After having played a masterstroke of resubmitting the Bitcoin ETF application and extending its deadline for approval from SEC, VanEck’s Director of digital asset strategy, Gabor Gurbacs, took onto his Twitter account to spell out reasons why Bitcoin ETF made sense and was a move that could serve the public interest.
A Bitcoin ETF could open a new avenue to crypto investing
According to the recent tweet put forward by Gabor Gurbacs, who has been one of the key persons in drafting the ETF document for VanEck, Bitcoin ETF will change the way crypto investing takes place across the globe. According to him, a Bitcoin comes with a variety of advantages which would serve in the public interest. He feels a Bitcoin ETF would
- Increase the liquidity in crypto markets using the ETF ecosystem
- The counterparty risk in Bitcoin/ Crypto investing will be reduced to a great extent
- The price determination of bitcoin will be more peculiar and better valuation & execution practices could be expected to follow.
- The Bitcoin ETF will get in the separation of duties amongst industry players in terms of some managing trading, custody or valuation based on their capabilities and expertise.
- The fees that are being charged to investors and traders will be more transparent and may even lower out in some cases
- The compliance framework around the whole cryptoshpere will significantly improve thus bringing down the wrong activities and chance of fraud which is currently rampant in the industry
I believe, a #Bitcoin #ETF serves the public interest via:
+ Increased liquidity using the ETF ecosystem
+ Lower counter-party risk
+ Better valuation & execution practices
+ Separation of duties: trading, custody, valuation
+ Transparent fees
+ Established compliance framework pic.twitter.com/OB0XUZeJ1O
— Gabor Gurbacs (@gaborgurbacs) February 3, 2019
While Gabor has nicely put forward the advantages of having a Bitcoin ETF, a lot of people do feel it’s a little too early for a Bitcoin ETF to give out benefits.
ETFs can lead to systemic risk via immense accumulation of liquidity.
Most ETFs benefit market makers, or authorized participants, rebalancing the NAV against ETF share price.
In a non-liquid $65B market such as Bitcoin, an ETF is too early to benefit investors.
— Thib⚡ (@thibm_) February 4, 2019
Big believer of ETFs as vehicles to easily enter a market for institutional investors and fiduciaries.
Proper custody, insurance, valuation, governance, rebalancing, etc. are necessary.
Timing is critical as liquidity concentration in an ETF related to broader market is risky.
— Thib⚡ (@thibm_) February 4, 2019
While timing could be critical for a Bitcoin ETF, the advantages listed down by Gurbacks is definitely worth making note of. As ETF has been able to change the way, people invest in other commodities and securities, a lot of people including Gurbacs believe the same could happen with cryptocurrencies.
Successful or not will be secondary, but Bitcoin ETF can definitely bringing the maturity to the crypto ecosystem which in itself will be a big achievement
Will Bitcoin ETF help the crypto ecosystem to mature or will it just remain a trading tool? DO let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.