Are We Seeing a Crypto Spring?

The head of Dabner Capital Partners is optimistic about the future of cryptocurrency.

Five years ago, David Abner, then the head of WisdomTree Europe, won the 2017 etf.com Lifetime Achievement Award. Long an expert in trading exchange-traded funds, he later went on to lead business development at Gemini before founding his own consulting firm last year, Dabner Capital Partners. 

He joined the Exchange Traded Fridays podcast last week to talk about what he’s seeing in the markets today.  

Abner notes that bitcoin has had a significant turnaround this year, and says he believes the ominously named “Crypto Winter” will be giving way to a crypto spring.  

“You may not have seen the last storm, but I do think we are entering spring to a degree,” he said.  

Contrary to what some cryptocurrency proponents envision, he does not believe cryptocurrencies will replace traditional financial systems.

“Markets iterate and evolve over time. They aren't just torn down and rebuilt as much as the opportunist or the optimist would like to think,” he commented.  

Instead, Abner sees a new era of regulation and acceptance of cryptocurrencies, noting that traditional financial market players such as Fidelity, BNY Mellon, State Street and Nasdaq are all getting involved in cryptocurrency, while regulators are taking a closer look at newcomers to the space who oppose regulation.  

“Investors do well in regulated environments. Regulators are really there for investor protection, and that’s what [investors] want,” Abner said. 

Bitcoin ETF Decision Likely on Hold 

When it comes to a bitcoin ETF, he says he was optimistic that we would see one this year, but that the lawsuit from Grayscale over the SEC not allowing the firm to convert their bitcoin trust into an ETF has likely slowed the process.  

However, he does not think a physical bitcoin is necessary given the accessibility of the cryptocurrency. A bitcoin ETF is more for advisors who want to add bitcoin to their portfolios, in his opinion.  

Noting that BlackRock has 30 million users associated with its ETFs and that the firm’s head of ETFs has said that is not enough, Abner believes issuers that want to see their ETFs reach the greatest number of customers might want to consider security tokens, essentially a digitized version of a traditional investment. After all, security tokens can trade in a nonstop global market, whereas ETFs are generally limited to trading hours and a particular market.  

“If you think about securitized tokenization, you could potentially expand that globally, and then you create an even bigger potential liquidity pool for certain products. And that drives tighter spreads, obviously, that drives lower fees, but maintains margins. I think that is this really cool evolutionary path,” Abner said.  

Contact Heather Bell at [email protected]