Opinion by: Agne Linge, head of growth in wefi
Decentralized Finance (DEFI) disturbing and outcompeting tradfi has long dreamed of many changes in the crypto field. Some of them praised more than $ 40 billion in net inflows to see Bitcoin (Btc) funds exchanged by exchange (ETF)- recorded In the US since last January Regulation drama – as the final success for the industry.
While indicating an increasing number of investors are interested in crypto and treat it as a legitimate property, a U-turn on the basic principles of self-custody, unauthorized access and indefinite transfer of value is a huge win for the industry. Crypto -based ETFs are simply centralization of what was developed to fight centralization.
Spot crypto etf
Advocates of Crypto-based ETFs have a convincing case for the adoption of these instruments. ETFs have opened that the market has exchanged doors for a whole new class of investors, who have previously reluctantly put their money into crypto due to lack of regulations and technology barriers to understand crypto infrastructure. The ease of accessing and processing process is the key points of sale of Crypto ETF spots, allowing a familiar way to vary with new ownership through a broker account rather than real ownership. Moreover, the greater clarity of the regulation has increased the profile of the crypto industry and provides greater confidence in potential investors. For many, crypto ETFs represent a gateway to digital assets and a crypto version that feels safer, simpler and more aligned with traditional financial standards.
Not all ETFs are born the same, however, and the design of these funds vary in jurisdiction by jurisdiction and shows how big the “crypto” is. Hong Kong runs a unique, in-kind ETF model, which regulates the actual backing of crypto and allows customers to deliver or receive the underlying coin in exchange for ETF shares. This is different from the US cash-based model, which requires the creation and redemption of ETF shares to be processed in the US dollar.
This cash -based approach is abstract far from crypto and adds a layer of fiat currency. It strengthens the SEC’s ability to detect manipulation and fraud and protect the investor community with regulations designed first for Trade. This is not just a technicality: Wall Street funds sell volatility on the market and do not care about the underlying ownership.
Exposure is not equivalent to ashavion -owned
The ETF spots are an attempt to normalize the crypto and make it consistent with the Trade architecture. But this attempt is the Procrustean Bed for digital assets-reasonable compliance with non-native standards inevitably introduces additional risks. ETF shares holders face custodian risks, entrusted with third parties with property that means being held directly. They also have management fees that return over time and are subject to monitoring errors, where ETF performance can deviate from the underlying owner due to increased trading costs or system efficiency. These problems are endemic to Trade, and Defi should solve them. Instead, the ETFS BITAG crypto inside the very financial cage is meant to escape. Investors get exposure but have lost power. It was like watching a lion through the bars and called it wild.
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What matters most about ETF spots is that they contradict the basic DEFI principles and some tokenomics of coins. The Main Players of Tradfi quickly combine BTC and Ether (Eth) Holds, Crypto asset managers managersWith the Blackrock Ishhares Bitcoin Trust seeing nearly $ 5 billion amidst flows from other players. For eth and solana (Sol), which is on the track to get their own ETFs approved, large centralized players can create chokepoints in the proof-of-stake confirmation mechanism, which potential cracking ecosystem. The Hold-and-forget model of the ETF can prove deadly for crypto.
Unlike actual coins, ETF shares have no comfort yield-ETF owners lack the ability to participate in management of management, staking to earn defi protocols of income and income. The concentration caused by ETF is important to provide institutions that control certain ecosystems, allowing them to dictate their conditions and impose their decisions in the wider community.
Comfort at the expense of ethos
ETF spots are starting to miss the point of crypto. The beauty of the defi lies in self-custody: the idea that individuals should touch their properties, control their keys, and work for free from mediators. That is the reason and the foundation for the size of a change in the crypto industry today. ETFs sell exposure to BTC and ETH (and other future altcoins), but simple prices -changing prices do not prevent crypto costs. Defi has promised a better financial system, but without the agency and community community, it would not be possible to reach this goal.
Yes, ETFs are convenient. Yes, ETFs have more supervision. And yes, ETFs governed by well -known companies such as Blackrock and Fidelity can provide investors to the retail feeling of safety and transparency. However the crypto industry should not forget the ethos of cryptocurrencies and the main principles of the industry. Direct ownership protects the financial freedom of individuals with -owners, opens additional revenue flows, and maintains change and improvement through community participation. In a system originally designed to eliminate the need for trust, returning to trusted mediators is more than ironic – this is a regression.
Opinion by: Agne Linge, head of growth in wefi.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
