BitMEX co-founder says Wall Street giants will simply “clean up” Bitcoin and store it in “metaphorical vaults” and if it’s too successful, the number of Bitcoin transactions will dry up.
The former CEO of BitMEX has warned that a spot Bitcoin (BTC) exchange-traded fund (ETF) could “totally destroy” Bitcoin if it becomes too successful.
Hayes, who co-founded cryptocurrency exchange BitMEX in 2014, explained in a Dec. 23 blog post that Bitcoin has value because “it moves.”
However, the purpose of a spot Bitcoin ETF is to “liquidate the asset” and “store it in a metaphorical vault,” he said.
If Bitcoin ETF issuers end up holding all Bitcoin, and investors end up buying Bitcoin derivatives rather than holding Bitcoin themselves, the number of transactions on the network will dry up and miners will lose incentive to continue validating transactions.
“The end result is miners shutting down their machines because they can no longer pay for the energy required to run them,” Hayes said. “Without miners, the network dies and Bitcoin disappears.”
Interestingly, Hayes envisions that if this happens, a new cryptocurrency network will replace Bitcoin and even expand on Satoshi Nakamoto’s original vision of a peer-to-peer electronic currency.
Hayes’ Bitcoin musings come two weeks before all pending spot Bitcoin ETF applications are expected to be approved, with Bloomberg analysts predicting approval to take place between January 5 and January 10, 2024.
BlackRock, Grayscale, Bitwise, WisdomTree, Invesco and Galaxy, Fidelity, Ark Invest, Valkyrie, Franklin, Hashdex, Global X ETF and Pando Asset are all awaiting a decision from the SEC on their spot Bitcoin ETF applications.
