An ETF will bring a revolution for Bitcoin and other cryptocurrencies

But not everyone’s on board with the crypto ETF train. Critics argue that Bitcoin-linked ETFs could be even worse than centralized exchanges for the crypto market. Their main beef? There’s zero possibility of withdrawing the underlying instrument. This means the holders are never able to take advantage of the single most important feature of Bitcoin: the ability to control their funds without a need to trust anyone.

And it’s not just talk. The potential of these investment vehicles is already being realized in markets like Canada. The Purpose Bitcoin ETF, for example, raked in over $400 million in assets under management within just two days of its launch. It’s no longer a question of whether crypto is an asset class.

It’s like a starter pistol has been fired, and the institutional investors are off to the races, setting the stage for a seismic shift in the financial landscape, with crypto ETFs as the starting block.

Crypto ETFs unleash a domino effect

ETFs are a huge business. BlackRock alone managed circa $3 trillion in client assets in ETFs at the end of March 2023 across a range of stocks, bonds and commodities.

The approval of crypto ETFs indicates more than just mainstream acceptance — it can drive market maturity, establish price stability and foster innovation, leading to the creation of ETFs for a broader range of digital assets and decentralized finance (DeFi) tokens, similar to how the approval of the first ETF in 1993 led to a diverse range of ETFs today.

Related: BlackRock’s misguided effort to create ‘Crypto for Dummies’

But not everyone’s on board with the crypto ETF train. Critics argue that Bitcoin-linked ETFs could be even worse than centralized exchanges for the crypto market. Their main beef? There’s zero possibility of withdrawing the underlying instrument. This means the holders are never able to take advantage of the single most important feature of Bitcoin: the ability to control their funds without a need to trust anyone.

With the potential to become as mainstream as their stock or bond counterparts, crypto ETFs could usher in a diverse range of investors. But the real disruptive element? Institutional-grade custody.

Race for crypto ETFs fuels the impetus for institutional custody

To be clear, it’s not just the custody technology that is disruptive but also the investor protection standards imposed on licensed custodians. As traditional financial institutions take the plunge and launch crypto-related trading…