- Some crypto executives criticize Bitcoin ETFs, claiming they centralize crypto assets and go against the decentralized ideals of crypto. Despite their popularity, executives argue ETFs give too much influence to Wall Street.
- Bitcoin ETFs saw immense interest initially, with over $10 billion in trading volume the first week after the SEC approved the first spot Bitcoin ETFs. However, some executives worry this leads to centralization.
- Some executives also argue improving wallet technologies like EIP-7212 may reduce the need for intermediaries like ETFs long-term. They claim crypto apps will make self-custody so easy that ETFs won’t be necessary.
Some crypto executives are criticizing Bitcoin exchange-traded funds (ETFs), claiming they violate the ideals that crypto was built upon. Despite their popularity, these executives argue that ETFs could lead to greater centralization and won’t be needed long-term.
The Rise in Popularity of Bitcoin ETFs
The US Securities and Exchange Commission approved the first spot Bitcoin ETFs on January 10, 2022. These ETFs began trading the next day and saw immense interest, with over $10 billion in trading volume in the first week. In addition, Bitcoin ETFs had over $782 million in net inflows in just the first two days.
Concerns Over Centralization
However, some crypto executives have concerns about Bitcoin ETFs. Andy Bromberg, CEO of wallet developer Eco, claimed ETFs could give Wall Street too much influence over the crypto market. He argued that by buying a Bitcoin ETF, investors are “giving Wall Street money to buy Bitcoin with.”
Bromberg stated that this centralization goes against the decentralized ideals Bitcoin was founded on. “There is a world where if all people entering the industry care about and think about is price and not what this technology actually does, they’ll buy into these Bitcoin ETFs. And one day these Wall Street institutions will own 70% of the Bitcoin in circulation. I’m not so sure that is the thing that we were trying to build,” he said.
Criticisms Over Long-Term Need
Some executives also question whether ETFs will even be needed long-term. Lucas Henning, CTO of wallet developer Suku, claimed most cryptocurrencies besides Bitcoin likely won’t get SEC approval for ETFs.
He argued new technologies like EIP-7212 will make self-custodying crypto assets easier than ever. As wallets become more convenient, the need for intermediaries like ETFs will decline. “We’re going to see wallets and we’re going to see crypto apps that are built for non-crypto native users where you’re not even going to realize that you’re actually using crypto,” Henning stated.
While Bitcoin ETFs have proven immensely popular initially, some crypto executives have raised concerns. They argue ETFs could lead to centralization of crypto assets with Wall Street institutions. In addition, improving wallet technologies may reduce the need for ETF intermediaries long-term. However, only time will tell whether these criticisms or the popularity of ETFs will prevail.