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From crypto winter to courtroom victory with Jennifer Rosenthal of Grayscale
Imagine stepping into the world of crypto investments, grappling with the complexities of a new technology and pioneering the charge towards a revolutionary financial product. Our guest, Jennifer Rosenthal, head of communications at Grayscale Investments, has done just that. On today's episode of What's at Stake, Jennifer gives us a captivating recount of her journey, including how she built Grayscale's communications team and led the company to an impressive victory in the D.C. Court of Appeals.
From the nuances of message crafting to the intricacies of litigation preparedness, Jennifer shares insights on how Grayscale navigated communications challenges while converting their flagship product into an Exchange-Traded Fund. Bryan and Jennifer also discuss how Grayscale is educating people about the importance of a Bitcoin ETF, and why their recent court win is so notable. Join us for this fascinating conversation, offering an inside look into the world of crypto and communications.
Welcome to another episode of what's At Stake, a Penta podcast. I'm your host, brian DeAndreau, a partner here at Penta, and I'm joined today by a good friend, jennifer Rosenthal. Jen is the head of communications at Grayscale Investments, who recently just got some very great news out of the DC Court of Appeals. Just a couple of weeks ago, they ruled in favor of Grayscale in their lawsuit against the SEC. This dates back to early October 2021. Grayscale has been working to convert their flagship product, the Grayscale Bitcoin Trust, into an exchange-traded fund and in February 2022, we started working with Jen and the team to make that case.
Speaker 1:And now that we have at least the first victory of, hopefully, a line of victories coming forward, thought it'd be a great opportunity to have Jen come on the show. We've had Michael Sonenschein, the CEO, on the show before. We've had Craig Somme, the chief legal officer. They've talked about their perspectives on this issue and the case they put forward, but I really wanted to get Jen in here to talk more about communications and public affairs and the work that goes maybe sometimes behind the scenes, though it ends up on the front pages into all of this. So, jen, really excited that you agreed to do this. Welcome to the show.
Speaker 2:Hi Ryan, thanks for having me Excited to do this, honored to be number three of your Grayscale favorites, so very high up on the top five list at a minimum.
Speaker 1:Number three on the schedule, number one in our hearts.
Speaker 2:Don't tell Michael that.
Speaker 1:I know he'll listen. Jen, I want to start with your background, because you've got an interesting career path and took maybe a nontraditional route to where you are today. But we've talked about this a lot. I think it makes you the great communicator you are today too. So back us up to the 101 on Jen's career.
Speaker 2:Yeah, thanks. So I started my career, as you mentioned, unconventionally. I went to school to be a high school English teacher, was really impassioned by education and equity and decided to move from teaching high school to pivoting to early literacy and parenting engagement through a nonprofit route and that was my first foray into communications. And then I got recruited to join an education corporation so a big company, where I was part of a global corporate affairs and marketing team. And that was really interesting because I was part of a comms function or corporate affairs function that not only did comms and PR and social media but also looked at employee engagement and looked at public affairs and government relations, who were all part of one team working globally.
Speaker 2:After that I had this really interesting moment where I had just kind of finished my master's degree I had been at Pearson for five years but my experience had always been in education and I had a couple of mentors who suggested that I go unconventionally mid-career to an agency and I ended up at what is now FGS, global Crisis Communications Agency, and I did that six or eight months before our global pandemic. So it was kind of a confluence of social health, economic crises converging. All companies were kind of dealing with some of these challenges at the same time, and I had had the experience working in-house at a matrix in an organization.
Speaker 2:And so it was just this terrible storm of crisis, but I had got an amazing experience over the years that I was there, and then I came over Grayscale, which I would consider more of a kind of entrepreneur in the other. So I joined Grayscale about two and a half years ago to build our communications and public affairs team strategy function, and so that's what we've been doing and, as you mentioned, we got really great news last week.
Speaker 1:Yeah, that's excellent. So a lot of our listeners will know, but Grayscale is the largest digital asset manager in the world. When you joined and you can correct me if my dates are off a little bit it was sort of an interesting time, I think, in the crypto world Because Bitcoin and cryptocurrency in general had been around for a while. It sort of had a pretty niche kind of market in terms of both investors. But also you saw a lot of what I'll call media popping up, but it was a lot of folks starting out on their own or blogging about it and, as is often the case down here in Washington, it hadn't really hit DC's radar and you didn't see a lot of folks whether it was regulators or whether certainly Congress paying attention to it. And now you're there for a little bit.
