In today’s issue, Miguel Kudry of the L1 advisers decomposes direct property of the cryptocurrency compared to the negotiated and enveloped funds and how they should evolve until 2025.
Then, CREWS ENCHS COOP Index answers questions on the subject in Ask and Expert.
– Sarah Morton
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The lines between the FNB Crypto Spot and the direct property will be blurred in 2025
The year 2024 marked a pivotal moment for the cryptocurrency market with the launch of Bitcoin funds (ETF) and Spot exchange ether (ETF), quickly becoming some of the ETFs with the fastest growth of the history. According to various reports, Global Crypto ETPS has raised more than $ 134 billion in management assets (AUM) by November 2024. This success was remarkable even under the initial constraint of buyouts and cash contributions only in the United States , a condition imposed by the SEC during the approvals of 2024. However, the landscape should evolve more in 2025 with changes planned in the redemption mechanisms.
The transition to redemptions in kind
The DEC decision in 2024 not to authorize buyouts and contributions in kind meant that only species could be used to buy or sell ETF shares, which has somewhat limited the potential of these financial products. This restriction is about to change in 2025, with expectations that regulatory organizations authorize transactions in kind for cryptographic ETFs. Blackrock has already deposited a change of rule to activate the buyouts in kind for his Bitcoin ETF. This change will allow authorized participants to issue and buy the shares directly with Bitcoin or Ether rather than with money, which will create a new liquidity steering wheel between traditional financing ecosystems (tradfi) and financing ecosystems decentralized (DEFI).
Impact on investors
The cash approach only left billions of billions of assets of cryptocurrency on the sidelines. Crypto-native investors, in particular those who have low assets, have hesitated to convert their assets into ETF due to substantial tax obligations. With redemptions in kind, these investors could move parts of their cryptographic wealth in ETF without the immediate tax burden, thus accessing a wider range of traditional financial services such as non -polled loans, mortgages and private banks.
For traditional investors who have acquired an exhibition to cryptocurrencies via ETFs, the transition to redemptions in kind offers the possibility of diving deeper into the cryptographic ecosystem. These investors, having experienced a significant assessment in their ETF participations (Bitcoin, for example, was estimated at around $ 46,800 at the time of the launch of the FNB in January 2024, and Ether at around $ 3,422 by mid-July 2024 ), can now convert their ETF actions into direct crypto assets to explore DEFI products without the need for new capital or tax confiscation.
Change catalysts
The recent withdrawal of the accounting bulletin n ° 21 (SAB-21) is another important development. This will relieve the financial institutions of the registration of digital assets as liabilities on their balance sheets, encouraging more banks and brokerage houses to engage with police custody and develop crypto-native financial products. An example of this trend is the recent launch of Coinbase of a loan product supported by Bitcoin in partnership with Morpho Labs, taking advantage of Defi to support loans with Bitcoin. This year, we must expect to see a wave of traditional financial institutions according to this path.
At the same time, a segment of investors gravitate to the self-leather, preferring to manage their assets independently to access cryptocurrency products without intermediaries. This trend highlights the importance of convivial and secure self-works solutions in the evolving cryptographic landscape.
The convergence of Tradfi and Defi
2025 promises to be when the boundaries between traditional and decentralized finances become more and more vague. With mechanisms such as kind transactions and favorable regulatory changes, investors will probably interact with crypto-law platforms more transparent, often inadvertently. This convergence should improve entries in the two sectors, increase volume and create a more interconnected and liquid market.
In conclusion, the evolution of the ETF to direct property in cryptographic space does not only concern the choice of investments, but on the way in which these financial instruments reshape the behavior of investors and market dynamics. With redemptions in kind on the horizon and regulatory changes such as the withdrawal of SAB-21, 2025 will mark an important chapter in the integration of cryptocurrencies into general finance, more blurring the boundaries between traditional financial rails and in chain.
– Miguel Kudry, CEO, L1 Advisors
Ask an expert
Q. What establishes the property of chain cryptography outside of traditional ETFs?
Access to the market 24/7 is only the starting point. The chain property unlocks real composability – investors to use assets as guaranteed, gain return and participate in decentralized ecosystems. While the ETFs provide an exhibition, the active chain acts offer unrivaled flexibility and utility.
Q. How does the direct custody of cryptographic assets improve the flexibility of investors compared to ETF?
Have you ever tried to transfer assets from one brokerage house to another? How long did he take? Was it a friction nightmare? Probably. With the possession of chain cryptography, you have a complete control. You can self-assurance your assets, put them with the goalkeepers and move them in and go out in a few minutes. What if an opportunity arises and you have to act quickly? You can get liquidity immediately by selling or borrowing against your assets – no waiting, no hassle, just action if necessary.
Q. Do AI agents of the future prefer ETF or tokenized assets on the chain?
Imagine an AI agent managing investments. To buy an ETF, he should sail in the KYC processes, work through the limited hours of a brokerage house and depend on human intermediaries. The tokenized assets on the chain eliminate these barriers, providing 24/7 access, transparent automation and composibility to maximize efficiency. For AI financial systems, the choice will be clear: DEFI.
– Crews Enochs, Ecosystem Growth Lead, Coop index
Continue to read
- President Donald Trump has signed an Crypto order to define a federal program intended to bring American companies to digital assets in friendly surveillance.
- The Arizona Bitcoin Strategic Reserve Bill goes to the next step after the Senate finance committee approved it on Monday.
- The US Senate subcommittee on digital assets has been formed, chaired by the Wyoming senator, Cynthia Lummis, the most vocal defender in the Congress for Cryptocurrency.
