Michael Sonnenshein is the CEO of Grayscale Investments. He regularly appears on CNBC and Bloomberg and was recognized in 2018 as one of Business Insider’s Rising Stars of Wall Street.
Previously, he worked at JPMorgan Securities and Barclays Wealth. He is a graduate of Emory University and received an MBA from New York University.
In this 2,949 word interview, exclusively in the Wall Street Transcript, Michael Sonnenshein of Grayscale Investments details the creation and evolution of his cryptocurrency financial institution.
“Grayscale Investments is the world’s largest digital currency asset manager. Grayscale got its beginning in 2013 when we recognized that digital currencies were going to become a bona fide asset class and that investors wanted access to digital currencies as they thought about their investment portfolio.
One of the interesting things that Grayscale was early to identify was that not only would digital currencies become a bona fide asset class, but also that digital currencies carried — and still today carry — characteristics and attributes that make them difficult for investors to figure out where to buy, how to transfer, how to store and how to safekeep digital assets. And because they are accessible through very different channels than our traditional investments, like stocks, bonds and ETFs, that there was a real opportunity to provide investors with access and exposure to digital assets, but to do so in a wrapper that was familiar to investors, and that didn’t cause them to have to depart from the ways that they typically make investment allocations.
So we launched, in 2013, a long-only passively managed Bitcoin fund that has since become far and away the world’s largest Bitcoin investment vehicle.
And we’ve gone on to more fully flesh out the Grayscale family of products over the last eight years, which now comprises our 15 unique investment vehicles, all holding digital assets or digital currencies. And we now manage about $48 billion spread across those 15 investment vehicles.”
The investment vehicles mentioned by Michael Sonnenshein of Grayscale Investments, such as the Grayscale Bitcoin Trust (GBTC), are all SEC reporting financial instruments:
“…One thing that I think is certainly a differentiator as companies like Grayscale are building the standard for this ecosystem is this designation that we voluntarily were able to obtain on behalf of many of Grayscale’s investment products and that is being an SEC-reporting company.
This is not something that’s typically looked at that often because when companies IPO or new products are launched on national securities exchanges, they’re automatically subject to SEC reporting mandates, meaning that they have to file 10Ks and 10Qs and 8Ks, in order to stay current with the SEC.
Grayscale voluntarily approached the SEC on these exact kinds of issues on behalf of our biggest and longest-running products.
And so far, six of our funds have become SEC-reporting companies. In doing so, we’re really defining the disclosure and reporting frameworks that will now be used by other industry participants, and are really helping to shape the narrative and help keep regulators informed about the ways in which these assets are behaving — and how they need to be treated to give investors the requisite disclosure and reporting to make informed investing decisions.
So, that’s a framework that we’ve been very happy to pursue and something that I think, certainly, our team is very proud of.”
Michael Sonnenshein of Grayscale is positioning his investment firm to become a domain expert for all digital assets, not just Bitcoin:
“Certainly, the second largest digital currency by market cap is Ethereum. That is a protocol that has been developed to be different than Bitcoin. Bitcoin was originally developed to become a digital form of money that was not created or backed by a government.
Ethereum has many similar attributes; it too resides on a blockchain and it too empowers cryptography and other elements that are fundamental to Bitcoin. But its use case is really more rooted in becoming a gas that powers decentralized applications.
And when you think about the continued use cases that are being developed around digital assets, you’re starting to see the formation of subgroups within the digital asset ecosystem and you’re starting to see a real confluence between digital asset protocols and various existing areas that investors have interest in.
So you’re starting to see the emergence of digital assets in gaming, digital assets in privacy, digital assets in file storage, digital assets in video transcription. And the emergence of these subgroups, I think, are important because they’re highlighting that while some of the earliest incarnations of this asset class have been around things like money and applications, you’re now starting to see the emergence of newer protocols that are beginning to really disrupt or displace a lot of the systems that we use that aren’t necessarily monetary and that are really highlighting a bunch of other use cases for investors that they may not have seen when they first began to invest in things like Bitcoin and Ethereum.”
Michael Sonnenshein wants Grayscale to become the first stop for new investors into digital assets like Bitcoin.
“I think for anybody that’s thinking about this for the first time, we always encourage people to start small. They’re able to go into their brokerage account, punch in ticker symbol GBTC and buy a few shares of the Grayscale Bitcoin Trust. It’s a really easy and frictionless way to gain exposure to Bitcoin, right alongside your other investments.
We certainly would also encourage folks to think about leveraging Bitcoin directly, if they feel like they have the technological know-how or comfort to do so and to buy $5, $10 worth of Bitcoin and send it to a family member or a co-worker and have them send it back. And sometimes for folks, we do see that the tangible experience that they may have sending and receiving the asset actually helps to demystify it quite a bit.”