As the race to launch the first spot Bitcoin exchange-traded fund (ETF) in the US intensifies, some issuers may eventually have to disclose their on-chain wallet addresses holding the underlying BTC reserves to stand out from competitors, according to blockchain industry leader Samson Mow.
Providing verifiable on-chain proofs of Bitcoin holdings would be the optimal way for exchange-traded fund issuers to assure investors of sufficient reserves. However, none of the 14 ETF applicants so far have offered to furnish such wallet transparency, Mow noted in a recent interview.
Some experts have raised doubts about whether a Bitcoin ETF would hold any real BTC instead of issuing “unbacked” shares. However, analysts like Eric Balchunas assert that holding the asset is in the issuers’ best interest to maintain credibility. According to Valkyrie CEO Leah Wald, investors can already verify if an ETF holds its claimed assets from regular disclosures.
Still, without specific on-chain wallet addresses, holdings remain unverifiable to skeptics. Some applicants like Grayscale have refused to share wallet details, citing security risks. But Mow believes extreme scenarios of issuing unbacked exchange-traded fund shares are unlikely since tight regulations prohibit it.
Transparency Becomes Key Battleground In ETF Industry
As the ETF arms race escalates, I believe we will see one or more funds disclose their addresses in a bid to be viewed as the most transparent and reliable issuer, said Mow.
With the first SEC spot Bitcoin exchange-traded fund approvals expected by January 10th, applicants also face intense fee competition. Invesco and Galaxy Digital already offered six months of zero fees and waivers on over $5 billion in assets under management.
Leading ETF analysts estimate a 90% chance of the SEC giving the green light to spot Bitcoin ETFs next week. Some remote possibility of another rejection exists if regulators need more time. But the broad consensus suggests the long-awaited Bitcoin ETF is imminent, establishing a regulated on-ramp for mass retail crypto adoption.
Issuers now have the opportunity to build further trust and goodwill by opening their books and revealing BTC wallet addresses. A transparent proof-of-reserves could make all the difference in this tight race.
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