Bitcoin ETFs: What It Means for the Crypto Industry

• Patrick Lao discussed the crypto industry’s anticipation of Bitcoin Exchange-Traded Fund (ETF) applications (Bitcoin ETFs) during the August edition of “Bitcoin, Beer, and Bitstories” (BBB) on August 30, 2023, as part of a web3 news wrap-up.
• Grayscale Bitcoin Trust (GBTC) recently won a case against the SEC, in which a court directed the latter to review the former’s Bitcoin ETF application.
• Lao explained that converting GBTC to a Bitcoin ETF would make it easier for large industry investors like pension funds and sovereign wealth funds to invest in Bitcoin, offering greater liquidity and real-time asset value tracking.

Before August ended, a federal court ordered the U.S. Securities and Exchange Commission (SEC) to review Grayscale Investments’ Bitcoin exchange-traded fund (ETF) application after it had previously rejected Grayscale’s application, arguing that the Grayscale Bitcoin Trust (GBTC) does not have enough safe practices and fraud protection in place. 

This decision, although it is important to note that Grayscale’s Bitcoin ETF application is not yet a done deal as the U.S. SEC still has to approve it, was celebrated by the crypto community, emphasizing that the approval of the application could have a significant impact on the accessibility and mainstream adoption of Bitcoin as an asset class within traditional financial markets.

Giving better points on the matter, BitPinas Editor-In-Chief Michael Mislos and Mintoo Director Patrick Lao discussed the reasons why the crypto industry is looking forward to Bitcoin ETF applications during the August edition of Bitcoin, Beer, and Bitstories (BBB) on August 30, 2023. The discussion was part of a wrap-up of the web3 news for the month.

Bitcoin ETFs: What It Means for the Crypto Industry

An ETF application is a proposal submitted to financial regulatory authorities for the authorization of exchange-traded funds that track the price of Bitcoin. These applications aim to offer investors a convenient and regulated way to gain exposure to Bitcoin’s price movements without having to directly own and store the cryptocurrency.

Accordingly, a number of financial institutions and investment firms have already submitted applications for Bitcoin ETFs to regulatory bodies such as the U.S. SEC, hoping to launch such funds for retail and institutional investors. 

For Lao, GBTC is restricted by its minimum investment, which causes it to only trade at a discount or premium to its net asset value.

“(It is important) because Grayscale BTC was created first as a trust, but I think, (their) ultimate end goal ever since is to convert to an ETF. Once they do that, it becomes a very much easier place for these large industry investors, like the pension funds and sovereign wealth funds, to invest in Bitcoin.”

Patrick Lao, Director of Mintoo

Lao further added that once Grayscale’s application is approved, investors will have greater liquidity and will be able to track the asset value of Bitcoin in real-time. 

Bitcoin ETFs: What It Means for the Crypto Industry

In response to this, Mislos inquired why these investors would need to wait for an ETF when they could simply invest through the already existing centralized exchanges (CEXs).

According to Lao, some hedge funds have already invested through CEXs. However, there are still several limitations to these entities. Lao noted that investors who wish to use exchanges have two options: they can entrust their money to a firm on a CEX, or they can manage it themselves on a decentralized exchange (DEX).

“Ang significance nito, ‘pag may ETF ka na doon na lang sila mag invest kasi ‘yung ETF has already taken care of all of those concerns for them; the centralization and custody.”

Patrick Lao, Director of Mintoo

To conclude the discussion, the BitPinas EIC then highlighted that with ETFs, investors can invest safely “in their own comfortable way.”

This article is published on BitPinas: Why Crypto Industry Looks Forward to Bitcoin ETFs Applications

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.