CoinList founder Andy Bromberg believes that spot Bitcoin (BTC) exchange-traded funds (ETFs) are just “watered down crypto” and a sign the industry is heading in the wrong direction, amid growing hype over potential ETF approvals in the United States.
Bromberg — also CEO of payments-focused wallet app Beam — told Cointelegraph: “If a Bitcoin ETF is considered crypto, we’ve failed as an industry.”
He said a Bitcoin ETF would “absolutely” be a net positive for crypto adoption but asserted the space’s success comes from helping people self-custody assets and decouple from the traditional finance system — the antithesis of a TradFi ETF.
“If crypto adoption happens mostly through ETFs and similar centralized financial instruments, then the core promises of the technology won’t be realized — decentralization and true ownership.”
The rise of rollups & account abstraction unlock the ability to build payment apps on Ethereum as good as — or better than — web2 products.
Between self-custody’s regulatory viability and that new tech, it’s the right place to focus.
And it’s what crypto is all about.
— Andy Bromberg (@andy_bromberg) September 20, 2023
Bromberg’s take is contrary to the prevailing sentiment of excitement around the potential for spot ETFs to bring in institutional money. Some predict ETFs could see Bitcoin’s market capitalization double and the price hit $150,000 by the end of 2024.
CoinShares head of research James Butterfill told Cointelegraph that setting up a wallet for safe self-custody was still a daunting task for many non-tech-savvy institutional and retail investors. He believes an ETF will improve market access and will “help further democratize Bitcoin.”
“Self-custody simply isn’t possible for many institutional funds, as it steps outside the regulated framework they must operate in,” Butterfill said, adding that it’s also the case for some retail investors.
Matrixport research head and Crypto Titans author Markus Thielen agreed and argued the reason so much crypto remains on exchanges despite a string of collapses is because self-custody is “still problematic for most users and has clumsy interfaces.”
Bromberg conceded that self-custody has historically been a challenge but pointed to technology such as account abstraction — which allows for wallet creation without using a seed phrase and more recovery options if access is lost — as proof it was possible to make “mainstream-usable…