Why are ETFs Important for Crypto and how is the US Contributing to them?


It’s been over a decade since the cryptocurrency industry has been around. From the beginning, the industry has thrived over the trust, contribution, and investments of the investors. Given the current situation of the crypto-verse, it is obvious that the cryptocurrency industry is bound to expand exponentially in the future.

However, ever since the crypto-sector picked up the pace from 2020, there is one major concern that crypto-analysts have avoided talking about. The hesitance from the analysts and crypto-firms comes from the regulatory point of view for cryptocurrencies.

By now, the entire world is aware of the fact that cryptocurrencies are mainly decentralized. This means that there is no central body governing or ruling the crypto-blockchain infrastructure. It is for the individuals to participate in and contribute with their knowledge, expertise, and other innovations in the sector.

In order to stay true to the foundation of the crypto-blockchain, the majority of the cryptocurrency exchange list prefers remaining unregulated. This means that there is no accountability or identification of the users using the crypto-related platforms. It can be a corrupt politician, a criminal group, or a terrorist organization, using crypto for funding, and no one would have any clue about it.

However, the regulators are not ready to let this matter go and they are showing strictness over such matters. Still, most cryptocurrency firms are preferring to remain unregulated by not adhering to the KYC, AML, and CTF guidelines.

As a result, over 95% of the cryptocurrency sector is hanging by a thread and it is up to the regulators that they can shut them down anytime, just like the Chinese Government.

This is where Exchange-Traded Funds (ETFs) Come In

On one hand, the cryptocurrency sector is not willing to adhere to the regulations as it would be against their found. However, on the other hand, they want to gain mainstream popularity, adoption, and investments. Although some of the mainstream institutions are adopting cryptocurrencies, the majority of them are not adopting them due to the lack of regulatory infrastructure.

This is where major cryptocurrency firms, crypto-investment firms, and even mainstream investment firms have come up with a regulated solution to the problem. They have come up with innovation by introducing exchange-traded funds (ETFs). This means that any cryptocurrency firm holding cryptocurrencies can go for a public launch just like companies listed publicly, such as Google, Microsoft, and more.

Before a crypto ETF can be launched, the respective company aiming to launch ETFs for cryptocurrencies submits a request for approval with the respective regulatory authorities in their countries. Although cryptocurrencies are not regulated. However, regulating them through the regulatory authorities in the respective country in the form of stocks (ETFs) seems to be doing the trick.

Through the ETFs, the mainstream investors get what they are looking for as the ETFs are regulated. They are protected and are offered in line with the regulatory guidelines of the respective jurisdictions.

Major ETFs and How is the US Playing a Major Role in this Sector?

Ever since the crypto-sector was born, the US regulatory authorities didn’t see eye to eye with the ideology that went into the foundation of cryptocurrencies. Therefore, the US administration and regulatory authorities were never flexible towards cryptocurrencies.

Initially, the US tried its best to get rid of cryptocurrencies but as the sector continued expanding, the country knew that train had left the station. Therefore, the country has changed its approach towards cryptocurrencies since the beginning of 2021.

The country is now approving crypto-ETFs by the dozens. As the stock exchanges in the United States have global recognition and adoption, therefore, the US market was extremely important for the crypto-firms to target. This is the reason why the US SEC tends to receive the highest amount of ETF approval applications. Initially, the US SEC didn’t approve any ETFs, and it went on from January 2021 to September 2021. However, in the third quarter of 2021, the US has started approving ETF requests and it is expected to approve many more in 2022. This means that the crypto-industry will be gaining even more recognition due to the US.


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