Crypto ETFs have become Wall Street’s latest embrace of digital assets, funneling billions into Bitcoin and Ethereum. However, Sygnum, a Swiss bank specializing in digital assets and operating under Swiss regulation, suggests that these very funds might be undermining the key strengths of crypto.
Speaking with Decrypt at the Consensus conference in Hong Kong this Wednesday, Max Stuedlein, Sygnum Bank’s head of strategic digital asset solutions, explained that the “regular market hours” imposed on crypto ETFs for regulatory compliance are actually holding back crypto from realizing its full potential.
According to Stuedlein, by using these ETF structures, investors might be “just dragging along a lot of the negatives of traditional finance,” as he shared with Decrypt.
Stuedlein pointed out key downsides like limited trading hours, decreased liquidity, and crucially, the disappearance of crypto’s always-on, 24/7 trading—the very features that initially drew many investors to the world of digital assets.
“When you wrap [Bitcoin] up in a traditional wrapper like an ETF,” Stuedlein stated, “you essentially kill the very thing that made it interesting in the first place.”
Sygnum offers a range of services—from banking to trading and asset management—in the crypto space for institutional and accredited investors and holds the distinction of being the first digital asset bank globally to receive a license from FINMA, Switzerland’s financial regulatory body.
Stuedlein highlighted a growing divide he observes: on one side, crypto-native firms deeply rooted in the digital asset world, and on the other, traditional financial institutions now rushing into the market with a wave of ETF offerings.
While U.S. spot Bitcoin ETFs have indeed amassed a significant $110 billion, representing 5.89% of Bitcoin’s total market capitalization, and spot Ethereum ETFs hold $10.37 billion (3.15% of ETH’s market cap), according to CoinGlass data, Sygnum contends that these investment products fundamentally undermine crypto’s unique appeal.
“Our focus is on developing products and services that build upon the inherent advantages of digital assets, because that’s where we see the real potential for value creation,” Stuedlein elaborated. “We believe the better path forward lies in prioritizing the core digital assets and their native benefits, rather than trying to force-fit these assets into outdated traditional finance frameworks.”
This perspective comes as the U.S. SEC begins to consider a wave of ETF applications beyond just Bitcoin and Ethereum—a trend that, according to Bitwise CIO Matt Hougan, could unleash a ‘floodgates‘ of new investment capital.
Looking ahead, JP Morgan analysts released a report in January forecasting significant potential inflows, estimating $3 to $6 billion could flow into Solana ETFs and $4 to $8 billion into XRP products, should they gain regulatory approval.
Positioning itself in the space, Sygnum—a firm that manages over $4.5 billion across 65 countries and reached unicorn valuation earlier this year—sees itself as occupying a unique middle ground. They are a regulated bank fully invested in the promise of blockchain technology, yet they openly question whether Wall Street’s current approach might be inadvertently watering down the very advantages that make crypto compelling.
“Instead of trying to fit a digital asset into a conventional product framework, we need to really consider the unique benefits digital assets offer,” Stuedlein concluded. “Let’s build our services around those advantages.”
