{"id":356604,"date":"2021-10-22T18:49:00","date_gmt":"2021-10-22T15:49:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/"},"modified":"2021-10-22T18:49:00","modified_gmt":"2021-10-22T15:49:00","slug":"crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/","title":{"rendered":"# Crypto breaks Wall Street\u2019s ETF barrier: A watershed moment or stopgap?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2fcbb29f07b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2fcbb29f07b\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/#Futures-based_vs_physical_ETF_%E2%80%94_Does_it_matter\" >Futures-based vs. physical ETF \u2014 Does it matter?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/#Will_pension_funds_rush_in\" >Will pension funds rush in?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/#Will_it_attract_individual_users\" >Will it attract individual users?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/#Is_an_Ether_ETF_in_the_cards\" >Is an Ether ETF in the cards?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-breaks-wall-streets-etf-barrier-a-watershed-moment-or-stopgap\/#A_critical_turning_point\" >A critical turning point?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Crypto breaks Wall Street\u2019s ETF barrier: A watershed moment or stopgap? <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvZjY2YTkzMTYtNmYxYS00MmVmLWI3MTktMjk2MDY2OTFkODFiLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>But others, like Arca CEO Rayne Steinberg, had \u201cmixed feelings\u201d about the events. While pleased that a much-awaited crypto investment vehicle finally received regulatory <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roval \u2014 ending eight years of futility on the part of U.S. fund issuers \u2014 he had some misgivings about the product that finally met the approval of the SEC, specifically the fact that it was futures-based and didn\u2019t track the price of Bitcoin (BTC) directly. <\/p>\n<p>\u201cWe do not think a futures ETF is a good way to get Bitcoin exposure,\u201d he said in a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ar.ca\/blog\/the-huge-kind-of-not-so-big-deal-bitcoin-futures-etf\" data-amp=\"https:\/\/www-ar-ca.cdn.ampproject.org\/c\/s\/www.ar.ca\/blog\/the-huge-kind-of-not-so-big-deal-bitcoin-futures-etf?hs_amp=true\">blog<\/a>, adding, \u201cFutures based ETFs work for short term trading, but have massive tracking error issues over long periods, which is what most investors are looking for when it comes to Bitcoin exposure.\u201d<\/p>\n<p>Markus Hammer, an attorney and principal at Hammer Execution consulting firm, agreed with some others that the event was a milestone yet cautioned, \u201cIt is only one milestone with quite a journey ahead,\u201d further informing Cointelegraph, \u201cAs an investor, if you want to go long in crypto \u2014 and many do \u2014 you prefer a fund that tracks \u2018physical\u2019 Bitcoin and not a derivative of it.\u201d <\/p>\n<p>The ProShares ETF is a bet on BTC\u2019s <em>future <\/em>price movements. That is, \u201cthe product ultimately deviates from the BTC price itself, next to the fact that ProShares as the issuer is just another inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ry and thus counterparty risk to the investor.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Futures-based_vs_physical_ETF_%E2%80%94_Does_it_matter\"><\/span>Futures-based vs. physical ETF \u2014 Does it matter?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Many institutional investors will probably wait for a physical Bitcoin ETF \u2014 tied to the spot market, not the derivatives market \u2014 that tracks the actual price of the cryptocurrency, Campbell Harvey, professor of international business at Duke University, told Cointelegraph. The BTC futures market is relatively small, he explained, \u201cand the buying pressure in the futures will lead to a negative \u2018roll return,\u2019\u201d meaning that: <\/p>\n<blockquote><p>\u201cYou are paying a premium to buy the futures each time you \u2018roll over\u2019 to the next contract. It is far more direct to buy the physical, but the SEC has given no indication they are willing to allow that.\u201d<\/p><\/blockquote>\n<p>In an interview with CNBC shortly after the Oct. 19 launch, SEC Chair Gary Gensler <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/CNBC\/status\/1450458243239747592\">suggested<\/a> why the agency had permitted only this indirect path to the crypto space: \u201cWhat you have here is a product that\u2019s been overseen for four years by a U.S. federal regulator, the CFTC, and that has been wrapped in something that is within our jurisdiction [i.e., the SEC] by the Investment Company Act of 1940, so we have some ability to bring it inside of investor protection.\u201d <\/p>\n<p>In other words, the new product will have two<em> <\/em>layers of regulatory protection \u2014 the CFTC and the SEC \u2014 against potential hackers, manipulators and fraudsters. <\/p>\n<p>Whatever its pedigree, the ProShares fund obviously resonated with investors \u2014 by the end of its second day of trading, it had reached $1 billion in assets under management, the earliest any ETF has reached that mark. <\/p>\n<p>\u201cThis is the first American ETF that is designed to track Bitcoin, and that certainly means something,\u201d Jeff Dorman, chief investment officer of Arca, told Cointelegraph, \u201cbut it definitely isn\u2019t the product that the market wanted nor is it one that financial advisors feel comfortable selling, so it will likely lead to less adoption than a physical-backed ETF would have.