According to a famous Bitcoin analyst, the potential approval of a spot Bitcoin exchange-traded fund (ETF) by the United States could contradict the role envisioned by Bitcoin’s anonymous creator, Satoshi Nakamoto, and trigger fundamental issues.
Will Bitcoin Struggle After ETF Introduction?
Josef Tetek, a Bitcoin analyst at Trezor, believes that the concept of a spot Bitcoin ETF, an investment product that would trigger tracking of BTC prices through the custody method, contradicts the idea of Bitcoin, which emerged with the concept of self-custody.
In an interview, Tetek stated:
In principle, spot Bitcoin ETFs move people away from self-custody and potentially create systemic risks as ETFs would be considered safer than exchanges.
The analyst, who believes that the approval of a spot Bitcoin ETF could have significant consequences, mentioned that it could pave the way for a large number of BTCs to be stored in centralized locations accessible by the government. Referring to the 1930s, the analyst recalled that the United States had also confiscated gold in the past and added:
Although a spot Bitcoin ETF would make exposure to Bitcoin price movements more accessible for both individuals and institutions, traditional ways of buying Bitcoin provide the same exposure. Do we really need ETFs for that?
Is “Paper Bitcoin” on the Horizon?
Another issue, according to the analyst, is that with a Spot Bitcoin ETF, owners of the ETF will not have the option to redeem the underlying asset.
Contrary to this, Tetek pointed out that these assets would be collectively held by those managing the ETF, which increases the possibility of issuing endless amounts of “paper Bitcoin” that are not backed by the real Bitcoin, which has a limited supply of only 21 million coins. The analyst stated:
The result could be the creation of millions of unsupported Bitcoins that would disrupt real markets and devalue real Bitcoin – all while giving more authority to centralized giants of traditional finance. The complete opposite of Satoshi’s original vision.
Similarly to Tetek, there are others who are not optimistic about spot BTC ETFs. Arthur Hayes, co-founder of the cryptocurrency exchange BitMEX, believes that if spot Bitcoin ETFs succeed, they could completely destroy Bitcoin.
Some Bloomberg analysts, however, point to a different aspect. Even if this situation does not occur with Bitcoin, ETF fees are expected to be lower than those on exchanges, and such ETFs will likely compete with centralized crypto exchanges like Coinbase.
