The Shiba Inu community is buzzing at the possibility of SHIB possibly getting an exchange-traded fund (ETF). This could mark a major milestone in the lifecycle of the asset as it will expose it to huge institutional funds. On July 2, the Coinbase exchange applied for permission 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 trading contracts on July 15. This could pave the way for a possible SHIB ETF because it is similar to the way Bitcoin and Ethereum ETF were approved. The dedicated Shiba Inu community is positive about the approval which will expose their beloved memecoin to a wider audience.

Reacting to this, Shiba Inu lead marketing strategist Lucie, on X (formerly Twitter) revealed some reasons why it would be great to have a Shiba Inu ETF. She also highlighted some major disadvantages a SHIB ETF will have.

Four Reasons Why a SHIB ETF Will Be Great

Lucie, who is always vocal about the major developments surrounding the Shiba Inu ecosystem, emphasized four strong points that could boost the standing of Shiba Inu 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 the need to navigate the complexities of cryptocurrency exchanges.

Secondly, she cited ‘regulations and security‘. It is public knowledge that ETFs are financially regulated. This will provide another layer of security, helping with compliance which will attract institutional investors. The introduction of institutional investors into the market will mean more funds pouring in which can help boost the value of the token.

Thirdly, Lucie mentioned that a potential approval of SHIB ETF could help with ‘diversification’. This is because an ETF gives access to related assets which helps to reduce risks through portfolio diversification.

Finally, an approved SHIB ETF will ‘increase the demand‘ for the token. Economically, when the demand for a product increases, its value skyrockets. This hopefully will be the case for Shiba Inu as a potential ETF approval could shoot its price to new highs. Conversely, Lucie also pinpointed some possible drawbacks of a SHIB ETF.

Why a SHIB ETF Will Not Be Great

In her lengthy post, Lucie stated that even though it would be a great achievement to get a SHIB ETF, there are also some disadvantages involved. To this effect, she highlighted five downsides. Firstly, she talked about ‘centralization vs. decentralization‘. Cryptocurrencies are decentralized assets, however, an ETF centralizes control. While this will provide stability, it will also reduce community control.

Secondly, ‘loss of direct ownership‘ is another reason why a SHIB ETF will not be great. Lucie reminded that ETF investors would directly own Shiba Inu, thus, they would miss out on the other perks that come with decentralized finance (DeFi) including staking and governance, adding that a SHIB ETF will simplify investment but reduce involvement.

Additionally, a loss of direct ownership will trigger ‘reduced engagements‘ thereby decreasing DeFi protocol participation. This will, in turn, weaken the thriving ecosystem by appealing to institutional “passive investors” who seek simplicity.

Fourthly, a SHIB ETF approval would mean an ‘increased cost and imposition of regulations‘. Lucie explained that ETFs imply management fees and regulatory supervision. So, while an ETF brings security and legitimacy to careful investors, it also discourages DeFi participants who are cost-conscious.

Lastly, Lucie points to ‘potential market influence.’ With an approved SHIB ETF, there is the risk of market manipulation because the ETF might centralize SHIB control. This presents a stark contrast to the transparent nature of DeFi. Ultimately, the introduction of a SHIB ETF holds both positive and negative effects depending on your view. The community needs to decide which factor outweighs the other. Is the market willing to compromise and turn a blind side to the drawbacks? if yes, then the introduction of a SHIB ETF will be a major highlight for years to come.

Victor Swaezy

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Victor Nnamdi Igbor "Swaezy" is a crypto enthusiast and writer with over 8 blogging experience. He is an easy person and when not working, loves to have a good time.

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