stuff&things

A Bit about ETFs

Bitcoin spot ETFs are now available for trading. They’re called spot ETFs because they’re traded on real-time pricing as compared to futures. This is … interesting. It’s a melding of a few of my worlds: tech, finance, disdain for investment opportunities that border on grift. It has it all.

There are plenty of thoughts out there on whether you should or shouldn’t invest and I’ll tell you right now: I’m not a financial advisor.

That said, I don’t like the idea. I think cryptocurrencies are a mess and in some (most?) cases borderline on fraud schemes. You have companies that have fake CEOs. And that might be one of the less egregious examples.

One thing I was thinking about with this was Environmental, Social, and Governance (ESG) investing. While Bitcoin ETFs are a new investment vehicle that may or may not prove lucrative, I believe they are incompatible with ESG investing practices.

Bitcoin’s carbon footprint is atrocious. While other cryptocurrencies may prove to be more sustainable, Bitcoin is the only one currently offered as an ETF. But as a new investment vehicle, could some ESG portfolios opt to dip a toe in the pool? I don’t know. But I think this is going to set up some fascinating conversations over the next few weeks/months/years. My gut tells me they’ll opt-out on the environmental impacts.

But as more sustainable cryptocurrencies are approved to be sold as ETFs, will ESG portfolios still stay away? After all, cryptocurrency is used to fund neo-Nazi activity. We’ll see at that point which ESG portfolios are truly ESG oriented and not just, sort of, E-G focused (or maybe just G if they invest in the Bitcoin ETFs).

It’s going to be an interesting ride. I have my thoughts on cryptocurrencies but my fascination with what could happen around these ETFs and ESG portfolios will keep me up at night for a while.