Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
In June, BlackRock, a global investment firm, surprised many within the cryptocurrency sector by submitting an application for an exchange-traded fund (ETF), known as the iShares Bitcoin Trust. The firm aims to navigate a decade-long resistance from U.S. regulators regarding cryptocurrency ETFs. A spot Bitcoin ETF would be available for trading on a conventional stock exchange and would align with market performance.
Proponents contend that ETFs are tax-efficient, straightforward to trade, and cost-effective; however, some argue that BlackRock’s strategy may be misguided. It is essential to recognize that ETFs do not share the same objectives or focus as Bitcoin (BTC).
Challenges within the traditional finance sector
The traditional finance landscape has historically been dominated by institutions that manage capital flow and set the terms of financial transactions. Many individuals feel excluded by these entities, perceiving that they have limited access to wealth generation, which creates obstacles for individuals and small enterprises.
Related: Bitcoin ETFs: Even worse for crypto than central exchanges
Consequently, the emergence of cryptocurrencies has provided a significant opportunity to present an alternative to the conventional finance system, promising enhanced autonomy, inclusivity, and transparency. Nevertheless, it is crucial to integrate traditional finance with decentralized finance (DeFi) to achieve widespread adoption.
Bitcoin ETF next deadline August 13th
(But this is for the ARK re-filing)
Likely gets postponed IMO while most eyes will be watching Sept 2nd for BlackRock ETF deadline
BlackRock likely the first approved, if any, as the rest are just re-filing pic.twitter.com/h2ESr6aMnp— Rager (@Rager) August 5, 2023
We must progress toward an industry where DeFi can support legacy financial institutions rather than view them as adversaries. Major banks and stakeholders are eager to enter the crypto space, and there is potential for the general public to engage with this new realm in the future, addressing the numerous limitations or barriers associated with traditional finance. The introduction of ETFs signifies the financial sector’s efforts to incorporate the innovations brought by cryptocurrencies.
ETFs encourage centralization
Various types of cryptocurrency exchanges exist, with centralized exchanges—such as FTX—being the most prevalent. Centralized exchanges manage the private keys to their clients’ wallets and typically require users to complete a Know Your Customer (KYC) process to mitigate illicit activities.
Related Posts
In contrast, decentralized cryptocurrency exchanges operate on a decentralized, noncustodial blockchain framework that facilitates direct peer-to-peer transactions. This model effectively eliminates the need for intermediaries. Users are not required to undergo the KYC process, allowing individuals in oppressive regimes to participate. They also retain control over their private keys and are solely accountable for the security of their assets, which they can stake to earn interest.
Related: Don’t be naive — BlackRock’s ETF won’t be bullish for Bitcoin
The capacity of crypto to provide these benefits—particularly to unbanked individuals who lack access to traditional banking services—is the fundamental purpose of the industry.
Conversely, ETFs are fundamentally centralized products, creating a contradiction with the decentralized essence of Bitcoin and other cryptocurrencies. They do not offer the advantages that form the foundation of cryptocurrency, nor do they motivate new users to participate.
In addition to compromising Bitcoin’s core tenets of decentralization and trustless transactions, ETFs also introduce the issue of “paper” Bitcoin—BTC that exists solely on paper. Without the ability to withdraw the “Bitcoin” one supposedly owns, the likelihood of future FTX-like disasters increases significantly.
We need to clarify cryptocurrency — not establish a “Crypto for Dummies” fund
Most individuals lack a fundamental understanding of Bitcoin, non-fungible tokens, or cryptocurrencies in general. It is vital for those involved in cryptocurrency to identify a welcoming entry point into the crypto realm for the general public. Clarifying cryptocurrencies and Bitcoin will foster broader adoption. Transforming Bitcoin into a readily tradable asset could undermine its role as a groundbreaking decentralized currency.
Traditional finance should be utilized as a stabilizing influence. Its frameworks could potentially provide stability to the volatile crypto market. If executed correctly, they could enhance security, accessibility, and trust, potentially attracting more mainstream investors to cryptocurrencies. Stringent regulatory oversight could also legitimize Bitcoin and cryptocurrencies for the general populace and financial institutions.
A significant evolution is necessary within traditional finance. Institutions must adapt and evolve to fully embrace cryptocurrencies. They should integrate the principles of decentralization and autonomy that cryptocurrencies embody rather than merely incorporating Bitcoin into existing frameworks. This suggests that BlackRock should reconsider its Bitcoin ETF initiative.
Daniele Servadei is the co-founder and CEO of Sellix, an e-commerce platform based in Italy.
This article is for informational purposes only and is not intended to be and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
