DeFi
Will a SHIB ETF be here soon? Here are 4 reasons why it would be great
The Shiba Inu community is excited about the possibility of SHIB getting an exchange-traded fund (ETF). This could mark a significant milestone in the asset’s lifecycle, as it will expose it to massive institutional funds. On July 2, the Coinbase exchange filed an ETF application for authorization to launch a futures contract relating to Shiba Inu and four other altcoins, including Stellar (XLM), Chainlink (LINK), Polkadot (DOT) and Avalanche (AVAX).
If the application is approved by the Commodity Futures Trading Commission (CFTC), Coinbase intends to launch the futures contracts on July 15. This could pave the way for a possible SHIB ETF as it is similar to how Bitcoin and Ethereum ETFs were approved. The dedicated Shiba Inu community is positive about the approval which will expose their beloved memecoin to a wider audience.
In response to this, Marketing Strategy Manager for Shiba Inu Lucie, on X (formerly Twitter) revealed some reasons why it would be great to have a Shiba Inu ETF. She also pointed out some major drawbacks that a SHIB ETF would have.
Four Reasons Why a SHIB ETF Will Be Great
Lucie, always present on the major developments surrounding the Shiba Inu ecosystem, highlighted four strong points This could improve Shiba Inu’s reputation if an ETF is approved. The first reason she gave was “accessibility. The introduction of SHIB ETF will expose the token to traditional investors who will now have access to Shiba Inu without needing to navigate the complexities of cryptocurrency exchanges.
Second, she cited “regulation and safety“It is common knowledge that ETFs are financially regulated. This will provide an additional level of security, helping with compliance, which will attract institutional investors. The introduction of institutional investors to the market will mean an influx of additional funds that can help increase the value of the token.
Third, Lucie mentioned that a possible approval of the SHIB ETF could help to “diversification’This is because an ETF provides access to related assets, which helps reduce risk through portfolio diversification.
Finally, an approved SHIB ETF will be “increase demand” for the token. Economically, when demand for a product increases, its value skyrockets. This will hopefully be the case for Shiba Inu, as a possible ETF approval could propel its price to new heights. Conversely, Lucie also identified some possible drawbacks of a SHIB ETF.
Why a SHIB ETF Won’t Be Great
In her lengthy article, Lucie stated that while getting a SHIB ETF would be a great achievement, there are also some drawbacks. To this end, she highlighted five drawbacks. First, she talked about “centralization vs. decentralization“Cryptocurrencies are decentralized assets, but an ETF centralizes control. While this brings stability, it will also reduce community control.
Second, ‘direct loss of property“This is another reason why a SHIB ETF won’t be great. Lucie reiterated that ETF investors would hold Shiba Inu directly, thus missing out on other benefits associated with decentralized finance (DeFi), including staking and governance, adding that a SHIB ETF would simplify investing but reduce involvement.
Additionally, a direct loss of property will trigger “reduced commitments“thus decreasing participation in the DeFi protocol. This will in turn weaken the thriving ecosystem by attracting institutional “passive investors” who seek simplicity.
Fourth, approval of a SHIB ETF would mean a “increased costs and imposition of regulations‘. Lucie explained that ETFs involve management fees and regulatory oversight. So while an ETF provides security and legitimacy to cautious investors, it also discourages cost-conscious DeFi participants.
Finally, Lucie points the finger at “potential market influence.’ With a SHIB ETF approved, there is a risk of market manipulation as the ETF could centralize control of SHIB. This is in stark contrast to the transparent nature of DeFi. Ultimately, the introduction of a SHIB ETF has both positive and negative effects depending on your perspective. The community must decide which factor outweighs the other. Is the market willing to compromise and turn a blind eye to the downsides? If so, then the introduction of a SHIB ETF will be a major event for years to come.