This is why a bitcoin ETF is important

clicks | 10 months ago | comments: discuss | tags: bitcoin

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I am likely to get flamed for this, but here goes. A lot people around here oppose an ETF because they feel that bitcoin was created to compete with the legacy financial system, and resent the entry of institutions. However I think they are missing a few points;
Probably more than anything else, volatility is what is holding back adoption for retail and for personal transactions. The injection of institutional level funds is exactly what is required to reduce the volatility. Yes, it may well mean a much higher bitcoin price, but with that will comes a reduction in volatility. In practical terms, physical ETFs - ie those backed by bitcoin (like the Solid X proposal), are not much different than buying real bitcoin - yes I know "not my keys keys = not my bitcoin", but for many people who can't even manage to backup their photo album, an ETF is the only viable way to to take advantage of bitcoin's ability to protect from failures of the legacy financial system. An ETF traded on a significant US exchange can be traded EXACTLY like a US stock. This means that it can be bought and sold worldwide through standard brokers, and as a result put into tax sheltered retirement plans such as 401ks in the US, RRSPs or TFSAs in Canada, or SIPs in the UK to name but a few. Regulated entities - including new fintech startups will have much less regulatory difficulty working with a regulated ETF than they are right now with raw bitcoin. A regulated ETF will go a very long way in making bitcoin respectable, and thus pave the way for mass adoption. ETFs exist for practically all other financial assets and commodities (gold, copper, any subset of stocks or bonds you can imagine etc). Blocking an ETF is like trying to stop a rising tide, so it will happen. The only question is at what point is the market mature enough for the regulators to feel comfortable. submitted by /u/MadBanker01
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