Bitcoin activist and entrepreneur Andreas Antonopoulos has recently revealed he’s against a Bitcoin Exchange-Traded fund (ETF), as the financial instrument will let large players manipulate the cryptocurrency’s price, and will see a class of “second-tier” investors grow.
As part of Antonopoulos’ monthly Q&A session, he addressed the ETF hot topic. While he conceded the cryptocurrency’s price may surge if a Bitcoin ETF is approved, thanks to the number of investors it’ll become available to, it will also be a tool for institutional investors to manipulate BTC’s price as they’ll be able to bet on it, without actually owning it.
The crypto community is bullish on a BTC ETF. As CryptoGlobe covered, a lot of speculation surrounds the financial instrument, so much so that when the Securities and Exchange Commission (SEC) rejected the Winklevoss twins’ application, Bitcoin’s price dropped over 3.5%.
Antonopoulos added that a Bitcoin ETF is a “terrible idea” that’s “going to happen anyway.” Per the academic, the financial instrument is going to hurt the ecosystem, as it will be a large custodial holder of Bitcoin that gives investors access to a share of its funds, not the “responsibilities and rights a key holder of Bitcoin has.”
This means investors won’t get to choose what happens to the Bitcoin itself. Drawing parallels to last year’s scaling debate – that led to the creation of Bitcoin Cash (BCH) – he argued investors won’t be able to choose a side in debates, as that’ll be up to the fund. Last year, per Antonopoulos, crypto exchanges had similar influence in the market.
A Bitcoin ETF will do that, and it will do that on an even bigger scale. It will give institutional player access to Bitcoin, but it won’t give them a voice in the consensus and governance of Bitcoin. That will be held by a centralized fund manager. Andreas Antonopoulos
While this won’t be the end of the flagship cryptocurrency, he noted, it will lead to price and debate manipulation in the future. Potentially, it could lead to a “Corpo Bitcoin,” a corporate version of the cryptocurrency, that would presumably be compliant with regulators’ demands.
Per the academic, an ETF is a multi-billion dollar “not your keys, not your Bitcoin” investment vehicle, that puts him off over the lack of control investors could have over the underlying flagship cryptocurrency.
There is, however, an “enormous market appetite” for a Bitcoin ETF, which means it’s bound to happen, whether or not it’s a good idea for the cryptocurrency’s spot market.
ETFs fundamentally violate the underlying principle of peer-to-peer money where each user isn’t operating through a custodian, but has direct control of their money, because they have direct control of their keys. Andreas Antonopoulos
Eventually, Antonopoulos sees two types of institutional investors emerge. The first will want to actually own Bitcoin and control its own private keys to be financially independent, while the second won’t have the technical ability to use the cryptocurrency, and will rely on third-parties.
This, he said, is already happening in the ecosystem. Some users control their own private keys, while others rely on cryptocurrency exchanges and custodial wallets to store their money, making them “second-tier” Bitcoin users.