\u201d<\/p>\n<p>Some, including Harvey, saw significance in the fact that Invesco, a leading ETF provider, announced on Monday that it was abandoning its<em> <\/em>bid to issue a BTC futures<em> <\/em>ETF \u2014 at least for the time being \u2014 and focus instead on \u201cpursuing a physically backed, digital asset ETF,\u201d an Invesco spokesperson <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-10-18\/invesco-drops-pursuit-of-bitcoin-futures-etf-filing-before-debut\">told<\/a> Bloomberg.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Will_pension_funds_rush_in\"><\/span>Will pension funds rush in?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Asked about pension funds, a cautious but huge subgroup within the institutional investor firmament, Dorman told Cointelegraph, \u201cPension funds have been doing their due diligence for years\u201d with regard to crypto, but it is unlikely that a Bitcoin futures ETF \u201cmoves the needle\u201d much with this investor class. \u201cBut <em>if<\/em> the ETF leads to larger market caps and increased liquidity, then the sheer growth in size of the market will make it easier for pensions to invest comfortably.\u201d<\/p>\n<p>\u201cProShares\u2019 Bitcoin Futures ETF surely raises the profile of Bitcoin in the institutional investment community,\u201d Ben Caselin, head of research and strategy at cryptocurrency exchange AAX, told Cointelegraph, and it might make it easier for pension funds to gain crypto exposure. \u201cHowever, there would have to be a wider variety of different Bitcoin ETFs, including physically backed for larger players to enter the market on the back of an ETF,\u201d said Caselin.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Crypto and pension funds: Like oil and water, or maybe not?<\/em><\/strong><\/p>\n<p>Nigel Green, CEO of financial solutions company deVere Group, said in an emailed statement to subscribers that the ProShares futures-based ETF would \u201cinevitably bring in a growing number and broader range of active market participants, including those using pension funds, and retirement and brokerage accounts,\u201d but Dorman, for his part, stated that \u201cETFs aren\u2019t really designed for institutional investors \u2014 it is more of a retail product.\u201d <\/p>\n<p>Any institutional investors that want exposure to Bitcoin would already have different ways to get this exposure, Dorman explained, \u201cso this won\u2019t change much. I do believe we\u2019ll see more institutional adoption of all digital assets, but it\u2019s likely that institutional adoption of Bitcoin will be less than that of other digital assets that can be more easily understood and valued. We\u2019re already seeing new onramps gain traction \u2014 NFTs, gaming, DeFi.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Will_it_attract_individual_users\"><\/span>Will it attract individual users?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>What about retail investors \u2014 will a futures-based Bitcoin ETF be attractive, or is it too technical? <\/p>\n<p>\u201cThere are plenty of retail stock traders using trading apps who are not comfortable buying Bitcoin on the spot market, let alone withdrawing such funds into a private wallet,\u201d Caselin said, adding, \u201cIn some jurisdictions, retail traders may not be allowed to trade on centralized crypto exchanges. ETFs open up new avenues to gain exposure to Bitcoin\u2019s price action.\u201d<\/p>\n<p>On the other hand, the ProShares ETF\u2019s \u201cseparately priced, complex underlying derivatives\u201d might arguably add \u201can additional layer of complexity for those who have been wanting to easily and safely buy Bitcoin,\u201d John Iadeluca, CEO of Banz Capital, told Cointelegraph, while Harvey added that \u201cretail investors can easily get exposure to crypto by using existing brokers like Coinbase or Robinhood. They can bypass the ETF and avoid the futures.\u201d <\/p>\n<p>Still, \u201cAn ETF is a traditional financial product that can be publicly traded on the exchange like a stock,\u201d noted Hammer. \u201cThis will certainly make it somewhat appealing to an unsophisticated retail customer to participate in crypto via their existing trading account and the familiar (centralized) banking system.\u201d They don\u2019t have to deal with hot\/cold storage decisions, crypto exchanges, fraud, taxation issues, and the like. \u201cConvenience does the magic here.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Is_an_Ether_ETF_in_the_cards\"><\/span>Is an Ether ETF in the cards?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Bitcoin is not the only star in the crypto galaxy, of course. In fact, its dominance has been ebbing some over the past year, and there is even talk about an eventual BTC-ETH \u201cflippening\u201d in which Ether (ETH) surpasses Bitcoin in total market value. It bears asking: <em>How far away is an SEC-approved Ether ETF?