Bitcoin ETFs Dilute Cryptocurrency Essence, Asserts CoinList Founder Andy Bromberg
Summary:
CoinList founder Andy Bromberg suggests that Bitcoin exchange-traded funds (ETFs) are a diluted version of cryptocurrencies and pointedly contradicts the industry's direction. The statements were part of Bromberg’s critique that Bitcoin ETFs curtail the core ethos of the crypto world, which encourages people to own their assets independently. While Bromberg acknowledges Bitcoin ETFs could positively affect crypto adoption, he highlights complications with self-custody for institutional funds and certain retail investors. He concluded by advocating for legal clarity and better education to ease institutional investors into holding crypto comfortably.
Andy Bromberg, founder of CoinList, has stated that Bitcoin exchange-traded funds (ETFs) are merely "diluted crypto" and don't represent the right direction for the industry. Bromberg, who heads the wallet application Beam, conveyed these sentiments to Cointelegraph, arguing that a Bitcoin ETF betrays the crux of the crypto industry if it's regarded as crypto.
In his opinion, a Bitcoin ETF inclusion would be an overall positive for crypto growth. However, he emphasises that crypto triumphs from allowing people to possess their assets independently, breaking free from traditional financial systems, representing a stark contrast to a conventional ETF.
According to Bromberg, if ETFs and similar centralized instruments are the primary drivers of crypto adoption, the technology's main benefits - decentralization and true ownership - will not be fully realized.
The concept of ETFs propelling institutional money into the industry, resulting in Bitcoin's market capitalization doubling and pushing prices to reach $150,000 by the conclusion of 2024, contradicts Bromberg's sentiments. Given that setting up a safe self-custody wallet remains a daunting task for many non-techie institutional and retail investors, CoinShares' James Butterfill sees an ETF as a tool to enhance market access and democratize Bitcoin further.
Butterfill points out that self-custody isn't achievable for several institutional funds since it deviates from the regulated framework they're obligated to operate within, a reality that also holds for some retail investors. Markus Thielen of Matrixport sees eye-to-eye with Butterfill, suggesting that despite various collapses, a significant chunk of crypto still resides on exchanges because self-custody remains a conundrum for most users and involves complex interfaces.
Bromberg admits that self-custody has traditionally posed a challenge, but cited account abstraction technology, which allows wallet creation without a seed phrase, as evidence that self-custody usable by the mainstream is achievable.
Bromberg proposes a solution: provide institutional investors interested in holding crypto with legal clarity and education on technology and products. Tesla, MicroStrategy, and numerous crypto miners are public companies reporting crypto holdings, Bromberg points out, although the specifics of most custody arrangements remain undisclosed.
Butterfill anticipates Bitcoin holdings via ETF would undergo regulatory scrutiny, which would uphold high custody standards. He also alluded to the possibility of ETF providers offering physical redemption à la gold-backed ETFs.
While some Bitcoin advocates worry over the sway large asset managers like BlackRock might exert over the Bitcoin network, such as altering its price, Butterfill counters that BlackRock would symbolize a diverse clientele within a regulated framework. Although BlackRock may bring in a wave of new Bitcoin investors, its influence wouldn't match that of an individual or a government.
On a final note, Butterfill and Thielen believe welcoming institutional entities, including Wall Street firms, to promote Bitcoin, will boost its assimilation as a safe-haven asset beyond gold and other similar investments.
Published At
11/21/2023 10:42:00 PM
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