Speaker 1:But Grayscale has had this goal for a while to convert GBTC into an exchange traded fund. You fast forward to October 2021 to make that applications. Walk me through. I mean, I think you guys knew right away this was going to be something you were really going to have to engage audiences on and something you were going to have to educate on in a place where there was little education already there.
Speaker 2:Yeah, you know it's. It is interesting because I joined one Bitcoin. I think it's just like it had just hit 60,000 and you know everyone was really excited and you know what drew me to that in, what drew me to the industry was that I've, you know, I believe in new tech, right, I believe in equity. These are things that have resonated with me at a deep level For a long time and I was really impressed when I learned about blockchain technology. But I also came from, you know, you know a more traditional background and Working at a corporation, working at like a well established and see. So the idea of running headfirst into, like a crypto protocol, which felt like a little bit of a bridge too far. And the nice thing about grayscale is that grayscale is, like you mentioned, the world's largest Crypto asset manager, and asset manager first was expertise in crypto, with a specialization in crypto, and, and that distinction Was really what drew me to the company and which room you have to to grayscale's leadership is this idea that you know They've taken crypto and they've put it in a product or a wrapper or security that is familiar and comfortable to us investors that has this kind of you know, this is this ethos since the company was born. But you know we believe in in regulations. You know this business was built and has grown leveraging us rules of financial regulations and so, you know, as as a, as a company, even before I joined, I think, the grayscale team and really focused on how do we take people on this journey. We understand that this is a new asset class. We understand that things are changing and it and it evolves really quickly. And how do we bring Our investors, how do we bring regulators and policymakers, how do we bring people on a journey to help them understand this asset class and the potential that this asset class has? And that was really what drew me, from a communications perspective, to this role is the opportunity to tell not only the story of a company but a bit of history.
Speaker 2:And when, you know, you mentioned the timeline. You know our largest, our flagship fund, grayscale Bitcoin trust Well, 3.4% all outstanding Bitcoin has Nearly a million investors across all 50 states and, as you mentioned, you know, in 2021 was when the Bitcoin futures ETF started trading and that was a huge milestone for Bitcoin right, one that was celebrated, you know. And grayscale had initially filed to be an ETF and it always kind of conceived of being an ETF, but it initially had filed to be an ETF in 2017, and then, you know, the SEC at the time was not comfortable with the underlying markets for Bitcoin spot and Bitcoin futures and Decided to not approve either of those products. What is lesser known is that, behind the scenes, grayscale actually worked with the SEC for about a year and a half to turn GVTC into the first ever Crypto investment vehicle that was voluntarily SEC reporting. And so, you know, when 2021 came around and the Bitcoin futures ETF started trading, we saw that as a great signal, that amazing the you know regulators are comfortable with the underlying asset class and we decided to refile To convert GVTC into an ETF it's called an 18 before filing that that filing is a 240-day review process, and what's interesting about that review process is that there is this comment letter component to that review process whereby yeah, whereby, you know, anyone can submit a comment through this kind of like public governance process to the SEC for consideration as they're deliberating on whether or not to approve or deny this.
Speaker 2:What is a rule change? And so you know when I I remember first looking at the government website, the SEC's website, and there's three ways that you can send an Comment letter, and I'm sharing this because it's like a very calm this is very calm, right? You could either write a letter and print it and physically mail three copies. You could go to the website, but there was not a direct URL. You would have to, like, click around a bunch of times in order to find Right. Or you could send an email, but the email had to have the s number, which is the filing number, in the subject line, and that's like a multi number, like subject line email.
Speaker 2:So you know we were thinking about and when we engaged you all at PENTA, you know we filed this on behalf of our investors.
Speaker 2:Right, like this filing is on behalf of our investors and our actions are on behalf of our investors, and we felt like this was a perfect opportunity to give them a platform to have their voices be heard.
