Markets
Spot cryptocurrency ETFs: a sneaky control tool?
If you can’t beat them, join them. Most likely, these thoughts are coming to the minds of those watching the cryptocurrency spot ETF approval process.
First, the SEC approved Bitcoin spot ETFs. Ethereum spot ETFs are about to follow, and the market is already anticipating that Solana spot ETFs could be coming soon…
The well-known cryptocurrency expert, Arthur Hayes, did this recently noticed that bankers would like to centralize cryptocurrencies and make them similar to any other asset.
Of course, Hayes, or any other analyst, cannot be considered the source of the ultimate truth. However, we at Bitbanker believe that the theory seems plausible.
While the “control theory” may seem like just another conspiracy theory, there are some valid points that support it. Let’s look at it in more detail.
At this point, it is obvious that the SEC cannot ban cryptocurrencies. Cryptocurrencies have gained “critical mass” and found their place in the portfolios of financial companies and private investors. This is especially important in an election year since cryptocurrency holders are also voters.
Financial companies love commissions more than anything. The commission business is more profitable than the lending business. With lending, you need a strong risk and analytics team, sophisticated software, and a little luck to navigate the complex economic landscape.
In the case of commissions, you get a ready-made cash flow after the initial investment in paperwork and a couple of guys managing your fund. It is not surprising that financial companies are ready to develop new funds for all popular products, including cryptocurrencies.
Taking a look at the big picture, US regulators want to keep cryptocurrencies under more control. The potential accumulation of cryptocurrencies in funds managed by American financial firms seems like an elegant solution to this problem.
From this perspective, the creation of spot ETFs on cryptocurrencies has two purposes. US regulators place more cryptocurrencies into US-regulated funds that will comply with all US regulations, including sanctions. Meanwhile, financial companies reap commission profits from their large user base. It seems like everyone is winning, but is this deal good for cryptocurrency fans?
Spot cryptocurrency ETFs are a new reality in the cryptocurrency markets, whether you like them or not. Eventually, Ethereum spot ETFs will be approved, bringing additional demand for ETH from traditional financial markets.
Most likely, these ETFs will be followed by others as financial firms would like to capitalize on the success of Bitcoin spot ETFs and Ethereum spot ETFs. Solana seems like an obvious target following the approval of Ethereum spot ETFs. Additionally, some financial firms may want to create funds dedicated to meme coins, although this would be a more complicated exercise. Overall, the potential cryptocurrency ETF boom would provide further support to cryptocurrency markets, although direct support would be limited to a few big names.
For those investing in cryptocurrencies, purchasing them directly will always remain the best way to navigate the cryptocurrency markets. There is no reason to pay someone to hold your cryptocurrencies when you can hold them yourself.