Castle Funds’ COO Exclusive: Just Because Bitcoin ETFs Are Allowed Doesn’t Mean They’ll Succeed
In an insightful interview with Cryptonews, Dan Hoover, the Chief Operating Officer and Chief Compliance Officer at investment firm Castle Funds, discussed several Bitcoin ETF-related topics.
These include how valuable Bitcoin ETF trading volume information really is, what it takes for ETFs to succeed, why TradFi market minutiae are “very foreign” to most crypto market participants, and much more.
This is what he had to say.
The spot Bitcoin ETFs’ initial trading volumes suggest that the supporting players in any successful exchange-traded product (ETP) launch are not yet up and running in volume, Hoover told Cryptonews. (Note: ETFs are a subset of ETPs as a broader category.)
Therefore, he said,
“Trading volume is only powerful information if it results in creation of new ETP shares (assets in the Trust that the sponsor can charge a fee on).”
Otherwise, it just shows that the same shares are changing hands repeatedly.
Typically, this means that:
As an investor in the bitcoin markets, said Hoover, he would prefer that the BTC held in an ETP be purchased in the market and belong only to the fund or Trust, instead of being borrowed from another party that keeps a claim on the coins.
Spot Bitcoin ETFs come with a set of benefits. These include fewer access challenges for investors and a competitor for the poorly-performing futures-based Bitcoin ETFs, Hoover argued.
Over the next few months, the launch issues “will ease a bit.” There will be an opportunity for the market participants – APs, broker-dealers, and options market-makers – to resell ETPs to individual investors, Hoover said.
Long-term, however, while ETPs are “a reasonable solution” to the regulatory ambiguity constraining access for most US investors,
“I believe that the
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