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29th December 2023 > > India & spot BTC ETFs.


India is rightly cracking down on industry players who refuse to adhere to standard norms and practices of the financial services industry. Spot BTC ETFs are under a daily barrage of FUD from those who wish to see them fail.

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Perpetual futures funding rates remain at highly elevated levels. The risk of a painful long squeeze (perhaps down to mid-30s?) remains ever present. These leveraged children will sell as soon as a spot BTC ETF is approved, missing out on owning BTC at prices that may never be seen again.

Curious Cryptos’ Commentary – India

In advance of India’s proposed new regulatory framework (see CCC 13th September 2023) India’s Financial Intelligence Unit has issued compliance orders to nine offshore centralised cryptocurrency exchanges, and has requested that the Ministry of Electronics and Information Technology block the relevant URLs:

The nine exchanges are likely familiar to you all: Binance, KuCoin, Huobi, Kraken,, Bittrex, Bitstamp, MEXC Global, and Bitfinex.

Currently all providers of digital services must register with the FIU and demonstrate compliance with AML and KYC requirements. These are standard steps for any organisation providing financial services and will come as no surprise to any of the exchanges who have failed to adhere to these basic requirements.

I despair sometimes at the nonchalant and irresponsible attitude some of the major players display regarding the reputational risks to the crypto industry, breaches of which can and will be amplified by the uninformed media. You can be sure that politicians of a controlling nature will use this development to argue for further restrictions. The pace of wholesale global crypto adoption is slowed by these displays of immaturity, a trait which I had hoped had passed with the fiasco of FTX and the subsequent jailing of Sam Bankman-Fried and Changpeng Zhao, the two man-children of cryptos of whom we have gratefully seen the back of.

Curious Cryptos’ Commentary – Spot BTC ETF FUD

Josef Tětek, an analyst at Ledger’s prime rival Trezor, appears to be a maxi. He doesn’t like the concept of a spot BTC ETF, as it contradicts Satoshi Nakamoto’s original concept of self-custody.

And to a degree he is right about that.

But like all maxis, he fails to recognise that the decentralised world cannot exist without the centralised world, and ETFs are a key staging post for the wholesale adoptions of cryptos, an outcome I am sure he desires. His ignorance on this point has been trumpeted on X:

“And while a spot Bitcoin ETF would make exposure to Bitcoin price movements more accessible to individuals and institutions alike, simply buying Bitcoin through conventional means would offer the same exposure. Do we really need ETFs for this?”

Yes, is the simple, obvious, and correct answer.

Realising that the lack of substance behind this line of questioning wasn’t cutting the mustard, Tětek doubles down:

“The result could be the creation of millions of unbacked Bitcoin, which would distort genuine markets and depress the value of real Bitcoin — all while handing greater agency to the giants of centralized, traditional finance. The very antithesis of Satoshi’s original vision.”

This is straying into the realms of conspiracy theorist thinking. The asset managers launching spot BTC ETFs will always hold the physical collateral of those ETFs. As mature, responsible, and regulated custodians of financial products, one can trust them to do so. One cannot trust a partially decentralised version (e.g. Tether and USDT) without full disclosure, which specifically in the instance of Tether it signally fails to do.

You know what creates “unbacked” BTC? The cash-settled futures and options markets, as the fractionalised banking model – because of the lack of buyer of last resort – cannot realistically be applied to cryptos in any meaningful sense (*).

Spot BTC ETFs are a fightback against financial engineering of the type welcomed in the past by regulators.

(*) Contrary to what you may read in the uninformed press, the fractionalised banking model does not “print money”, not in the sense that we saw with the Weimar Republic, Venezuela, Zimbabwe, and the greatest crime ever seen in market manipulation, quantitative easing, beloved of those who support Modern Monetary Theory (aka Magic Money Tree).

The fractionalised banking model creates credit, not money per se, and that is why it works to humanity’s benefit. If you do not understand the difference between the two (and more than a decade of QE and MMT led some people to believe there was no difference) I suspect your mortgage and credit card bills are becoming difficult to manage.

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