<\/em><\/p>\n<p>\u201cGiven that Ethereum is the second-largest cryptocurrency in the world, the possibility for an Ethereum ETF is high,\u201d Jay Hao, CEO of cryptocurrency exchange OKEx, told Cointelegraph, \u201cbut it still needs time to mature.\u201d<\/p>\n<p>\u201cEthereum has a track record of following Bitcoin in terms of price action and attention,\u201d said Caselin. \u201cHowever, unlike Bitcoin, Ethereum would not be suitable as legal tender. Also, Ethereum is still in its experimental phase, and while the project has done exceptionally well, there are still questions around what the transition to proof-of-stake [consensus protocol] will look like.\u201d For now:<\/p>\n<blockquote><p>\u201cEthereum is more about the platform than it is about the asset. I don\u2019t see an Ethereum ETF on the horizon anytime soon until the space has matured more.\u201d<\/p><\/blockquote>\n<p>Iadeluca disagrees. \u201cI think the approval of an Ethereum futures ETF is much more likely now\u201d particularly since Ethereum-based investment products have closely followed the institutional product developments of Bitcoin within the mainstream markets. \u201cHowever, this may take some time.\u201d <\/p>\n<h2><span class=\"ez-toc-section\" id=\"A_critical_turning_point\"><\/span>A critical turning point?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>All in all, where do the week\u2019s events figure on the crypto historical-significance scale? Was this, indeed, a \u201cwatershed\u201d moment where everything changed?<\/p>\n<p>\u201cThis is no doubt a significant milestone for the continuous development of the crypto industry,\u201d Hao told Cointelegraph. More attention and participation from institutional investors can only help mainstream acceptance. \u201cAs the adoption rate of Bitcoin and crypto grows, the industry will continue to flourish.\u201d<\/p>\n<p>Harvey, however, warned about succumbing to hype. \u201cOverall, the entire space is held back by the regulatory uncertainty, and additional guidance is necessary,\u201d he told Cointelegraph, while Hammer added that \u201cwhat the market is looking for is a physical ETF rather than a crypto futures ETF.\u201d He also agreed the market still lacks regulatory clarity: <\/p>\n<blockquote><p>\u201cAs long as no uniform crypto taxonomy is defined, the responsibilities between the supervisory authorities are not clearly assigned, and there is no legislative framework that regulates crypto in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>, and especially DeFi and stablecoins, then nothing is gained.\u201d<\/p><\/blockquote>\n<p>ProShares\u2019 breaking of the ETF barrier remains a \u201cbittersweet\u201d moment for Dorman. On one hand, it\u2019s \u201cgreat to see another milestone achieved,\u201d but it\u2019s also disappointing because \u201cit is yet another flawed product with high fees and significant tracking error that trades exclusively on a handpicked exchange by the SEC.\u201d<\/p>\n<p>By the same token, one doesn\u2019t want to lose sight of the forest because of the trees. This week\u2019s events could arguably be viewed as a sort of test \u2014 \u201cto see if mainstream investors are ready to include cryptocurrencies in their portfolios alongside other assets such as stocks and bonds,\u201d said Green. \u201cAnd it appears, judging by the reaction, that they are.\u201d <\/p>\n<p>A lot of excitement radiated out of New York this week with the launch of the first Bitcoin exchange-traded fund (ETF) sanctioned by the United States Securities and Exchange Commission. The ProShares Bitcoin Strategy ETF (BITO) had a stunning debut on the New York Stock Exchange as the second-most heavily traded opening-day fund on record, with some <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2021-10-19\/proshares-bitcoin-futures-etf-starts-trading-in-watershed-moment\">calling<\/a> it \u201ca watershed moment for the crypto industry.\u201d\u00a0<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"crypto_biz\"><\/template><\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/crypto-breaks-wall-street-s-etf-barrier-a-watershed-moment-or-stopgap\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Crypto breaks Wall Street\u2019s ETF barrier: A watershed moment or stopgap? &#8221; But others, like Arca CEO Rayne Steinberg, had \u201cmixed feelings\u201d about the events. While pleased that a much-awaited crypto investment vehicle finally received regulatory approval \u2014 ending eight years of futility on the part of U.S. fund issuers \u2014 he had some&#8230;<\/p>\n","protected":false},"author":1,"featured_media":356605,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMTAvZjY2YTkzMTYtNmYxYS00MmVmLWI3MTktMjk2MDY2OTFkODFiLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,75849,74898,74355,70934,67874],"class_list":["post-356604","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-etf","tag-sec","tag-adoption","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/356604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=356604"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/356604\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/356605"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=356604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=356604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=356604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}