<\/p>\n
CoinList founder Andy Bromberg believes that spot Bitcoin (BTC) exchange-traded funds (ETFs) are just \u201cwatered down crypto\u201d and a sign the industry is heading in the wrong direction, amid growing hype over potential ETF approvals in the United States.<\/p>\n
Bromberg \u2014 also CEO of payments-focused wallet app Beam \u2014 told Cointelegraph: \u201cIf a Bitcoin ETF is considered crypto, we\u2019ve failed as an industry.\u201d<\/p>\n
He said a Bitcoin ETF would \u201cabsolutely\u201d be a net positive for crypto adoption but asserted the space\u2019s success comes from helping people self-custody assets and decouple from the traditional finance system \u2014 the antithesis of a TradFi ETF.<\/p>\n
\u201cIf crypto adoption happens mostly through ETFs and similar centralized financial instruments, then the core promises of the technology won\u2019t be realized \u2014 decentralization and true ownership.\u201d<\/p><\/blockquote>\n
\nThe rise of rollups & account abstraction unlock the ability to build payment apps on Ethereum as good as \u2014 or better than \u2014 web2 products.<\/p>\n
Between self-custody’s regulatory viability and that new tech, it’s the right place to focus.<\/p>\n
And it’s what crypto is all about.<\/p>\n
\u2014 Andy Bromberg (@andy_bromberg) September 20, 2023<\/a><\/p><\/blockquote>\n
Bromberg\u2019s take is contrary to the prevailing sentiment of excitement around the potential for spot ETFs to bring in institutional money. Some predict ETFs could see Bitcoin\u2019s market capitalization double and the price hit $150,000 by the end of 2024. <\/p>\n
CoinShares head of research James Butterfill told Cointelegraph that setting up a wallet for safe self-custody was still a daunting task for many non-tech-savvy institutional and retail investors. He believes an ETF will improve market access and will \u201chelp further democratize Bitcoin.\u201d<\/p>\n
\u201cSelf-custody simply isn\u2019t possible for many institutional funds, as it steps outside the regulated framework they must operate in,\u201d Butterfill said, adding that it\u2019s also the case for some retail investors.<\/p>\n
Matrixport research head and Crypto Titans<\/em> author Markus Thielen agreed and argued the reason so much crypto remains on exchanges despite a string of collapses is because self-custody is \u201cstill problematic for most users and has clumsy interfaces.\u201d<\/p>\n
Bromberg conceded that self-custody has historically been a challenge but pointed to technology such as account abstraction \u2014 which allows for wallet creation without using a seed phrase and more recovery options if access is lost \u2014 as proof it was possible to make \u201cmainstream-usable self-custody.\u201d<\/p>\n
Institutional investors need legal clarity, not ETFs<\/h3>\n
Bromberg thinks the real solution to giving institutional investors who want to hold crypto a way to do so lies in regulatory agencies providing legal clarity and the industry giving education on technology and products for institutions to comfortably self-custody.<\/p>\n
\u201cThere are institutions that hold crypto on their balance sheet already, and others could follow,\u201d Bromberg said.<\/p>\n
Many public companies report crypto holdings, including car maker Tesla, business intelligence firm MicroStrategy and a host of crypto miners \u2014 although it\u2019s unknown what the custody arrangements are for most.<\/p>\n
\nWhenever the spot bitcoin ETF is approved, we will see what the true global demand looks like for the investment asset.<\/p>\n
Large institutions aren\u2019t buying bitcoin for transactions, they will want exposure to the best store of value currently available.<\/p>\n
\u2014 Pomp (@APompliano) November 13, 2023<\/a><\/p><\/blockquote>\n
Butterfill said ETF-based Bitcoin holdings would come under a regulatory purview that would \u201censure high standards for custody.\u201d He explained that some Bitcoin ETF providers could offer physical redemption, similar to some gold-backed ETFs.<\/p>\n
Wall Street suits won\u2019t change Bitcoin<\/h3>\n
Other Bitcoin advocates are concerned about the possible influence that massive asset managers such as BlackRock could have over the Bitcoin network.\u00a0<\/p>\n
In October, Bitcoiner Peter McCormack told Altcoin Daily that a BlackRock ETF would be \u201cgood for price but bad for Bitcoin\u201d and expressed concern that it could end up the largest Bitcoin holder by way of its ETF.<\/p>\n
\nThe playbook:<\/p>\n
1. BlackRock files for an ETF. <\/p>\n