Andy Bromberg: Bitcoin ETFs Contradict the Nature of Crypto
The U.S.'s recent nod to spot Bitcoin ETFs has been heralded as Wall Street's triumph. These new exchange-traded funds grant both institutional investors and laypersons easier crypto market access. Yet, Andy Bromberg, CEO of the crypto wallet Beam, signals a caveat: these ETFs deviate from the founding principles of Bitcoin and cryptocurrencies at large.
Beam, a crypto wallet enabling global peer-to-peer payments, was unveiled in the summer of 2023 by the Eco Protocol DeFi project team. Bolstered by Andreessen Horowitz's venture funding, the startup has evolved into a platform with nearly 80,000 crypto enthusiasts. In January 2024, Eco Inc. acquired the Join app, facilitating stablecoin purchases in major retailers like Amazon and Shopify.
Amidst the buzz around spot Bitcoin ETFs, Beam CEO Andy Bromberg remarks that ETFs are fundamentally financial instruments with a third party holding the base asset. He firmly believes that moving away from Bitcoin's self-custody model undermines cryptocurrency's foundational principles. Cryptocurrency’s decentralized essence lies in empowering people to manage their financial fate independently, without intermediaries.
The biggest negative implication is that the core promise of crypto, of Bitcoin, is this idea of self-custodial products where you have ownership of your own money,highlights Andy Bromberg.
He also draws a distinction between BTC and other ETF-underlying assets. Unlike commodities such as oil, Bitcoin, as a digital asset, should be independently owned by individuals. An overemphasis on spot Bitcoin ETFs as the crypto market's mainstay could hinder the full realization of the technology's potential. The issue is that those owning Bitcoin solely through ETFs might miss out on cryptocurrency's true essence – the ability to directly own, control, and use it.
Bromberg not only identifies the issue but also suggests remedies. Firstly, he calls for the crypto industry to develop user-friendly products that bridge the traditional finance-crypto divide. These products should be intuitive enough for ETF beginners to seamlessly transition to independent cryptocurrency use.
We should be building products that are easy enough to use that someone who only has the expertise to go and buy a Bitcoin ETF in their brokerage account feels comfortable using an actual crypto product as well,asserts Andy Bromberg.
Secondly, he encourages Bitcoin ETF investors to delve beyond financial risks and understand the technology. A genuine interest in crypto and innate curiosity can lead to wider engagement with cryptocurrency, beyond ETF confines.
Bromberg also foresees a scenario where other crypto ETFs could receive approval.
The crypto industry stands at a crucial juncture. It must leverage ETFs for mainstream cryptocurrency adoption while preserving the core decentralized principles and user empowerment that define the crypto revolution.