Speaker 2:But we also recognize that it was kind of a cumbersome process to even figure out how to have their voice be heard. So we created a QR code that allowed investors to Scan a code and it would populate an email that had the s number written in the subject line and they could then submit their Comel order, and we you know, that was kind of our kickoff of our public affairs work. When I say public affairs work, I mean the like, the actual public work, because we'd always done a lot of work behind the scenes with Policymakers and regulators is that educational partner? But really we like we put the, we put the you know, our foot on the gas and we were like, okay, this is an amazing opportunity to allow investors nationwide nearly a million investors across all 50 states to have their voices heard, and so that's really what we tried to do.
Speaker 1:Yeah, and I I really want to put a fine point on this. You said something a minute ago, too that I don't want to get lost in all of that. I mean you, when you think about the different stakeholders that the grayscale has, right from its employees to its investors, to the government regulators. You had a. The company had a vision very early on of converting GBDC into an ETF. They were very public and open about that Vision, and you also add the recognition that that would take Education and maturity in the market and you all said about doing that. So you you obviously employees, but your investors understood that vision.
Speaker 1:You all worked with the SEC and other members of the government kind of well in advance of October 2021. When, then, you start seeing some things in the crypto market happen, like the futures ETF, you're now not only ready yourself with the product, but you've done your job Educating and priming that those different stakeholders, so they're ready. Gets to what you were just saying a second ago. Now we launch a campaign that we invite folks who feel strongly about this, who want to see that ETF, who want to see that easier and more consumer protected way to access Bitcoin. You open that up and give them the option to do that, and then you and I know what happens. But we start to see a flood of support for what Grayscale is doing.
Speaker 2:Yeah, no, it was. All of these communications tactics. Strategies always come with considerations. Is this the right approach? Because one of the things about Grayscale what you point out is that, again, because we're a crypto asset manager, we talk a line between traditional finance and being a regulated and compliant business and being an expert or specialist in an industry that is absolutely transformative, that operates in a way that I've never seen any other industry operate. It's fun, it's silly, it's confusing, it's fast moving. There's a totally different language.
Speaker 2:As we were thinking about embarking on this 19B4 journey and throughout the litigation, one of the things that's been really, really important from a communications perspective is tone and our messaging. It's how do we maintain a respectful and professional persona brand dialogue to show that genuinely, we have deep respect for regulators and we understand that they have a really tough job and that, frankly, the crypto asset class is a small part of their larger network of responsibilities, but also that there are millions of people who want access to this asset class, as evidenced by the popularity of the products like GBTC. It's always been this how do we push forward a conversation in a way that's respectful but also future looking and forward thinking?
Speaker 1:I think that's a perfect place to take a quick break. We'll be right back on what's at stake.
Speaker 3:Penta is the world's first comprehensive stakeholder solutions firm. We are a one-stop shop for the intelligence and strategy leaders need to assess a company's reputation and make decisions that improve their positioning as executives in the C-suite must account for a growing set of engaged stakeholders, all with distinct, fast-changing demands. Penta provides real-time intelligence and strategy solutions. We work with clients solving complex global challenges across a variety of industries. Our clients span technology, financial services, energy, healthcare and more. To learn more about how Penta can support your company, check out our website at pentagroupco, our Twitter at PentaGRP or find us on LinkedIn at Penta Group.
Speaker 1:We're back on what's at stake. I'm talking to Jennifer Rosenthal from Grayscale Investments. Jen, you were just talking before the break about the importance of tone and how you communicate, especially on issues like this. That begs the question that you and I have talked about a lot but I think would be helpful to our listeners of you. Do get to a point in this campaign where it looks like the SEC may reject, and then ultimately does reject, the application from Grayscale. You have strong legal concerns about their ability to do that. Given the future's ETF, grayscale makes the difficult decision to sue their regulator. Talk about that as much as you can. I guess the decision-making process, but more so from a comms perspective, how you balance that, knowing you are going to be around for a while and going to be working with the SEC and the staff there, as you have been for years.
