Swiss-regulated Sygnum Bank weighs in on mainstream enthusiasm for crypto ETFs

Max Stuedlein, head of strategic digital asset solutions at Sygnum Bank challenged the mainstream enthusiasm around crypto exchange-traded funds. Stuedlein opined that ETFs still carry numerous negatives presented by traditional finance tools.

Swiss digital asset bank, Sygnum challenged the hype around crypto ETFs. Max Stuedlein, head of strategic digital asset solutions at Sygnum Bank, commented that ETFs carried limitations that are already staples of traditional financial assets.

Sygnum Bank challenges ETF mainstream hype

Swiss-regulated Sygnum Bank Sygnum argued that exchange-traded funds weakened crypto’s benefits, such as decentralization. In an interview at Consensus in Hong Kong on Wednesday, Max Stuedlein said the regular market hours that crypto ETFs operated on hinder crypto’s potential.

He noted that ETFs are subject to reduced liquidity, restricted trading hours, and limited accessibility. The Sygnum Bank official said that these crypto features attracted users to decentralized finance and cryptocurrencies in the first place.

The Sygnum Bank head revealed the company anticipates a divide between specialized crypto-native and traditional finance institutions. He expressed concerns that traditional finance players introduced ETF products and frustrated their efforts.

Stuedlein added that investment tools like these threatened to eliminate cryptocurrencies’ distinctive features. He explained that Sygnum Bank intends to develop its products and services based on digital assets that generate value.

Bitwise CIO Matt Hougan expressed his views on the growing market interest in cryptocurrency ETFs. He said the ETF trend could lead to an influx of capital in the market. Hougan projected the US SEC could approve spot ETFs for over five digital assets in 2025.

According to Hougan, all commodity-based exchange-traded products had regulated future markets. The CIO added that crypto ETFs have no regulated future markets beyond Bitcoin and Ethereum.

Bitcoin and Ethereum ETFs record significant inflows

CoinGlass data revealed that US spot Bitcoin ETFs accumulated $110 billion a year after their launch. The data highlighted that this amounted to 5.89% of Bitcoin’s market cap. The analytics firm also pointed out that Ethereum ETFs accumulated $10.37B, which amounted to 3.15% of Ethereum’s market cap.

According to SosoValue data, Bitcoin ETFs recorded $71.07 million in outflows on February 19. The data revealed Fidelity FBTC experienced the highest outflows of approximately $48.39 million. Other US spot ETFs such as ARK 21Shares’ ARKB and VanEck’s HODL also recorded outflows.

Abu Dhabi’s Sovereign Fund, Mubadala Investment Company announced it had invested over $436 million in Blackrock IBIT shares. Barclays also revealed that it owned 2.47 million shares of IBIT in a recent SEC filing. Goldman Sachs and JP Morgan were among other institutions that acknowledged Bitcoin ETF investments.

JP Morgan analysts projected in January that XRP and Solana ETFs could record inflows between $3 and $6 billion upon approval. According to Matthew Sigel, head of digital assets research at VanEck, the JP Morgan forecasts considered Bitcoin and Ethereum ETF’s market cap and total outflows.

Bloomberg analysts Eric Balchunas and James Seyffart predicted that Trump’s administration would favor more approval from the SEC. The analysts added that Bitcoin-Ethereum combination products would likely take the lead followed by Litecoin (LTC) and Hedera Hashgraph.

Seyffart opined that Litecoin and HBAR had higher odds of approval than Solana and XRP. He noted it is unclear whether investor demand was present in the market.

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