Institutional Onslaught: Bitcoin’s ETF Predicament
Arthur Hayes, a notable figure in the crypto sphere and founder of Maelstrom Fund, voices skepticism about the potential ramifications of a potential approval ot a spot Bitcoin ETF for the cryptocurrency and its users.
Hayes explored a hypothetical scenario. He raises concerns about the likelihood of influential traditional finance figures, like Larry Fink, and similar entities absorbing a significant portion of the available circulating Bitcoin. This could occur if these institutional players invest in Bitcoin ETFs, with Hayes pointing out that some major mining operations are already predominantly owned by entities like BlackRock.
Hayes expresses caution about asset managers such as BlackRock, viewing them as aligned with governmental interests, which might require citizens to remain within the fiat banking system for taxation purposes, perpetuating the cycle of inflation to manage mounting debts. He contends that these institutional entities, compliant with government directives, would likely hold Bitcoin through ETFs, essentially restricting its usage as it becomes more of a financial asset rather than a decentralized currency.
He elaborates that purchasing a Bitcoin ETF essentially means acquiring a derivative, where the asset manager acquires Bitcoin and stores it in custody, limiting its functional use. Moreover, Hayes warns that an excessively large BlackRock ETF, for instance, could immobilize significant portions of Bitcoin, potentially detrimental to its core functionalities.
Looking ahead, Hayes also highlights the potential risk of these entities consolidating control over the network’s consensus mechanisms by holding a substantial share of miners. He questions whether their objectives align with the necessary technical upgrades crucial for maintaining Bitcoin’s integrity, particularly in encryption and privacy standards.
Hayes underlines Bitcoin’s essence as a decentralized currency that empowers individuals to conduct global transactions, juxtaposed against the possible scenario where a large portion of it ends up under the control of a few institutions, raising concerns about the broader implications.