We had the opportunity to speak with Menno Martens, a Crypto Specialist and Product Manager at VanEck EU. VanEck EU is a European arm of VanEck, an American investment management firm headquartered in New York City that is primarily engaged in issuing exchange-traded fund (ETF) products.
We asked Martens about his thoughts on crypto ETFs, Bitcoin, tokenization, and more.
Can you tell us a bit about your personal journey in the crypto field and how did you first get involved with crypto-related ETFs?
I first got involved with Crypto in 2016 as a means of investment. I became an active part of several crypto communities along the way and started developing smart contracts. With the experience I gathered over the years, I joined the Dutch Central Bank, where I primarily educated the regulator on the use of the technology and the value of tokens. I knew I wanted to contribute more to the development and adoption of crypto. I found VanEck because it closely aligns with my own values. Growing up in an environment where investing and understanding of financial markets was limited, I felt the need to make investing in Crypto more accessible, even without technical knowledge of private key management or secure operational procedures, through VanEck’s Crypto ETNs.
VanEck started offering educational content on Bitcoin and Blockchain technology in early 2016. Not much later, VanEck filed for the first Bitcoin ETF in the US. In 2020, VanEck launched the Bitcoin ETN in Europe.
How do you perceive the current state of the ETF landscape in regard to cryptocurrencies? Do you agree with recent statements made by Bitwise CIO Matt Hougan, who said that the Bitcoin spot ETF launch is akin to “Bitcoin’s IPO in the US market”?
To some extent, I agree with that statement, however, it is important to acknowledge 2 things: a spot Bitcoin product already existed for a long term in the EU in the form of Bitcoin ETN, which has strong similarities with the US Spot ETF launched in January. The second thing is that the EU is ahead, not just in terms of Crypto backed products but also regulation. The part I agree with is that the US is a significantly larger market compared to the European market, and therefore, the launch of Spot Bitcoin ETFs could be seen as more important.
What’s, in your view, the biggest benefit of investing in a crypto ETF – or some other single-asset ETF – compared to buying physical BTC from exchanges?
It allows institutional or professional investors to hold and trade in Bitcoin without touching the underlying asset or having Crypto on the balance sheet. A significant portion of the market that was previously on the sidelines due to being unable to have exposure to crypto directly, is now able to have exposure through a regulated product in the US. Again, this was already possible with the VanEck Bitcoin ETN in the EU.
Do you think that retail investors might start gravitating towards ETFs over buying cryptocurrencies directly from exchanges? Does VanEck have any projections or forecasts on how this dynamic might shape up in the future?
It will take a long time until holding crypto directly is something everyone is comfortable with; also, it is quite different from holding traditional assets. This is why it serves well for a certain group of investors who are technically not as well-versed as those who prefer to invest in crypto directly. I think it is unlikely that crypto-native investors will move to such products. ETNs and ETFs serve their purpose well by allowing professional and institutional investors without technical capabilities to do proper operational security measures and private key management. In the short term, I expect this group to grow as these relatively new products pass the test of time and compliance departments of financial institutions become more comfortable with the idea of supporting crypto-based products.
What would you say to critics who say that large asset managers buying large quantities of Bitcoin makes crypto as a whole more centralized and goes against the original vision laid out by Satoshi Nakamoto?
The whole idea of crypto is to create a permissionless and open market, where regardless of the size, you can acquire as many Bitcoin’s as you desire. Whether or not this was an undesired outcome of the original Bitcoin vision is out of the question because it is inherently possible in an open market such as Bitcoin. The same could be said about large publicly listed companies such as MicroStrategy hoarding Bitcoin and other Cryptocurrencies.
The tokenization of real assets has been a major trend in the blockchain space for the last couple of years. What are some of the more interesting or innovative applications of real asset tokenization that you’ve come across?
Regulation has a lot to catch up when it comes to tokenization. Technically, it is possible to tokenize a lot of real-world assets, however, real-world assets that suffer from inefficiency or low liquidity could benefit the most. Tokenized securities, such as funds, are also an interesting development that we are paying close attention to.
In your opinion, which sector will see the biggest changes due to tokenization?
Traditional financial products and real-estate once regulation allows for it.
Could you share your pessimistic, neutral, and optimistic price targets for Bitcoin for the end of 2024?
I wrote an article on this, The Investment Case for Bitcoin, which I recommend.
Source: https://coincodex.com/article/38695/interview-with-menmo-martens-vaneck-eu/