Part 4/15:
The importance of third-party custodians in ETFs cannot be overstated. They verify and hold the underlying assets, providing a transparent and secure framework. Steve highlights that this setup allows investors to confirm the holdings directly, reducing the risk of manipulation or fraud. For example, in traditional gold ETFs, investors can verify the reserves, giving peace of mind.
Jeff shares that many investors and institutions are hesitant about direct ownership of Bitcoin due to technical complexities, but ETFs provide a safer, regulated avenue for exposure. He points out the advantages of ETFs compared to direct holdings, such as ease of trading and regulatory security.
How ETFs Work: Creation, Redemption, and Pricing
The duo discusses the mechanics of ETF trading: