Of the 11 financial institutions that issued spot Bitcoin ETFs in January 2024, only two – Bitwise and VanEck – have committed to donating a percentage of their profits to open source Bitcoin development.
Whether or not large holders are harassing ETF sponsors to fund grassroots development, the real question is: why are they just investors? @BitwiseInvest And @vaneck_us In doing so? Bitcoin is an ongoing project and core development continues to be underfunded
– nice "in bank" Carter (@nic__carter) April 10, 2024
Given the logic behind Bitwise and VanEck's decision to donate to developers who maintain and update the Bitcoin protocol, it's hard to imagine why more issuers of spot Bitcoin ETFs haven't followed suit. not.
“Although we use the language of ‘donation’ when supporting developers, I think in reality it feels more like a personal investment to make the asset itself stronger,” wrote Hong Kim, co- founder and CTO of Bitwise, in a press release. AMA thread on Stacker News. “Many people think that Bitcoin is magically maintained, but that's not true! If you run a large Bitcoin pool and accept fees for it, why wouldn't you reinvest some of that money into the underlying infrastructure? »
For this reason, Bitwise, which issued its spot Bitcoin ETF under the name Bitwise Bitcoin ETF (ticker: BITB), has committed to donating 10% of its ETF fee profits to three different nonprofits that fund Bitcoin Core developers — OpenSats, Edge and the Human Rights Foundation (HRF) – for 10 years.
“Brink, OpenSats, and HRF were the most established nonprofits with a history of funding Bitcoin developers – they had proof of their work, so to speak,” Kim told Bitcoin Magazine.
VanEck, which issued its spot Bitcoin ETF under the name VanEck Bitcoin Trust (ticker: HODL), also sees the benefit of supporting Bitcoin Core developers. Therefore, he promised to donate 5% of HODL profits to Brink and made an initial donation of $10,000 to the organization.
“We believe TradFi stands to benefit from the efforts of Bitcoin’s major contributors,” Matthew Sigel, head of digital asset research at VanEck, told Bitcoin Magazine.
“As we stand to benefit from rising Bitcoin prices, it makes sense that we also give back to the work of the innovators who make the chain possible,” he added.
Since it makes sense for spot Bitcoin ETF issuers to give back to Bitcoin Core developers – those who support and strengthen the underlying asset of their financial product – who will be the next to follow Bitwise's lead and VanEck?
The development of Bitcoin and open source scaling solutions for the protocol could benefit significantly from more of these large financial institutions donating even a small portion of their spot fee profits Bitcoin ETF.