DeFi exec says Ether ETF will ‘destroy the spirit of crypto’
While the community celebrated the approval of a U.S. spot Ether exchange-traded fund (ETF), one industry executive criticized the centralized nature of such a product.
The emergence of cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) has revolutionized finance, eliminating the need for intermediaries, allowing funds to be transferred without relying on a central authority.
On the other hand, with the introduction of ETFs, cryptocurrencies are at risk of becoming less centralized, said Avantgarde Finance founder Mona El Isa.
“ETF issuers are reapplying old technologies to cryptocurrency products just to stay relevant and are undermining their purpose,” El Isa told Cointelegraph.
She noted that the Ether ETF piques interest from traditional finance (TradFi) because the ETF structure and regulations are “familiar territory” and speak the language of traditional finance.
“However, accessing Ethereum through ETFs misses the core benefits of Ethereum’s decentralized and disintermediate design,” El Isa said.
According to management, there will be some adoption of the newly approved products, but investors are likely to ultimately prefer self-storage over holding ETFs because it offers more benefits. She said:
“Over time, as investors become more comfortable with cryptocurrencies, we expect they will want to hold Ethereum non-custodially to take advantage of all the benefits of the technology, including low costs, elimination of counterparty risk, and the ability to trade instantly. ”
Non-custodial or self-custodial cryptocurrency wallets allow users to own Bitcoin while taking full responsibility for storing their private keys or real-world assets. Unlike self-custodial solutions, spot cryptocurrency ETFs do not allow investors to hold cryptocurrencies as they rely on third-party custodians like Coinbase.
Some industry executives agreed that the approval of the Ether ETF has sparked investor excitement and decentralization debate.
“As Buterin himself addresses issues facing Ethereum such as MEV and liquidity staking, there is no doubt that a long-term fight lies ahead to maintain balance and ensure Ethereum remains as decentralized and democratic as possible. None,” said Bybit’s director. Financial Products Hao Yang told Cointelegraph.
Related: Ethereum ETF approval becomes a ‘huge political issue’ — Joseph Lubin
He also expressed optimism about the future of the cryptocurrency industry in light of its recent approvals:
“This approval not only instills new confidence in the broader cryptocurrency industry, but also gives broader implications for the prospects for other projects in DeFi, NFTs and other token-based applications.”
El Isa is not the only one skeptical of cryptocurrency ETFs due to concerns about centralization.
Josef Tětek, a Bitcoin analyst at hardware cryptocurrency wallet company Trezor, previously warned that spot Bitcoin ETFs could take investors further out of self-management or even create “millions of unsupported Bitcoins.” He claimed that it could be done.
Trezor CEO Matej Zak also argued that storing the ETF’s underlying cryptocurrency on a platform like Coinbase makes spot cryptocurrency ETFs vulnerable to hacking.
At the same time, the issuers believe that there is no direct conflict between self-custodial and physical cryptocurrency ETFs.
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