Oct 21, 2019

‘Is That Still Bitcoin?’ CoinShares CSO Questions Crypto Custody

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Bitcoin (BTC) may not benefit from an influx of institutional traders, a senior executive at one of the industry’s best-known businesses has warned.

Wall Street and unexchanged Bitcoin

Speaking in an interview on financial news network RealVision on Oct. 18, Meltem Demirors, chief strategy officer at asset manager CoinShares, said Wall Street involvement in Bitcoin was not a straightforward win-win for adoption.

Many commentators expect increased attention from big finance to transform Bitcoin’s image globally. The debut of products such as Bakkt’s regulated Bitcoin futures in September shows a desire to cater to institutional demand.

Grayscale, the world’s largest crypto-focused asset manager, revealed this month that demand had remained strong throughout 2019.

Demirors, however, was more skeptical. She said:

“If we take 50% of the world’s Bitcoin and we put it in custody with a custodian that’s regulated... and we take these Bitcoins, and we put them in a vault somewhere… and then we issue Bitcoin depository receipts — pieces of paper that allow us to trade the underlying Bitcoins sitting in a vault somewhere — but we never actually exchange Bitcoin on the Bitcoin network, is that still Bitcoin?”

‘We’re part of the problem’

As Cointelegraph reported, Bakkt, in particular, got off to a slow start on its release, with Bitcoin markets tumbling just days after its contracts went live. At the same time, a similar offering from exchange Binance has seen more intense uptake.

Demirors remained dismissive of professional financiers’ interests in the Bitcoin arena, describing them as “live-action role-playing.”

CoinShares, too, potentially contributes to that style of behavior. She added: “As an asset manager, we are a part of the problem.” 

Nonetheless, for those interested in commodities and safe-haven investments, she conceded that at present, Bitcoin does represent the next best thing to gold

“I think Bitcoin is digital gold,” she concluded. “It’s the digital analog to gold.”

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