CoinList founder Andy Bromberg believes a spot Bitcoin (BTC) exchange-traded fund (ETF) simply “waters down the cryptocurrency,” a sign of the growing hype over potential ETF approval in the U.S. heating up, the industry is heading in the wrong direction.
Bromberg, who is also the CEO of payments-focused wallet app Beam, told Cointelegraph: “If a Bitcoin ETF is viewed as a cryptocurrency, then we have failed as an industry.”
He said a Bitcoin ETF would “absolutely” have a positive impact on cryptocurrency adoption, but claimed success in the space comes from helping people self-custody their assets and decouple from the traditional financial system – the antithesis of the TradFi ETF.
“If cryptocurrency adoption occurs primarily through ETFs and similar centralized financial instruments, the technology’s core promises of decentralization and true ownership will not be realized.”
The rise of aggregation and account abstraction unlocks the ability to build payment applications on Ethereum that are as good as, if not better than, web2 products.
Between the regulatory feasibility of self-hosting and new technologies, this is something to watch.
This is what cryptocurrency is about.
— Andy Bromberg (@andy_bromberg) September 20, 2023
Bloomberg’s view runs counter to widespread excitement about the potential for spot ETFs to bring institutional money. Some predict that ETFs could double Bitcoin’s market value, with the price reaching $150,000 by the end of 2024.
James Butterfill, director of research at CoinShares, told Cointelegraph that setting up a secure self-custody wallet remains a difficult task for many non-tech-savvy institutions and retail investors. He believes ETFs will improve market access and will “help further democratize Bitcoin.”
“Self-custody is simply not possible for many institutional funds because it is outside the regulatory framework within which they have to operate,” Butterfield said, adding that the same was true for some retail investors.
Matrixport Research Director and crypto titan Author Markus Thielen agrees, arguing that the reason why so many cryptocurrencies remain on exchanges despite a string of crashes is because self-custody “makes sense for most users.” It’s still a problem and the interface is clunky.”
Bromberg acknowledged that self-custody has historically been a challenge, but noted that technologies such as account abstraction — which allows wallets to be created without the use of mnemonic phrases and provides more recovery options if access is lost — — as proof it’s possible to make “mainstream available” self-custody. “
Institutional investors want legal clarity, not ETFs
Bromberg believes the real solution to providing a way for institutional investors who want to hold cryptocurrencies lies in regulators providing legal clarity and the industry educating institutions on the technology and products so they can easily do so. Self-hosted.
“Some institutions already hold cryptocurrencies on their balance sheets, and others may follow,” Bloomberg said.
Many public companies have reported cryptocurrency holdings, including carmaker Tesla, business intelligence firm MicroStrategy and a number of cryptocurrency miners – although it is unclear what the custody arrangements are for most companies.
Whenever a spot Bitcoin ETF is approved, we will see what the real global demand for this investment asset looks like.
Large institutions are not buying Bitcoin to trade, they want exposure to the best store of value currently available.
– Pomp (@APommpliano) November 13, 2023
Butterfill said that ETF-based Bitcoin holdings will be regulated to “ensure high standards of regulation.” He explained that some Bitcoin ETF providers can offer physical redemptions, similar to some gold-backed ETFs.
Wall Street Lawsuit Won’t Change Bitcoin
Other Bitcoin advocates worry about the impact large asset managers such as BlackRock could have on the Bitcoin network.
In October, Bitcoin enthusiast Peter McCormack Tell Altcoin Daily said the BlackRock ETF would be “good for price but bad for Bitcoin” and worried that it could eventually become the largest Bitcoin holder through the ETF.
script:
1. BlackRock applies for ETF.
2. Retail purchase #bitcoin The expectation of being able to sell higher prices to institutions that are “late to the party” pushes them higher.
3. BlackRock sells to retail investors (you) after a huge rally.
4. BlackRock FUDs your bags so they can… https://t.co/SxBBKeAoI7
— Sheldon Evans (@SheldonEvans) November 14, 2023
However, Butterfield said BlackRock would represent “a large and diverse set of clients” in a regulated structure, which is “very different from the control that an individual or a government can exert if there are such large holders.” ”.
related: Former Cantor executive launches crypto lending platform, looking forward to Bitcoin ETF
Existing Bitcoin exchange-traded products typically account for up to 5% of total daily Bitcoin trading volume, “so we still have a long way to go before ETPs challenge the entire market,” he explained.
Thielen welcomed possible new Bitcoin holders, saying BlackRock’s ETF would “open the door to thousands of institutional players” who he believed would use Bitcoin to replace “gold and other safe-haven assets, For example, national debt.”
He added that everyone has the right to own Bitcoin and that the cryptocurrency has become a speculative asset that has essentially moved away from its origins as peer-to-peer cash.
“We should welcome ‘lawsuits’ from Wall Street as Bitcoin’s promoters. We can all benefit from them.”
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