This week, U.S. regulators approved spot bitcoin ETFs (exchange-traded funds), significantly increasing investor access to the world’s oldest and largest cryptocurrency.
An ETF is an investment fund that tracks the performance of an underlying asset – including stocks, baskets of currencies, precious metals, and now onchain digital assets – as a means for investors to access the value of an underlying asset without directly owning it.
Experts predict bitcoin ETFs, spearheaded by Wall Street giants such as BlackRock, Fidelity, and Grayscale, will substantially increase institutional and retail investment in bitcoin. Any U.S. investor with a brokerage account can now gain exposure to bitcoin as easily as buying a stock, without having to set up a crypto wallet.
Vijay Ayyar, VP of International Markets for Indian crypto exchange CoinDCX, told CNBC he expects bitcoin’s adoption will be “much faster and bigger” than even the eightfold increase in total gold market capitalization following the first spot gold ETF 20 years ago.
“Bitcoin ETF approval has made it clear that traditional financial institutions have a significant role to play in determining how the crypto markets evolve,” said Chainlink co-founder Sergey Nazarov, who was heralded on CoinDesk’s Most Influential 2023 list for his work to unite TradFi and DeFi through Chainlink’s Cross-Chain Interoperability Protocol (CCIP).
“The approval of the Bitcoin ETF will lead to an influx of traditional large top-tier financial firms like BlackRock and Fidelity, which will likely actively participate in the crypto markets.”
During a recent interview on CNBC, Nazarov explained his belief that traditional capital markets are actually the “biggest net customer” of onchain assets like bitcoin because blockchain technology is ultimately about creating more transparent, less risky transactions and building higher-quality relationships between counterparties.
“I think the Bitcoin ETF is an efficient initial step where the bigger players in the capital markets allow folks to access cryptocurrencies, but I think they will then go on to make more and more advanced financial products of their own and eventually even define their own decentralized finance protocols that interact with the decentralized finance protocols on public chains,” he said.
In a statement provided to Chainlink Today, Nazarov said the bitcoin ETF approval is such a significant milestone because it paves the way for other blockchain-based digital assets to become more widely accessible through traditional financial instruments like spot ETFs.
“This will lead to the creation of bespoke financial products on-chain, with Chainlink at the forefront of this innovation,” he said.
“This moment could be a watershed where the traditional financial industry and the crypto markets collide, resulting in a world that we call “the internet of contracts” where all startups, banks, and asset managers will be part of one large system.”