Spot Bitcoin ETFs Seen as Complementary, Not a Threat to Personal Bitcoin Custody
Summary:
The anticipated approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the U.S. has raised concerns among some crypto insiders, who worry these investment instruments could deter investors from personal Bitcoin custody. However, many within the sector do not foresee a clash between the concept of a spot Bitcoin ETF and self-custody. Investment professionals maintain the stance that these different methods of Bitcoin exposure complement rather than challenge each other with the ultimate investment decision falling to personal preferences.
With the possible approval of a spot Bitcoin (BTC) exchange-traded fund (ETF) in the U.S., Josef Tětek, a Bitcoin analyst at Trezor, has raised concerns that these new investment vehicles could steer investors away from personal Bitcoin custody. Even so, there's no widespread consensus in the industry to suggest a face-off between spot Bitcoin ETFs and self-custody.
A spot Bitcoin ETF is a financial product offering real-time tracking of BTC's price by investing in Bitcoin. It provides a means for investors to handle BTC through orthodox brokerage accounts. Bitcoin ETFs, dissimilar to self-custody means, allow for indirect BTC investment, while self-custody mandates that users personally control and safeguard the private key to access their Bitcoin.
Upon seeking opinions from numerous industry personnel, Cointelegraph discovered that not many agree with Tětek's viewpoint. The predominant opinion being, these varying methods of Bitcoin access do not compete but rather complement each other.
Jan3's CEO, Samson Mow, commented to Cointelegraph about ETFs being designed for funds and institutional investors who can't handle the principal asset. He also postulated that this situation could change, with institutions being able to hold Bitcoin directly.
Mow advocates for investment in the actual Bitcoin, while adding that ETFs provide a stop-gap for traditional finance to adopt the Bitcoin paradigm. However, he does not believe ETFs compete with Bitcoin, per se.
David Gerard, a crypto blog and book author, shares this view, saying that holding keys is for serious Bitcoin evangelists or traders wary of key storage risks. He doesn't perceive any conflict between the two, instead, characterizing ETFs as merely treating Bitcoin as a derivative to mint more dollars.
Valkyrie CEO Leah Wald, whose company has applied for a spot Bitcoin ETF in the U.S., echoed these sentiments, stating it's more about investor preference. Some may prefer self-custody, while others may desire Bitcoin exposure via an ETF, which mitigates the complications of self-custody.
Eric Balchunas, a Bloomberg ETF analyst, citing the cases of gold and Bitcoin, argues that some individuals like owning these assets physically, while others just want exposure without the accompanying stress.
He confessed to not self-custodying Bitcoin due to concerns about losing the keys and forgetting them. He's of the opinion that many people share this sentiment. Balchunas' perspective opposes Tětek's, who back in December voiced concerns that a U.S. spot Bitcoin ETF could distort Bitcoin's original vision by Satoshi Nakamoto, potentially introducing systemic risk by appearing safer than exchanges while moving people away from self-custody.
Published At
1/4/2024 11:30:47 AM
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