Despite the hype around Wall Street’s spot bitcoin ETF applications, Bitcoiner enthusiasts remain unfazed, seeing the unencumbered use and ownership of bitcoin itself as superior to any third-party managed financial product.
The recent wave of spot bitcoin ETF applications by Wall Street giants, such as BlackRock, Fidelity, and Ark Invest, marks a reignition of institutional interest in bitcoin.
However, the Securities and Exchange Commission (SEC) has yet to approve the filings, deeming them inadequate and forcing firms to refile, as sources recently revealed to the Wall Street Journal. The SEC’s reaction appears political and related to its ongoing legal battle with Grayscale regarding the Grayscale Bitcoin Trust (GBTC).
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Most people who understand bitcoin are apathetic to the SEC’s rejection and instead are more concerned with how the ETFs and similar products could affect bitcoin’s prospects as a tool for monetary freedom. Why?
It’s simple: No one needs SEC approval to own bitcoin. Bitcoin itself is superior to Wall Street’s repackaging of it into an ETF product.
Anyone can own and transact with bitcoin. No third-party permission — or involvement — is required. People who understand bitcoin have little incentive to purchase, or even care about Wall Street’s ETF, which would place the familiar barriers that come with traditional financial products in the way of their ability to use the underlying asset.
Although a spot ETF makes it easier for investors to gain exposure to bitcoin’s price in their brokerage accounts, it also comes with artificial restrictions that bitcoin itself doesn’t have.
For example, a bitcoin ETF would only be tradeable during the market’s hours of operation, which is normally from 9:30 a.m. to 4:00 p.m. Eastern time on weekdays (excluding holidays). Brokerages and exchanges will be able to halt trading for a variety of unpredictable reasons. They must also comply with regulatory actions directed at them, putting additional constraints on the salability of ETF shares.
If the government decides to clamp down on bitcoin, it would be much easier for the state to seize a large amount held by an asset manager than by millions of hardened Bitcoiners who self-custody the asset.
Does that sound unconstitutional? It would be, but that isn’t something to rely on when mitigating risk. The recent 90th anniversary of FDR’s gold seizure is a good reminder of the government’s ability to seize citizens’ money.
As the first digital bearer asset, bitcoin offers true ownership, enforced not by ink on paper but by cryptographic certainty. This is something that no other financial instrument, including other cryptocurrencies, can provide.
And unlike bearer assets like cash, gold, silver, stocks, or bonds, anyone can transfer large amounts of value across the Bitcoin network worldwide at any time.
Because of bitcoin’s superiority over its repackaging as an ETF, some people have been outwardly hostile to them, going so far as to call them a “sh*tcoin,” (a popular catch-all term for all forms of money other than bitcoin, the U.S. dollar included). Bitcoiners place a high value on personal freedom, and bitcoin ETF ownership does not mint more sovereign individuals.
Further, the recent slate of spot bitcoin-ETF denials is nothing new. The Winklevoss twins applied for one over ten years ago, and they are still awaiting approval. The only difference between those old applications and the ones filed recently is that the recent ones were filed by white-shoe firms with deep ties to the SEC. It’s not by accident that BlackRock’s ETF approval record with the SEC is 575-1.
Although a bitcoin ETF product might provide more people exposure to bitcoin’s price in the short term, it is not a substitute for real bitcoin, and could even delay what many consider its destiny: separating money from the state.
When the first Bitcoin block was mined in January of 2009, it included the inscription, “Chancellor on the Brink of Second Bailout for Banks,” a clear rebuke of crony capitalism. People who understand bitcoin share this sentiment and own real bitcoin rather than relying on firms like BlackRock.
