The U.S. Securities and Exchange Commission (SEC) is currently reviewing the approval of a Bitcoin spot ETF, which may be approved before January 10th. Industry experts predict that this may prompt more companies to offer Bitcoin investment options in their 401(k) retirement plans, thus transforming Bitcoin into a mainstream investment option. However, BitMEX founder Arthur Hayes believes that if the Bitcoin spot ETF is too successful, it could completely destroy Bitcoin.
The potential approval of the Bitcoin spot ETF by the SEC is currently underway. The SEC recently requested that issuers submit their final amended S-1 application documents within 29 days, increasing market expectations for the approval of the Bitcoin spot ETF by January 10th.
The industry is actively discussing whether this potential approval will attract funds from traditional financial investors. According to CNBC, several industry experts speculate that the launch of a spot ETF may lead to more companies offering Bitcoin investment options in their 401(k) retirement plans, thereby transforming Bitcoin’s role from a high-risk asset to a mainstream investment option.
Bitcoin IRA Chief Revenue Officer Chris Kline expressed optimism, stating that Bitcoin IRA allows retirement savers to invest in over 60 cryptocurrencies within their retirement accounts. Currently, retirement savers in the United States have limited options for directly investing in Bitcoin and usually need to invest through providers such as Bitcoin IRA, BitIRA, and iTrustCapital.
Industry experts predict that once the Bitcoin spot ETF is approved, more providers are expected to join and offer retirees more options to invest in this asset. Steven T. Larsen, founder of Columbia Advisory Partners and Defi Steward, stated:
However, the Employee Benefits Security Administration (EBSA), a division of the Department of Labor, issued a warning in March regarding including cryptocurrencies in retirement plans, highlighting five major risks associated with investing in cryptocurrencies or related products in retirement plans: high volatility, valuation issues, custody and record-keeping problems, evolving regulatory environment, and the difficulty of making wise investment decisions, emphasizing the importance of custodial responsibilities.
Joshua Rubin, Vice President of Law at Betterment, believes that the launch of a spot ETF may address the EBSA’s concerns about these five risks.
Regarding long-term cryptocurrency investments in retirement accounts, Mark Parthemer, Senior Strategist at Glenmede, highlighted the “tax advantages.” Compared to holding cryptocurrency assets in a standard brokerage account, retirement accounts may offer benefits of deferred taxation. Sui Chung, CEO of CF Benchmarks (a subsidiary of Kraken), expressed the same view.
Overall, many industry experts believe that the potential approval of the Bitcoin spot ETF marks an important step towards mainstream acceptance of cryptocurrencies in the traditional financial system, especially in the field of retirement planning. But is this good news for Bitcoin?
BitMEX founder Arthur Hayes recently expressed serious concerns about the potential impact of a Bitcoin spot ETF. He pointed out that the value of Bitcoin lies in its liquidity (i.e., its ability to be transferred). He warned that if the Bitcoin spot ETF is too successful, it could completely destroy Bitcoin.
Hayes explained that a Bitcoin spot ETF would store Bitcoin in a vault, which means that if the issuer of the ETF ends up holding all the Bitcoin and investors only buy related derivatives rather than directly holding Bitcoin, the actual trading volume on the Bitcoin network would significantly decrease. This would lead to lower transaction fees and miners losing the economic incentive to verify transactions.
Hayes emphasized:
In summary, Hayes believes that if Bitcoin becomes another financially controlled asset, it will “die” because it is not being used. Interestingly, he further predicted that once Bitcoin loses its original mission, new cryptocurrency networks could replace Bitcoin and even expand Satoshi Nakamoto’s original vision of peer-to-peer electronic cash.
Hayes concluded:
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401(k) retirement plan
Arthur Hayes
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Individual Retirement Account
Bitcoin
Bitcoin spot ETF
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