pudgy penguin's ideas with giving people
nfts in the trait boxes and they can go deeper if they want to so i think philosophically you
guys are on the same level so leads to some great conversation well we appreciate it and
hunter has to go eat some dinner so peepee hopefully you have let's see i got it pulled up
hunter thank you so much for joining us dude you're welcome anytime that was a blast
my pleasure thank you guys take that song peepee
uh it says it's playing it's not playing i know all right hunters
hunter left he's hungry all right goodbye thanks coming through everybody
uh this was the one he didn't hear nah he heard this one no he heard this one he loved it
it's kind of chilling spotify rug me this was a hit this is the best 1500
Chillin' with the pudgy penguins
Pops so high funds never endin'
Chillin' with the pudgy penguins
Any weather stayed together so invite your friends in
Chillin' with the pudgy penguins
Unity needs the best, don't forget to match in
Chillin' with the pudgy penguins
No trouble in the huddle so invite your friends in
Chillin' with the pudgy penguins
Alright, love you guys. Bye!