Speaker 2:Yeah, the decision-making process is, I think, the operative phrase here, because I think what people may not realize is how much work behind the scenes goes into preparation when we are considering any response. And this likely comes from and you'll appreciate this, brian, as someone who's in an agency, right at a strategic communications agency, at a crisis communications agency one of the things that we work with our clients on very regularly that was something that was really important when I joined Grayscale was this idea of how do we make sure we're prepared for all scenarios. That starts with understanding what the possible scenarios are Right. So when we started filing this 19 before, I'm the person in the room that's asking an annoying amount of questions what is a 19 before? What does this mean? What is the time clock? What are the different ways in? This could all shake out.
Speaker 2:I actually think that it's an interesting role of a strategic communications professional is to be the voice unapologetically be the voice that's asking the questions that media reporters, that investors may be asking or thinking about, because you need to ask those questions in order to be able to develop messaging or develop scenario plans for the things that you want to do. So when we were going through this process, we were ready. We had a full blown, what we were calling a playbook for every possible scenario that could have played out. And those were not static documents, right, those would be constantly evolving, so there would be, a development that would happen.
Speaker 2:Maybe it was a market event in crypto, maybe it was a new kind of conversation around regulation, maybe it was something specific to Brayscale's business that we needed to just update. So we were able to and we were very intentional. So the day the SEC rejected our 19 before application, because of the playbook that we had, we were able to respond in less than an hour with a press release and full court press because we were prepared for that Right and it took a lot of preparation to get there because every single document that we put out has to be approved by legal and compliance. So I would say that's probably one of the things I'm not proud of my team for. Yeah, as you're changing me.
Speaker 1:Both of those things you just mentioned are super complicated tasks that I think, you know, candidly, a lot of folks don't think about until they're in the moment. But my advice to all my clients is you've got to be prepared for that. The scenario planning is not a one-time exercise. I mean, you and I were updating things, you know, every time we got a certain comment letter from an influential voice or we yes, we saw something change in the crypto market and we'll get into. You know, crypto winter and all that.
Speaker 1:But all of that backdrop impacts how you're communicating, how you're talking to reporters, what other issues they're covering that might start to bleed into yours. And then, more importantly, the legal side of this, that everything needs to be perfectly buttoned up. These are not, you know, off the cuff decisions. These are not off the cuff interviews. Like we're working very closely with a legal team that's making a strong legal case. I often argue, and you know we had this support on our joint team together. You've got to have a communicator in the room there that understands how to work with lawyers. You got to have a communicator in the room there that understands especially where the media is coming from and how to talk to the business leaders, and that wholesome effort is what leads to success on any kind of litigation matter.
Speaker 2:Yeah, I actually think you're hitting on something that you know.
Speaker 2:I use the term strategic communications very intentionally because I think you know historically it comes with thought of as like just PR, right, like you're a broadcast arm you are basically, you have a message and you put out a press release and that's your message.
Speaker 2:You know social media, the way in which you know we have engagement, is what I'll say broadly that's not even an all encompassing term, but engagement more broadly from brands, from executives, from all different sorts of stakeholders, has really changed the way that you need to do communications and I actually think it's worth it better, because you know brands are being encouraged to think more holistically about communications across their channels.
Speaker 2:So how do you think about your own content, your earned content, your paid content, where you show up, and how do you put forth messages that are resonant, and how do you build your internal team to have the muscle of being able to recalibrate in response to these real time events? So it's, you know, it's another reason that I think having and not to to pentashorn, but I think media monitoring is one of the most important parts of any sort of comms function, because how do you, as the communications person at your company, make sure that you're putting your business in the context of what's happening in the world and what's happening, you know, geopolitically. It's imperative as you're thinking about navigating, especially something as sensitive as you know litigation.
Speaker 1:Yeah, you need that intelligence in the room and you need the right comms, people that understand it, because you know we talked about this again in the beginning. But even thinking through, you know in your case you've got investors that are eagerly waiting for the ETF and you've got a regulator on the other side that you'll be working with till you know the company's end of time right. So you've got to balance like we can. We can do one communication that's going to make a lot of investors happy, but what does that do for us long term with the regulator? Like, how do you balance those conflicting needs? You need that intelligence and then, as you call it, that strategic comms in the room to help the executives kind of think through those decisions and make the right play.
