Key takeaways
- Bitcoin futures ETFs have been described as inferior to Bitcoin spot ETFs.
- This was a major theme during Bloomberg’s Financial Innovation Summit where industry heavyweights weighed in.
- According to Michael Saylor, Bitcoin spot ETFs would bring trillions of dollars into the Bitcoin market.
The cryptocurrency market has welcomed the approval of Bitcoin futures exchange-traded funds (ETFs). The launch of the first two last month was greeted with accolades to the U.S. Securities and Exchange Commission (SEC). But calls have also increased for the regulator to allow Bitcoin spot ETFs.
During Bloomberg’s Financial Innovation Summit, the spot ETF debacle kept coming up in conversations. Several crypto-industry heavyweights expressed their thoughts on the matter.
Basically, the two kinds of ETFs are beneficial for institutional investors as they offer regulated exposure to Bitcoin. But they differ in the way they go about it. Futures ETFs offer indirect exposure by allowing investors to pitch their tent with funds that hold Bitcoin futures contracts. A Bitcoin spot ETF will in contrast hold Bitcoin on its balance sheet, which means direct exposure for investors.
While ProShares’ and Valkyrie’s Bitcoin futures ETF offerings have been impressive, key crypto market figures think that a spot settled Bitcoin ETF would be more effective and beneficial to both the pioneer cryptocurrency and investors. For Michael Saylor, CEO of MicroStrategy, a Bitcoin spot ETF is superior to a futures ETF by all standards. He notes that a spot ETF would mean trillions of dollars flowing into the Bitcoin market.
“And once these spot ETFs roll, I think you’ll see billions, then tens of billions, then hundreds of billions, then trillions of dollars flow into them,” he said.
The Bitcoin bull said he believes Bitcoin spot ETFs is the ultimate catalyst needed for Bitcoin to become the primary asset measure of the Western world. In his assessment, Bitcoin is already on track to replace gold ETFs and will eventually replace SPDR S&P 500 ETF trust as well.
Another key figure at the summit, co-founder of Coinmetrics, Nic Carter, also noted the inferiority of futures ETFs. Carter added that the SEC argument for refusing a spot settled Bitcoin ETF was “completely hollow” to him. This is because spot ETFs have proven to “work just great” in places such as Canada where they have been approved. For Carter, a Bitcoin spot ETF launch would easily get $100 billion in assets within a month.
Founder and CEO of digital asset-focused Avanti Bank chimed in that Bitcoin would thrive irrespective of a catalyst in the form of a spot ETF or not. However, SEC Commissioner Hester Pierce who was also at the summit threw some light on why the top regulatory body was being cautious with the issue. Pierce said that the commission isn’t yet comfortable with the Bitcoin market as it is not comparable to the trading finance market it was used to.
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