June 27, 2024
 min read

Bitcoin ETFs: Boon or bane for decentralization? Experts weigh in

Louise Hallersbo

The release of spot Bitcoin exchange-traded funds in the U.S. has opened the door for institutional investors to gain exposure to the top crypto through regulated financial products, unlocking trillions in investor capital for the first time.

The ETFs had a hot start, quickly accumulating over $53 billion in assets under management. As of June 26, these ETFs hold 871,000 BTC, representing 4.42% of the current circulating supply.

Sebastian Heine, our Chief Risk and Compliance Officer, shared insights on the potential implications of Bitcoin ETFs in a recent Kitco Article. He highlighted that while ETFs increase accessibility and institutional investment, they could compromise Bitcoin’s ethos of decentralization and self-custody. He notes, “The concern about a 51% attack does not apply here since Bitcoin miners control the network, not BTC holders.” He adds that large holdings by ETFs do not equate to network control, but the concentration of BTC in a few hands could lead to market manipulation, similar to incidents in traditional finance.

Sebastian further explains that if more Bitcoins are locked in ETFs than circulating, it could lead to a supply shock and skyrocketing prices, but also make Bitcoin susceptible to control and manipulation. Regulatory oversight is expected to address these concerns, but the balance between innovation and core Bitcoin principles is crucial.

Press the link below to read the ful article and insights from other experts as well: