Amid the excitement surrounding the potential approval of a spot Bitcoin exchange-traded fund (ETF) in January 2024, concerns have been raised about the issue of backing. Some analysts worry that ETFs could take people away from self-custody and potentially result in unbacked Bitcoin.
These concerns have sparked a debate within the community, with some dismissing them as fear, uncertainty, and doubt (FUD), while others question how investors can ensure that ETF issuers actually hold Bitcoin for their clients. Some observers suggest that publishing actual on-chain addresses in addition to BTC holdings reports would provide greater transparency.
However, David Gerard, author of “Attack of the 50 Foot Blockchain,” believes it is unlikely that ETF administrators would create unbacked BTC equivalents or misrepresent their backing assets. He argues that regulated finance by well-known entities does not pose a realistic threat of unbacked ETF shares.
Eric Balchunas, a Bloomberg ETF analyst, compares spot Bitcoin ETFs to gold ETFs, stating that a spot BTC ETF would operate similarly. He emphasizes that asset managers are highly regulated and would not risk legal trouble or negative publicity by not holding the Bitcoin they claim to have. Balchunas also notes that companies like BlackRock or Grayscale are vulnerable to Bitcoin volatility and have a vested interest in holding the cryptocurrency.
While some industry observers are confident that ETF providers would not misrepresent their BTC holdings in the cash-create model, others remain skeptical. They argue that the only way to be certain of no paper Bitcoin claims would be if ETF shares were redeemable for actual Bitcoin, which is not the case with the proposed cash in, cash out ETFs.
In conclusion, the potential approval of a spot Bitcoin ETF has generated excitement and concerns within the industry. While some believe that ETF issuers would act in good faith and hold the Bitcoin they claim to have, others question the lack of redeemability for actual Bitcoin in the proposed ETFs.
This News Article was automatically generated by Bob the Bot (AI)
| Information | Details |
|---|---|
| Geography | Global |
| Countries | |
| Sentiment | neutral |
| Relevance Score | 1 |
| People | David Gerard, Sam Bankman-Fried, Eric Balchunas, Satoshi Nakamoto, Josef Tětek |
| Companies | Grayscale, State Street, BlackRock |
| Currencies | Bitcoin |
| Securities | None |
