When Larry Fink, CEO of BlackRock, changed his Bitcoin perception, he paved the way for Wall Street to warmly embrace cryptocurrencies. He even suggested fintech’s darling, the exchange-traded fund (ETF), might be a viable canal for harnessing Bitcoin’s power.
However, it’s important to remember that Bitcoin’s origin story is rooted in a reaction against mainstream financial institutions. Created and launched in reaction to the 2008 financial crisis, Bitcoin was subversive. Its underlying principles were decentralization, non-regulation, and self-governance, and not something traditionally associated with stock exchanges and brokers.
The crypto community’s reaction to ETFs and such might be a mixed bag, notwithstanding the recent increase of Bitcoin’s value, which has rocketed by 82% year-to-date. As Jim Bianco, president of Bianco Research puts it, if crypto becomes merely an easily accessible poker chip, it fails to fulfill its true promise.
Fink, previously vocal about his crypto skepticism, has claimed that Bitcoin could “revolutionize finance.” However, in expressing the desire to make Bitcoin more accessible and more appealing to trade, primarily through ETFs, Fink’s vision veers away from Bitcoin’s decentralization principle.
This divergence has not gone unnoticed among experts like Jim Iourio, managing director of TJM Institutional Services. Iourio points out the contradiction in using third-party managed ETFs as investment vehicles for a currency created to avoid third-party control, clearly going against Bitcoin’s existential principle.
Indeed, cryptocurrencies were built as an alternative to third-party controlled finance like banks and governments, making it immune to manipulation.
Under the ETF model, the provider, expectedly BlackRock post regulatory approval, owns the asset and sells the fund’s shares to investors. This is the very system cryptocurrencies sought to transform.
However, the narrative has a lucid silver lining as Galaxy’s head of research, Alex Thorn, notes. Mainstream adoption could potentially bring a cascade of Bitcoin enthusiasts who might not be primarily driven by its decentralization properties but see Bitcoin as the ‘digitized gold’, which is not entirely a bad thing.
Fink’s modified stance on Bitcoin could be a key catalyst in fostering its mass adoption, embedding Bitcoin in the public consciousness and mainstream usage. The ultimate nexus of traditional finance and decentralized digital assets could project a path where cryptocurrencies become an integral part of financial systems, rather than mere alternative investment avenues. Undeniably, this confluence marks start of a game-changing era in the world of fintech.
Source: Coindesk
