Bitcoin ETFs drive mainstream adoption despite regulatory hurdles

Bitcoin’s journey from a fringe digital currency to a mainstream financial asset has been turbulent, drawing both significant interest and concern. In a recent discussion, Roundtable host Rob Nelson, Richard Levin, Head of FinTech and Regulatory Practice at Nelson Mullins, and Aaron Williams, co-host of Bitcoin Bros., examined the complexities of bitcoin’s place on corporate balance sheets and strategies for retail investors.

Nelson began the conversation by touching on the challenges companies face when holding bitcoin on their balance sheets. He highlighted volatility concerns that could deter organizations from holding significant amounts of the cryptocurrency and drew a striking comparison to Michael Saylor’s MicroStrategy, which has invested heavily in bitcoin.

Reflecting on his early involvement in the crypto space, Richard Levin highlighted the unexpected evolution of bitcoin ETFs, which he calls ETPs (Exchange-Traded Products). “If you told me 14 years later that we would be talking about 11 bitcoin ETFs issued by some of the largest financial institutions in the world, I would have laughed,” he said. Levin highlighted the SEC’s primary missions: to promote capital formation, maintain market integrity, and safeguard the investing public. He noted that bitcoin, which is not classified as a security and trades on markets regulated as money services businesses rather than exchanges, poses unique challenges for investor protection and market integrity.

Levin further explained the importance of bitcoin ETPs, which offer retail investors a way to gain exposure to bitcoin without the complexities of direct ownership. He argued that this development aligns with the SEC’s goal of balancing technological advancement with investor protection. “The introduction of bitcoin ETPs is an important step,” Levin said, emphasizing that these products provide a safer entry point for retail investors.

Nelson then turned to Aaron Williams to ask how Bitcoin Bros advises its viewers to manage bitcoin’s notorious volatility. Williams highlighted the dollar-cost averaging (DCA) strategy, which involves investing a fixed amount of money in bitcoin on a regular basis regardless of its price. “It’s been the best performing asset over the last 10 years. If you can dollar-cost average over a number of years, you buy the tops and you buy the bottoms,” he said. He suggested that this approach could reduce fears of significant price declines.

Williams also advised viewers to consider increasing their investments during times of market fear, using the example of bitcoin’s price dropping to $18,000 following the FTX disaster. He likened this approach to traditional investing principles, where small, consistent contributions from each paycheck can add up to a significant investment over time without the stress of market volatility.