"Bitcoin ETF approval is inevitable"

Will bitcoin ETFs Get the Green Light? State Street’s Nitin Gaur believes it’s just a matter of time. Dive into his views on regulation and the future of bitcoin.

Cryptocurrency enthusiasts and financial titans such as Grayscale, BlackRock, Fidelity and Invesco are eagerly awaiting a crucial decision from the US Securities and Exchange Commission (SEC) on a batch of bitcoin spot ETF applications. This decision could have a significant impact on the cryptocurrency market.

Nitin Gaur, Head of technology and Digital Asset Design at State Street, shared his views on the likely approval of bitcoin ETFs and expressed confidence that it will happen.

crypto.news recently had the opportunity to sit down with Nitin Gaur at the SmartCon conference hosted by Chainlink in Barcelona. In this exclusive interview, Gaur delves into the future of bitcoin ETFs, the current regulatory landscape in the United States, and provides insight into several possible scenarios that could shape the future price of bitcoin.

crypto.news: What is your general opinion on bitcoin ETFs? Given the regulatory hurdles they face, do you think they have a future?

Nitin Gaur: bitcoin ETFs currently involve bitcoin futures, which are derivatives. Approval of spot ETFs is more challenging due to concerns about market manipulation. However, ETFs offer a convenient way for large financial institutions to access the crypto market and provide liquidity. Therefore, they have a positive impact on both the ETF markets and the cryptocurrency markets.

The fundamentals and desire for bitcoin ETFs are strong. While the SEC’s concerns are valid and aim to prevent market manipulation. What we have seen in recently filed applications is that the industry is working to address these issues. Over time, it will be up to the industry to address objections and loopholes from regulatory agencies. I think it’s a healthy debate.

crypto.news: Do you think they will finally be approved?

Nitin Gaur: Sooner or later, yes.

crypto.news: How do you think bitcoin ETFs will influence the price of bitcoin?

Nitin Gaur: The influx of institutional capital will significantly affect the price of bitcoin. However, the concern is that bitcoin could lose its usefulness if it becomes primarily an institutional asset. The initial idea behind bitcoin was to create an egalitarian financial system accessible to everyone. Although the institutional interest is positive, we must not lose sight of the original objective of creating a currency free of control and that can circulate freely across borders.

crypto.news: He has raised concerns about regulation and the possibility of governments exerting control over cryptocurrencies. What is your vision for regulating cryptocurrencies, especially in the US?

Nitin Gaur: The US regulatory framework is principles-based. Classifies assets, systems, fiduciary responsibility and prudential treatment of assets. In the context of cryptocurrencies, regulators apply existing rules, but they do not always adjust to the novel nature of the technology. What is needed is a new approach to regulation that encourages experimentation and learning while establishing barriers to avoid catastrophic failures. This could help the crypto industry grow without stifling it.

crypto.news: So do you think this change in regulation will happen?

Nitin Gaur: It’s up to the American people. Congress, as an elected official, acts on behalf of the people. The public must convey the importance of cryptocurrencies to their representatives and prioritize their regulation. Lobbying efforts and crypto alliances can play a role, but it needs to be a more universal movement and not just industry lobbying.

We have MiCA in Europe, MAS regulatory in Singapore, Dubai has VARA and Switzerland has FINMA. A good starting point is to adopt the things that have worked in all these different countries and create a framework that at least gives crypto projects some breathing room.

crypto.news: What is the general sentiment within crypto companies in the US regarding these regulatory challenges?

Nitin Gaur: It is a mix of neutrality and innovation. Many focus on technology and innovation, as these aspects are under their control and not a new ETF or a new token, for example, or nft. Some companies are considering launching projects in other countries with clearer regulatory environments. But the United States still has most of the capital. It is the largest market in the world. He also has a very talented concentration. It would be a farce if this continues to be distributed for a decade. At that point it will be too late. So, industries will move away because time is everything in all spaces.

crypto.news: In conclusion, could you offer some scenarios for the near future of bitcoin and how its price might change?

Nitin Gaur: The best-case scenario is that bitcoin becomes a global store of value and achieves widespread acceptance. bitcoin tends to thrive amid fear, uncertainty, and doubt. Worsening existing global geopolitical and economic scenarios could push bitcoin to new highs in terms of price and utility. Given the recessionary pressures, global macroeconomic factors and commodity wars currently unfolding, I would expect this to happen in less than five years.

I won’t speculate on prices, but even a modest 2-3x increase in bitcoin‘s value can significantly impact the global economy, especially considering the current economic climate.

The worst-case scenario would involve a coordinated regulatory offensive, which would effectively “stop” the flow of funds. Although it may not completely eliminate bitcoin, such efforts could reduce its usefulness by limiting the creation of wallets and related entities. However, it is challenging to coordinate such actions globally, given the disparities between the haves and have-nots. In times of crisis, such as those in Argentina and Turkey, users often find ways to circumvent restrictions, thanks to the irreversible and deflationary nature of the technology.

The worst-case scenario involves a coordinated effort by multiple countries to restrict financial services and accessibility, effectively “pausing” the flow of funds. However, cash and alternative methods can still facilitate bitcoin transactions.

The intermediate scenario implies a status quo in which there are no significant changes. If you continue doing what you are doing, you will get the same results. In this case, the price remains stable, without rising or falling. The intermediate scenario is similar to stagflation, where nothing substantial changes.