Some potential issuers of spot Bitcoin exchange-traded funds (ETFs) may need to disclose on-chain addresses for their underlying Bitcoin holdings to stay competitive, suggests industry activist and Jan3 CEO, Samson Mow. Mow argues that verifiable on-chain proofs would be the optimal way for spot Bitcoin ETF issuers to demonstrate their Bitcoin reserves. Despite this, none of the 14 existing applicants have pursued this approach, as revealed in Mow’s interview with Cointelegraph on December 28.
The Bitcoin ETF race is pushing issuers to disclose addresses
Concerns have been raised by some cryptocurrency observers regarding the authenticity of holdings in a spot Bitcoin ETF, with suggestions that it could result in the creation of ‘millions of unbacked BTC.’ Bloomberg ETF analyst Eric Balchunas emphasizes that holding real Bitcoin would be in the best interest of ETF issuers, as failure to do so might damage their reputation and trust.
Valkyrie co-founder and CEO, Leah Wald, suggests that investors can verify whether spot BTC ETF issuers hold actual Bitcoin by examining regularly available records from the ETF provider. She emphasizes that this process should be similar to verifying equity ETFs’ holdings through fund records, with regulators monitoring the underlying asset holdings. Additionally, for more technical individuals in the Bitcoin community, examining on and off-chain fund flows can provide further insight into the ETF’s holdings, according to Wald.
The quest for a Bitcoin ETF is prompting issuers to open up and disclose their wallet addresses
Despite acknowledging the possibility of some issuers bending the rules, Mow emphasizes that transparency will be a crucial factor in the competitive landscape of spot Bitcoin ETFs. According to the Jan3 CEO, as the ETF competition intensifies, some funds may disclose their addresses to establish themselves as the most transparent and trustworthy issuers.
In the U.S., regulatory approval for the first spot Bitcoin ETFs is anticipated in early January, with Jan. 10 identified by many analysts as a potential approval date. ETF experts, including Nate Geraci, anticipate fierce fee competition, with issuers like Invesco and Galaxy expected to waive fees for the initial six months and for the first $5 billion in assets. Analysts Eric Balchunas and James Seyffart estimate a 90% likelihood of SEC approval by Jan. 10, leaving a small chance of rejection if the regulator opts for additional time – a move they describe as the ‘rug pull of a decade.’
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