Crypto regulation outlook amid first bitcoin futures ETF debut

Emily Parker, CoinDesk Global Macro Editor & CoinDesk TV Anchor joins the Yahoo Finance Live panel to discuss Bitcoin ETFs.

Video Transcript

ZACK GUZMAN: Welcome back to Yahoo Finance Live. In today's Crypto Corner, eight years of waiting now culminating in this, the launch of ProShares Bitcoin Strategy ETF, the first Bitcoin-linked ETF, though it is linked to Bitcoin futures. Seeing a pop in its debut, up more than 2%, as shares bring in more than a half a billion dollars in opening day trading volume. That's now the hottest start for any ETF here in 2021, as investors pour money into that ETF.

And for more on what it means for the larger crypto space, very happy to welcome back into the show, Emily Parker, CoinDesk global macro editor and CoinDesk TV anchor joins us here again. Emily, good to see you. I mean, when we talk about this one, it's interesting because you have some deep in the crypto community pooh poohing it because it's not spot Bitcoin. You don't really own underlying Bitcoin here. But then you've got others cheering it for bringing attention to the space and maybe some investor enthusiasm that had not been there. So how do you see it in terms of inching along in the future of Bitcoin?

EMILY PARKER: Yes, that's exactly right. There is some controversy within the crypto community over how big a deal it is. But I think this is unequivocally a step forward for Bitcoin. Anything that potentially widens the pool of investors for this asset class is obviously a good thing for Bitcoin. Also, this is definitely a symbolic step. It's a signal of increased regulatory and institutional acceptance of the world's largest cryptocurrency.

ZACK GUZMAN: I mean, the other thing, too, here, right, when we talk about it, there have been, I suppose, critiques of maybe the SEC's baby step forward here around this one, the futures-linked version, versus the underlying spot version. But they've been pretty clear. They've signaled as much. And now we might see others kind of come on. I wonder if that maybe, too, it changes things in your mind in terms of a regulatory perspective, if these are going well, what it might do for changing the thinking there at the SEC.

EMILY PARKER: Yeah, that's a great point. So this is-- look, this is a new regime in the SEC. This is a new chair. I think there is more optimism. Well, some people are optimistic, some people are not. But I think the fact that the SEC essentially greenlit this, after so many years of the crypto industry pleading for an ETF, definitely signals some degree of regulatory acceptance towards Bitcoin.

So I think there are still a lot of other questions out there about how the SEC will regulate this industry. And there's a lot of regulatory challenges going forward. For example, how will stablecoins be regulated? How will exchanges be regulated? There's a lot of concern in Washington over the use of crypto in criminal activity, for example, and ransomware. So there definitely are a lot of challenges going forward. But this is no question this is a very big step.

AKIKO FUJITA: And Emily, I'm looking at this headline here, Brazilians acquiring $4 billion in cryptocurrency. Certainly, we've talked a lot about how especially in emerging markets, there's been more of an embrace of digital currencies overall. What are we specifically seeing in Brazil? And what does that tell you about the trajectory of adoption?

EMILY PARKER: Yeah, I'm glad that you brought up Brazil because I think sometimes in crypto, we talk as if the two main players are the United States and China. It's like, China cracks down, the US approves an ETF. And these are obviously two very major players, but there's so much else happening globally, particularly in Latin America. So, as you mentioned in Brazil, there was a report that Brazilians acquired $4 billion in cryptocurrency in 2021 alone. Brazil also passed the first ETF in Latin America. So I think when we're talking about crypto, yes, the United States is an important market, but it's not the only market. And looking at what's happening globally is really important because it means that if there are regulatory setbacks in the United States, it's not going to be a setback for the crypto economy as a whole because there are so many other players emerging.

ZACK GUZMAN: Yeah, it's a pretty good point. And I mean, we've seen it with El Salvador, Brazil. I mean, there are larger, I guess, storylines here than just what's going on. Of course, the Canada ETF has been there for a while, so I suppose we could always look to our neighbors to the north as maybe reasons to applaud as well.

When you step back, though, I mean, we're talking a lot about Bitcoin here. When you look at the rest of the market, it has been interesting to see things kind of diverge a bit. Historically, you'd see Bitcoin rise, you see the rest of the market as well. Now kind of in this weird period, I wonder how much of that, too, maybe stems from a regulatory question mark around what is and what is not a security. I know you guys there at CoinDesk have been closely watching the Ripple lawsuit and everything else. I mean, what's next on your radar for maybe things investors need to be watchful of?

EMILY PARKER: DeFi. I think the next thing to watch is DeFi because DeFi has-- DeFi, or Decentralized Finance, has been booming. And that's now in the crosshairs of regulators. So the next question is, how are regulators going to address this booming DeFi economy? And I think that's something that we need to watch. I think you're right. There are a few outliers, some assets that are not correlating with Bitcoin, which makes sense because these assets all perform very differently. They're driven by different fundamentals. They have different communities. So it should be like that.

And I think the next question is also what happens with Ether or Ethereum. Are we going to eventually see an Ethereum ETF? I mean, these are all questions for the future. And I think these-- if that happens, we could see these assets perform differently than Bitcoin.

ZACK GUZMAN: Yeah, it's an exciting time. I know we talk about the ETF trading, but everything else-- that's just Bitcoin. There's a whole other world out there. I don't have enough time to chat today--

EMILY PARKER: Absolutely.

ZACK GUZMAN: --but appreciate you coming back on here with us. Emily Parker, CoinDesk global macro editor and CoinDesk TV anchor. Thanks, again, for the time.

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