We Will be 'Flooded' by Bitcoin ETFs: Gibraltar Finance Minister

Albert Isola, Gibraltar's Minister for Digital and Financial Services, thinks we will be “flooded" by Bitcoin ETFs if the U.S. Securities and Exchange Commission (SEC) approves the first exchange-traded fund for digital assets—and he expects it to happen this year. 

"I think and I hope it does happen this year," Isola said, speaking to the Decrypt Daily podcast. But he raised concerns about the lack of supervisory measures for the aftermath of an ETF approval. 

“The process is clear in terms of licensing, but what about supervision afterwards?” he said. “Who's going to be responsible? What are the criteria? What [is] the US looking for in terms of how these vehicles are managed [and] marketed in the whole environment around them?”

A U.S. approval will have a big impact on policy in the rest of the world, he noted. 

As of last month, the SEC had received no less than eight Bitcoin ETF applications, from high-profile actors such as VanEck, which already runs many ETFs across other sectors. 

The SEC has pushed its decision on the proposal to at least June—but the pressure is piling up. Canada approved its first Bitcoin ETF in February and has since approved two more. 

Regulating for trends

Isola is convinced that sound regulatory policies are needed for broader cryptocurrency adoption. Gibraltar has long been ahead of the curve within the digital assets space; it introduced legislation to regulate digital ledger technology at the beginning of 2018 and has now granted over a dozen operating licenses to crypto companies, including exchanges eToro and Huobi, and most recently a crypto bank, Xapo. Earlier this year, the territory even launched its own NFT stamp. 

“I think that the space is particularly vulnerable to trends,” said Isola, likening the current fashion for non-fungible tokens (NFTs) to a time when people liberally bandied around the word blockchain. “[We’ve] got to be careful that NFTs are not used in the same way,” he said. “I think the NFT will be an extremely valuable tool moving forward, provided [they are] choosing the right areas in the right circumstances.”

Asked about the recent surge in popularity of meme coins such as Dogecoin, Isola struck a cautious tone, noting that care needs to be taken to understand "the substance of what it is and what it represents, before you then begin to evaluate what its longevity or its future could be." 

He also took a swipe at the marketing surrounding meme coins. "People have to be very, very careful of differentiating between risk and reward and understanding fully what is happening in front of them," he said, adding that while "clever people at marketing" are often successful in the short term or even longer-term, "issues begin to rise as the cracks begin to appear."