There is no doubt that BlackRock’s spot bitcoin exchange-traded fund (ETF) filing, and the flood of contenders that followed, gave the bulls a boost. They said it could herald winds of change in the regulatory landscape. This, they shouted, could bring bitcoin to the masses.
While there may be some truth to these claims, we need to take a step back and look at the bigger picture. We shouldn’t live in a world where the market is overrun just because of the possibility of a spot Bitcoin ETF being realized in the US. BlackRock’s potentially massive impact on Bitcoin (BTC) price action should give everyone in the Bitcoin community pause for thought, not celebration.
Spot Bitcoin ETFs are clearly an easy way for U.S. retirement funds to capture Bitcoin upside, and a U.S.-approved ETF is likely to drive significant Bitcoin price appreciation over the next few years. But how will it advance Bitcoin’s cause — to decentralize finance, empower the unbanked, and revolutionize the way we interact with money on a global scale? Very few if any.
TradFi hack
The BlackRock filing, and the discussions surrounding it, are certainly a reminder of the mistrust that exists between certain parts of the crypto community and the world of traditional finance.
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The timing of BlackRock’s foray into a bitcoin ETF is particularly intriguing and has conspiracy theorists going wild. Given the SEC’s lawsuits against Binance and Coinbase, some believe the agency is disarming crypto-native companies, paving the way for companies like BlackRock to take over crypto businesses.
Of course, such claims are unconfirmed speculation. However, they demonstrate that the deeper the involvement of traditional financial (TradFi) entities in the digital asset space, the more likely we are to make Bitcoin just another asset class, disregarding its intended purpose and true value proposition.
These Are the Key Dates and Timelines for the BlackRock Spot Bitcoin ETF
Here’s where I’m positioned for the next few weeks… pic.twitter.com/V1Kwvbh8Rc
— Ξ huf (@hufhaus9) June 26, 2023
As you delve further into the details of BlackRock archive, the alarm bells began to ring. The document states that in the event of a hard fork, BlackRock can “determine in its sole discretion which network should be deemed suitable for fiduciary purposes.” This could be significant, allowing BlackRock to try to influence the direction of Bitcoin, or at least steer institutional allocation and mainstream adoption.
Excessive impact on a decentralized monetary system is obviously a concern in its own right, but the broader problem with ETFs is that investors cannot extract the underlying bitcoin. The real benefit lies in owning Bitcoin.
Preserving the Spirit of Bitcoin
Let’s not forget that Bitcoin was created in direct response to the bailouts and quantitative easing following the 2008 financial crisis. Unlike traditional currencies, Bitcoin has a limited supply, is truly scarce, and operates with decentralized governance.
Fifteen years after the crisis, central banks around the world still can’t break the habit of printing money as a “get out of jail” card. But it’s only free. Hardworking ordinary people around the world are paying the price for the devaluation of their currencies, exacerbated by a not-so-temporary inflation spike.
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While central banks play Russian roulette with public finances, the ethos of Bitcoin is to empower individuals by providing a censorship-resistant, borderless form of money. As an open-source currency network, Bitcoin has the power to change the way we interact with money. It could drastically reduce the importance of centralized institutions — and possibly even render them obsolete — something conspiracy theorists would say TradFi knows all too well.
Bitcoin ETFs seem out of step with this ethos of empowerment. El Salvador has taken an aggressive approach to bitcoin adoption and arguably aligns more closely with bitcoin’s core goals than any ETF. While El Salvador seeks to empower the unbanked by actively promoting bitcoin ownership, bitcoin ETF investors will not be able to enjoy any of the benefits of bitcoin while enriching the pockets and strengthening the position of TradFi institutions.
Ownership over price speculation
Bitcoin spot ETFs may establish a stronger presence in the cryptocurrency ecosystem and appeal to a specific class of investors in the coming years, but their role should not overshadow Bitcoin’s future trajectory. If we only focus on giving people exposure to price changes without actual ownership, then we will completely miss the point of a revolutionary monetary system. No, it’s not “consumer protection” if someone proposes a rule that the retail sector can only be invested through ETFs and not direct ownership. This means that their powers are taken away.
Our industry should maintain a cautious stance, recognizing that the growing involvement of ETFs and traditional finance in the crypto space may pose a risk to the fundamental purpose of Bitcoin. Staying vigilant about these risks means not being blinded by the hype, but staying committed to the original ethos of Bitcoin — a tool to transform the world’s financial system, not just a speculative asset.
ben cassell He is the Vice President and Chief Strategy Officer of MaskEX, a digital asset trading platform headquartered in Dubai, UAE. Focused on driving mass adoption of Bitcoin and digital assets, he is responsible for MaskEX’s global expansion efforts in business development, marketing and communications. Prior to joining MaskEX, he held various senior management positions at AAX. He holds a BA in Cultural Anthropology and Sociology of Development from Utrecht University and a MA in Global Migration Studies from University College London.
This article is for general informational purposes only and is not intended and should not be construed as legal or investment advice. The views, ideas and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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