Exchange-traded funds (ETF) have been a welcome disruption in the Wall Street, as it has disintermediated the wall street of the overly-expensive hedge funds and oppressive mutual funds companies. But with the creation of blockchain-traded funds, we just might witness Wall Street disintermediating once more.
Nothing But Ironic
According to Mike Venuto, co-founder and Chief Investment Officer of Toroso Investments, ETFs have caused for Wall Street to disintermediate, and through blockchain-trade funds, the famed global financial center might breathe more.
Venuto, also an ETF researcher, said that there are two probable things to happen to ETFs: either they die, or they transform into blockchain-traded funds.
Even though it’s ironic, but one factor needed for ETF industries to grow is technology which would disintermediate Wall Street. That is blockchain technology, Venuto believes.
By definition, an exchange-traded fund is a marketable security which tracks a commodity, bonds, an index, or a handful of assets classified like an index fund. Compared to mutual funds, these behave like a common stock on a stock market. Also, they have considerably higher daily liquidity than mutual fund shares, not to mention lower fees.
That may be why Flow Traders NV, Europe’s largest ETF trader, has recently entered the crypto market, trading based on Bitcoin and Ethereum. This is an ongoing metamorphosis headed in the direction that Venuto was pointing.
Dennis Dijkstra, Co-CEO of the said trader, expressed his views on the matter:
“People underestimate crypto. It’s big, and it is to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested; we know they are because we get requests.”
The need must have been overpowering, since the Dutch Authority for the Financial Markets (AFM) warned the said trading firm from associating with cryptocurrencies. Flow Traders NV, a Dutch firm, seemingly did not heed the warning.
Bit by bit, we are now seeing blockchain being appreciated and capitalized on by fintech firms. It should not come as a shocker if one wakes up to a world metamorphosed into a more efficient one, with its systems hinged on blockchain.