Bitcoin may be hovering around $6,000 range at this point, but the anticipation within the market is quite high. Many are optimistic regarding the possibility of having a Bitcoin ETF. A Bitcoin ETF is believed to shake things up for the industry for a number of good reasons. There is a chance that this could trigger the influx of institutional investor capital. What can happen is that there could be another bull-run.
Despite the anticipation for an ETF, the US Securities and Exchange Commission has been strict regarding applications. Among applications that have been rejected include that of the Winklevoss twins’.
Citigroup Offering Crypto Custodial Solutions?
There are rumors circulating that Citibank is planning to enter the crypto market by offering crypto custody solutions. It is said to be launched using a product called Digital Asset Receipt (DAR). This will allow institutional investors to participate in the crypto market in an insured and regulated manner.
In concept, the DAR is quite similar to a Bitcoin ETF. Investors do not have to own a Bitcoin as represented by DAR. Citigroup has offered DARs for foreign stocks that the US-based investors can’t purchase. This means that investors can possess instruments that represent the value of the asset owned by Citibank in their behalf.
The good thing about this option is the fact that it does have insurance, protection, transaction monitoring all required by regulators.
The current regulatory climate is filled with uncertainty. For this reason, you have the likes of major banks being cautious when it comes to dealing with cryptocurrencies. Goldman Sachs and Citigroup are said to be among the first banks that would be offering crypto custodial solutions to the public. However, both institutions mentioned that they are still in the early process.
This means that there is a chance that we are going to see a DAR from Citigroup by next year. And though the US SEC is also set to decide on a Bitcoin ETF this month, there are those who believe that we are not going to see a Bitcoin ETF this year.
Critics of Bitcoin ETF
There are the likes of Vitalik Buterin and Andreas Antonopoulos who gave their opinion regarding Bitcoin ETFs. Vitalik Buterin mentioned that the market needs mass adoption for long-term growth and not a Bitcoin ETF.
As for Andreas Antonopoulos, though he believes that this is going to happen, he believes that it doesn’t help Bitcoin. He said that “Your keys—your Bitcoin; not your keys—not your Bitcoin”.
He also mentioned that “But it is going to happen anyway.. because there’s enormous market appetite and very little technical knowledge, so institutional investors simply can’t at the moment hold Bitcoin directly.
Institutional investors can change the landscape of the crypto market completely. The likes of Mike Novogratz is optimistic that there will be a mid-term rally of cryptocurrencies triggered by these institutional investors.
Recently, Bitcoin Tracker One and Ethereum Tracker One were suspended by the US Securities and Exchange Commission citing that investors could potentially confuse these products to an ETF. For some, this could mean that there will be a crypto-related ETF soon.