Speaker 2:Exactly. Yeah, it's always. It's always what I call brand tensions. Right, it's being a crypto asset manager. So that tension I mentioned around crypto and Treadfy, it's how do you balance being respectful or professional or compliant and forward thinking or innovative. These tensions, I think, actually make some really interesting cons and are actually a thought leadership white space. So when you think about the opportunity for Grayscale to actually take a leadership position and how we actually bring people on this journey, help them understand that you're regulating a technology, right, this is a new technology. It's very hard to understand. That's the fact. It's not an easy thing. It would be like asking someone to explain the mechanics of how the internet works, right, like this is the next version of the internet. It's really complicated. We haven't even really figured out how to effectively regulate the internet. There's all these conversations about social media companies, right, that have long gone on, so it's tricky. And so how do we, as a company, think about what our space in that conversation is and what our role?
Speaker 2:is is not only for our investors but for the other stakeholders that we gave priority.
Speaker 1:Yeah, and that raises another good point. You all made the calculation that your role in this space is obviously not only an advocate of your own products and what you want to bring to consumers, but you've been an industry advocate on that front and really going back to one of our themes of this show right, an educator on that front. And so I think a lot of people don't necessarily appreciate you enter into the litigation phase and there are some milestones along the way which give you media hooks every now and then, but you've got about nine months until even the hearing and then you've got another, if I do my math right, seven or eight months before a decision. Talk us through about how you all kind of not necessarily kept your foot on the gas, but you kept doing what you were doing. You were true to grayscale and kind of the education and engagement you had always done.
Speaker 1:I left out the most important part was during that period. You know we started entering into a bit of a crypto winter and you saw things like FTX collapse and a lot of, especially on the political side. Start to take a closer look at this industry, try to figure out what was going on, and that was a moment, I think, for education for a lot of these folks, but it came with a moment of scrutiny for the industry as well.
Speaker 2:Yeah, so I think one of the. From a communications perspective, I would say one of the things that has always been really refreshing about working with grayscale is the fact that our North Star has not wavered. Right. Our North Star is converting GBTC and our family of products into an ETF, but the GBTC to start right, bringing Bitcoin even further into the regulatory perimeter. So when you start with that North Star, everything that you do should be in support of that North Star, and we're talking about a spot Bitcoin ETF. Each of those words to a everyday person means Niente, right?
Speaker 3:It doesn't mean I like that.
Speaker 2:It's like. It's like it's like. The challenge is, how do you convince a person who may not know or doesn't, who has who's being, who's consuming so much media, who has so many other priorities, who's thinking about so many things, because when there's so much going on in the world, how do you convince them that even a sliver of their time in their day, their very busy day, is worth thinking about a spot Bitcoin ETF? And it's an exercise in unpacking the implication in the broader story, right? And so what is the broader story around the spot Bitcoin ETF and why it's important to have this in the United States?
Speaker 2:Right, it's a conversation about America being a leader in finance and innovation. It's about it's about investors having choice and access to the products of their choosing. It's about regulators regulating and creating regulatory frameworks that promote innovation and allow these innovations to flourish, right? So it was always, as we were deliberating on any sort of decision that we were making as a business, it was always with this North Star top of mind, and we made a decision to, despite the market events that you point to, to continue to engage, to continue to be that education partner, because it was that time, more than ever before, that people needed a trusted voice or a trusted resource that they could turn to on something like crypto, and so that was always how we thought about it. Is that we were unwavering in our North Star that converted into GBC, to an ETF.
Speaker 1:And you didn't right. You constantly put out Michael, your CEO, and Craig, your CLO, and you kept accepting those media opportunities, putting them in front of, I would say, both national media speaking engagements, but also, I guess you'd call it trade media.
Speaker 2:But those crypto specific folks, even in some of the toughest times for crypto, to make that case, yeah, I mean it was interesting, right, because we were again in the spirit of preparing for all scenarios. My goal as a communications professional is when I'm working with my executives.
Speaker 2:I should be the hardest interview that they ever had, and in scenarios like this I wasn't always right, they were having really tough interviews about macro conversation that were even above great skills business, and so how do you have that macro conversation but bring it back to your North Star, which is the importance of pushing for a spot like ATF in the United States. So, yeah, it was a challenge and we can always we could talk about how kind of crypto media is very different than traditional media if you want to go that route, but those are two very different things Might be another show.
