The Potential Impact of Bitcoin ETFs on Retail Investors: Simplifying Exposure to the Largest Cryptocurrency
Vijay Boyapati, former Google engineer and prominent Bitcoin advocate, highlighted the potential impact of Bitcoin exchange-traded funds (ETFs) on retail investors. If the new product is approved, it could simplify the exposure process to the largest cryptocurrency in several ways.
Bitcoin ETF to Remove KYC/AML Barriers for Potential BTC Investors:
The approval of a Bitcoin ETF could be of utmost significance in unlocking the potential of “trillions of dollars” held by retail investors, according to Vijay Boyapati, author of “The Bullish Case for Bitcoin,” in a recent tweet on his X account on December 23, 2023.
Currently, purchasing Bitcoin (BTC) with fiat currencies involves numerous obstacles in terms of custody, taxes, and a general understanding of the crypto concept. New investors also undergo rigorous know-your-customer (KYC) procedures when attempting to buy Bitcoin through current fiat on-ramps.
These barriers greatly reduce the potential investor base for Bitcoin (BTC), not to mention the fact that most investors are only willing to allocate a small portion of their investment portfolios to such volatile assets:
For many retail investors, overcoming these hurdles does not seem worth the hassle. Time and complexity act as a massive filtering factor (hence why most early Bitcoin investors were inclined to be very bold in their investment expectations).
The approval of a Bitcoin ETF in the United States would allow investors of various types to purchase Bitcoin (BTC) through their existing brokerage accounts, eliminating the need for additional KYC/AML checks.
At present, purchasing Bitcoin (BTC) with fiat currencies on KYC-compliant services is only possible in suspicious jurisdictions or involves significant transaction fees.
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Boyapati concluded that owning a small portion of Bitcoin (BTC) through an exchange-traded fund could incentivize new investors to shift towards “physical” Bitcoin (BTC).
In contrast, Arthur Hayes, co-founder of BitMEX, expressed concern about the potential migration of liquidity from “real” Bitcoin (BTC) to Bitcoin ETFs, which would be another category of TradFi assets under state control.
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Yesterday, reports emerged that heavyweight asset management firms, including BlackRock, Ark, and Grayscale, met with representatives from the Securities and Exchange Commission.
Hype around Bitcoin ETFs has been accelerating in recent days. Next decision deadline, January 10, 2024; some experts are confident that the first batch of ETFs will be approved within 20 days.
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