See More

Experts Confirm Bitcoin ETFs Will Actually Be BTC Backed

2 mins
Updated by Kyle Baird
Join our Trading Community on Telegram

In Brief

  • Spot Bitcoin ETFs will be fully backed by actual Bitcoin, not 'paper Bitcoin' or fractional reserves, dispelling recent rumors.
  • ETF Store President, Nate Geraci, and Bitcoin ETF analyst, James Seyffart, affirm that ETFs will hold Bitcoin, despite public misconceptions.
  • With 14 prospective entrants, the next 48 hours will be crucial as issuers prepare for the SEC's final submission deadline on Dec. 29.
  • promo

Exchange-traded fund (ETF) analysts have dispelled rumors that spot Bitcoin funds will be backed by ‘paper Bitcoin’ or fractional reserves. Instead, they will be fully backed by the asset itself, which means issuers will need to load up.

Rumors regarding the backing of Bitcoin exchange-traded funds have been circulating, adding to the apprehension before the projected January launch.

Bitcoin ETFs Backed by BTC

There have been several comments implying that the products will not be backed by the asset but ‘paper Bitcoin.’ Last week, Deezy founder Danny Kroeger said:

“If the Bitcoin ETFs are just “cash in, cash out,” it seems like they are just paper Bitcoin no? Probably the worst thing that could happen and may result in endless price suppression.”

Other comments have suggested that they could be fractional reserve backed. Fractional reserves are the systems that banks use by holding only a fraction of the cash deposited with them.

However, on December 28, ETF Store President Nate Geraci refuted the rumors.

“Spot bitcoin ETFs will *actually hold* the underlying bitcoin,” he said before adding, “I’m seeing more “paper bitcoin” comments out there.”

“The total value of the trust will be *fully backed* by actual Bitcoin. Period.”

Read more: How To Prepare for a Bitcoin ETF: A Step-by-Step Approach  

Bitcoin ETF analyst James Seyffart said there were “a lot of bad Bitcoin ETF takes.” “People are simply uninformed (being nice) and way too gullible,” he said before confirming “Spot Bitcoin ETFs WILL hold Bitcoin.”

In a separate post, Geraci said that with 14 prospective entrants in the race, the next 48 hours “will be wild” as issuers get their ducks in a row. 

The current prospective issuers are Grayscale ARK, iShares, Bitwise, VanEck, WisdomTree, Invesco, Fidelity, Valkyrie, Global X, Hashdex, Franklin, Pando, and 7RCC.

Furthermore, December 29 is the final deadline the Securities and Exchange Commission has set for submitting final filings and applications.

Ark Sells Grayscale Trust Holdings

In related news, fellow ETF analyst Eric Balchunas reported that Ark has sold its entire remaining Grayscale Bitcoin Trust (GBTC) position.

He noted that the firm has used half the money, around $100 million, to buy BITO shares. BITO is the ProShares Bitcoin Strategy ETF, the first of its kind, launched in October 2021. 

Ark BITO holdings. Source: X/@EricBalchunas
Ark BITO holdings. Source: X/@EricBalchunas

“Just like that, ARK is now the second biggest holder of BITO, although again this is a temporary parking spot,” he said before adding that institutions generally use highly liquidity ETFs for transitions like this.

Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Exodus Exodus Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024
Harambe AI Harambe AI Explore
Uphold Uphold Explore
Exodus Exodus Explore
Coinbase Coinbase Explore
Chain GPT Chain GPT Explore
Top crypto projects in the US | July 2024

Trusted

Disclaimer

In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

profile.jpg
Martin Young
Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences.   Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of...
READ FULL BIO
Sponsored
Sponsored