Speaker 2:I feel like that's where you're going. Maybe I can just give you a fill out.
Speaker 1:I know, but we'll get you back on for another episode, let me, without hitting the fast forward button too hard. So, as we mentioned at the top of the show, the litigation goes in your favor, a big win a couple of weeks ago, and I'd love to hear kind of how you're thinking about moving forward from here. And some of your don't reveal any secrets for Grace, but you know the communications job never, never stops. That's not a finish line. You've got a lot of work. I guess we have a lot of work.
Speaker 2:I was just going to say you guys, so we're, so we're early, so we we got a decision that the court vacated the SEC denial of GBTC's conversion to an ETF, which was very, very exciting for the great scale team and all of our investors. So we're entering into the phase that is the. You know we're following the federal rules of appellate procedure, so that is a 45 day window whereby the FCC has the opportunity to review the opinion and decide on their next steps. And so we're in this moment where you know it's a bit of a waiting period and again, if you know, if you've made it this far on the conversation, you understand that we're doing a lot of scenario planning, right. So we are thinking through the ways in which this, you know, could potentially shake out, or continuing to engage with investors, with members of the media, to help them understand these. Again, spot the point ETFs, federal appellate procedures they're kind of like wonky terms.
Speaker 2:So you know unpacking, you know what those terms mean, pointing them to, you know appropriate documents and guidance, but you know it's going to be, it's going to be a fun couple of months, I think it'll be really interesting to see, where you know what the SEC decides to do, and we hope that they are thinking about and keeping in mind the million investors that are in GBTC and who really would like to see this product converted into an ETF.
Speaker 1:Well, well, obviously, not only be helping but watching closely. Yeah, and one I want to one final question, hopefully not too personal, but if you, you know, if you step out of just your role with greyscale right now and back to that, what we were talking about in the beginning, jen's career and just you know any, any lessons learned, or you know things that have surprised you or you've been most proud of through this process?
Speaker 2:Um, the good question. So I would say I am incredibly proud. I'm going to answer in multiple ways and like the true, the true, like HOMS list fashion, I'm going to say number one, the number one, most thing I am proud of is being part of a small but mighty team.
Speaker 2:People may not realize, but greyscale is like 60 people total. So being part of a small but mighty team that has been on the way bring and in that, what stars convert to be to an ETF and to prioritize investors in all, in all those efforts, I am really personally proud. Number two of the communications team. We are a team of four total, plus our team at Penta, who we consider an extension of our team, and how we've been able to manage not only just the media around this and the messaging and the scenario planning, but we also do HOMS content, social media, social listening and so just you know the volume of work is pretty unbelievable. So really proud of the team there.
Speaker 2:And then I guess the third is you know it's been really amazing to see how much progress has been made on all fronts on the regulatory front and we're seeing tons of bipartisan support and interest in crypto. You know investors and developers, you know, continue to be excited about the crypto asset bus. And as we're heading into the 2024 elections, you know I am really really interested to see how kind of crypto you know comes and maintains part of that conversation. So I expect innovation will continue and it's really cool to be a part of a team at Graceville that is helping not only tell the company story but the industry story.
Speaker 1:Yeah, really, really helping to write kind of crypto story, and I personally agree with you and the listeners have heard this many times but you know there's been peaks and valleys but we've come a long way in two years as a crypto industry and I think the next two years will be really fascinating to watch as you see not only the regulatory and kind of policy side come together but even really start to see some of these products go mainstream and take off, but we'll have you back on to talk about that too, jen.
Speaker 1:So that's great, but with that, let me. Let me just leave it there and thank you so much for coming on in. What, when, when on said is is how quickly we're doing this after your big legal victory and how busy you are still. We appreciate you squeezing in some time to record this, and we have you having me.
Speaker 2:Thank you for the Penta team for their continuous support. We love being partners with you all and I'm very happy to be able to participate and hope this was helpful for whoever is listening to that.
Speaker 1:Great, thank you, and to all of our listeners, thank you for tuning in to another episode of what's at stake. We'll be back next week. I'm your host, brian D Angeles. We'll talk to you then.