Why Spot Bitcoin ETFs Are (But Mostly Aren’t) a Big Deal for Crypto 🤔
🖊️ Opinion article by Laura Shin. 🎙️ Also, join us at 12 pm EST for a live conversation with James Seyffart, Eric Balchunas and Nate Geraci.
The approval of spot Bitcoin ETFs in the U.S. is a big milestone for the crypto industry in the eyes of the outside world, especially for a movement that began in 2008 as a white paper quietly proposed to an obscure mailing list.
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Bloomberg’s headline read, “SEC Authorizes Bitcoin-Spot ETFs in Crypto’s Breakthrough.” The NYT’s: “Regulators Approve New Type of Bitcoin Fund, in Boon for Crypto Industry.” Coinbase called the approvals “momentous,” while Senator Cynthia Lummis said the decision was “historic.”
And while that is all true, the reason for that is more because the approvals were hard-won in a knock-down, drag-to-court fight, and because they are an acknowledgment by an incumbent more so than because of any particular achievement by Bitcoin itself at this point in time.
This is why, when the history books are written, I believe this moment will likely be seen as a sideshow that has more to do with politics and outside validation rather than a marker of Bitcoin’s success in gaining adoption.
Spot Bitcoin ETFs Should Have Come Long Ago
During Bitcoin’s 15-year existence, it has gone from a curiosity so worthless that, in 2010, 10,000 were needed to buy two pizzas to far and away the best-performing asset of the last decade.
However, the real reason that it will now be the belle of traditional finance’s next ball is not necessarily because of its meteoric rise in price, but because of the politics that delayed its approval as the basis for an exchange-traded product.
Imagine if spot Bitcoin ETFs had been approved at some point before the launch of Bitcoin futures ETFs. While one can dispute exactly when would have been the optimal moment for it, the broad consensus, hammered home last August by a panel of three judges, is that the lack of a spot Bitcoin ETP in the U.S. entered Twilight Zone territory once the Bitcoin futures ETFs went live in November 2021.