In a recent discussion, Aaron Arnold, Co-host of Altcoin Daily, spoke with Matt Hougan, Chief Investment Officer at Bitwise Asset Management, about the rise of cryptocurrency ETFs and their impact on investors.

They explored why someone might choose an ETF over directly purchasing digital assets and examined the current state of ETF adoption in the U.S.

Matt Hougan explained that ETFs offer a safe and low-cost way to access cryptocurrencies. "You could buy it on an exchange like Coinbase, but you pay relatively high fees," he said, emphasizing that ETFs provide institutional custody at a fraction of the cost.

While acknowledging that ETFs aren't self-custodied and can't be used in decentralized finance (DeFi), Hougan noted that many investors adopt a hybrid approach. They hold some cryptocurrency in self-custody to stay true to its original ethos while also investing in ETFs for institutional pricing benefits. "Both are great," he stated. "What you don't want is to be in between, paying high fees on a centralized exchange without cold storage."

When asked about the adoption process of crypto ETFs, Hougan revealed that despite their successful launch, widespread adoption is still in its early stages. "Most large institutional investors can't access these ETFs," he said, mentioning that major wirehouses like UBS and Wells Fargo haven't begun offering them, indicating significant growth potential ahead.

Morgan Stanley was one of the first movers, allowing its advisors to pitch certain Bitcoin ETFs beginning this summer.

Hougan compared the trajectory of crypto ETFs to that of gold ETFs, which saw increasing inflows for nearly a decade after their launch. "ETFs are a five to ten-year journey to maturity," he explained, suggesting that the crypto ETF market is just beginning. Both agreed that as accessibility improves and more institutions come on board, the adoption of cryptocurrency ETFs is poised to expand significantly in the coming years.