Ether ETFs ‘destroy the ethos of cryptocurrency’, says DeFi exec

As the community celebrated the approval of spot ether exchange-traded funds (ETFs) in the United States, one industry executive criticized the centralization of these products.

The emergence of cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) has revolutionized finance, eliminating the need for middlemen and allowing money to be exchanged without relying on a central authority.

On the other hand, with the introduction of ETFs, cryptocurrencies are at risk of becoming less centralized, according to Mona El Issa, founder of Avantgarde Finance.

“ETF issuers are defeating the purpose by putting outdated technologies back into crypto products,” El Issa told Cointelegraph.

She explained that the Ether ETF is attracting interest from traditional finance (TradFi) because the structure and rules of ETFs are “familiar territory” and speak the language of traditional finance.

“However, acquiring Ethereum through an ETF misses the main advantages of Ethereum's decentralized and decentralized design,” said El Issa.

According to the executive, the newly approved product will see some adoption, but investors will eventually prefer self-managed ETFs over holding them because they offer so many benefits. She said:

“I expect that in time, as investors become more accustomed to cryptocurrency, they will want to hold a non-Ethereum custodian to take advantage of the full benefits of the technology: low cost, elimination of associated risk, and the ability to quickly trade.”

Non-custodial, or self-custodial, crypto wallets allow users to own bitcoins while taking full responsibility for holding the private key or its actual assets. Unlike self-custodial solutions, spot crypto ETFs do not allow investors to hold their crypto as they rely on third-party custodians such as Coinbase.

Some industry experts agree that the approval of the Ether ETF has sparked both investor excitement and decentralization debate.

“When Buterin himself solves the issues that Ethereum has faced, such as MEV and liquid staking, there is no doubt that a long-term battle is ahead to maintain the balance and ensure that Ethereum remains as decentralized and democratic as possible,” said the head of Baybit. Financial products Hao Yang told Cointelegraph.

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He also expressed hope for the future of the crypto industry in the context of recent approvals:

“The approval creates a new sense of confidence in the broader cryptocurrency industry, as well as broader implications for other project prospects in DeFi, NFTs and other token-based applications.”

El Issa isn't the only one skeptical of crypto ETFs because of his concerns about centralization.

Joseph Tetek, a Bitcoin analyst at hardware crypto wallet firm Trezor, has previously argued that spot Bitcoin ETFs could lead investors away from self-protection and even create “millions of Bitcoins.”

Trezor CEO Matej Zak argued that storing ETFs of cryptocurrency on platforms like Coinbase makes spot crypto ETFs vulnerable to hacking.

At the same time, issuers believe that there is no direct conflict between self-hedging and spot crypto ETFs.

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