Discussing the Future Development of Crypto Assets ETF

In a deep conversation, an executive from a global asset management giant in the ETF and index investment sector shared her unique insights on digital asset ETFs, the process of market modernization, and the integration of blockchain technology with traditional finance.

The executive believes that the financial markets are undergoing a critical transformation period. She describes herself as a "market modernization advocate," dedicated to enhancing market resilience, increasing transparency, and expanding investor participation. She works closely with the company's digital assets department to explore the potential of Crypto Assets and digital assets.

She pointed out that ETFs themselves are a disruptive technology, with similar goals to blockchain technology: to modernize the market and achieve innovation and transformation in financial markets. Technological innovation has always been the cornerstone of market modernization, a principle that has not changed for thousands of years.

The Integration of Blockchain and Traditional Markets

The current stage is the integration of blockchain assets and traditional financial markets. The launch of the Bitcoin ETP in the United States marks an important watershed moment, but this is just the beginning. These products have built a bridge between the crypto assets world and the traditional financial world, positively impacting participants in both fields.

Traditional investors are able to access Bitcoin through familiar investment tools, while digital-native investors also find that ETPs meet their needs. Data shows that many investors first encountered this product category through Bitcoin ETPs and then expanded to other ETPs.

The ideal direction for development is to create bridges, drawing on the best practices from all sides, rather than completely overturning the existing system.

Technological Evolution and Market Transformation

There are two perspectives on the future development of Crypto Assets:

1. Current stage: Bitcoin ETF, Ethereum ETF, and others are "simulated versions" of Crypto Assets, equivalent to forcibly fitting encryption technology into traditional financial frameworks.

2. Future Vision: The operations of traditional financial institutions may shift to the blockchain, and there may even emerge specialized financial institution blockchains.

However, the executive raised a key question: is the vision of complete decentralization truly the best fit for the current market and investors? She suggested leveraging encryption technology to improve trust mechanisms rather than completely replacing intermediaries.

Development of the Options Market

A certain company's Bitcoin ETF and Ethereum ETP dominate in options trading volume. By collaborating with institutions such as exchanges, an options ecosystem has been established. The development of the options market has brought new trading mechanisms to Crypto Assets ETFs, achieving standardization of funding methods, measurability of volatility trends, and real-time monitoring of trading conditions.

The options market provides investors with an additional way to participate in the market, allowing them to adjust their risk exposure according to their own needs. This development has broadened the diversity of market participation methods and enhanced the price discovery mechanism and risk management tools.

Metrics for Successful ETFs

The primary criterion for judging the success of an ETF is whether it can achieve its expected goals. The main measurement standards include:

1. Tracking Accuracy: The underlying index must be tracked precisely.

2. Market Quality: A complete ecosystem support is needed, including trading volume, liquidity, exchange access, and the establishment of a redemption mechanism for authorized participants (AP).

In terms of actual performance, Bitcoin ETF has broken historical records, and Ethereum ETF is also among the top 20% of ETF issuances in the U.S. this year, with both being regarded as successful products.

ETF Trend Analysis

Current market trends indicate that retail investors are the main driving force, with investors generally understanding the differences between Bitcoin and Ethereum. The investment thesis for Bitcoin appears more advantageous in the current geopolitical context, while Ethereum faces challenges related to a higher correlation with large tech stocks.

ETF Protocol Upgrade

Regarding possible future protocol upgrades for Ethereum and Bitcoin blockchains, a large ETF issuing institution tends to support open architecture and interoperability, considering the practical needs of institutional scale operations. They are more focused on the scalability of the system, the participation conditions of counterparties, and the overall openness of the ecosystem.

ETF Development Forecast

By 2025, industry insiders expect to see further deepening of research on Bitcoin in portfolio construction, with discussions shifting from "whether to invest in Bitcoin" to "how to reasonably incorporate Bitcoin into a portfolio." The launch of Bitcoin ETP options is also an important development, but it also brings complexity, making enhanced investor education increasingly important.

Other ETF Plans

A large asset management company has taken a relatively cautious and pragmatic approach to digital asset ETFs. Their investment decisions are based on clear investment arguments, cash flow assessments of the underlying assets, risk measurements, and client portfolio needs. Currently, the company primarily focuses on the operation and development of Bitcoin and Ethereum ETFs, as well as tokenization projects and stablecoin-related businesses.

Impact of the New Government

The new government's rise to power may bring about policies that are more inclined towards free markets and pro-market. Changes in the regulatory environment not only affect Crypto Assets native enterprises but also mainstream financial institutions are paying close attention. Industry insiders are looking forward to a regulatory environment that better supports innovation, while also emphasizing that appropriate regulation is crucial for maintaining investor confidence.

Future Outlook

Looking ahead to 2025, the industry is focusing on three core aspects: the establishment of basic definitions, the clear delineation of jurisdictions, and the establishment of collaboration mechanisms between the public and private sectors. The industry is entering a possible "golden age", primarily thanks to lower-cost blockchain space, a more convenient development environment, and a clearer regulatory outlook.