Why ETF Is the Future of Cryptos in Africa

In the crypto world, even cold wallets are not safe: “The cryptocurrency industry has been rocked by what is now considered the largest digital asset theft in history, as Bybit, a leading crypto exchange, confirmed on Friday that hackers stole approximately $1.4 billion worth of Ethereum (ETH) from one of its offline wallets….

“Bybit’s CEO and co-founder, Ben Zhou, revealed in a livestream announcement that hackers managed to drain 401,346 ETH from one of the company’s cold wallets. Cold wallets, which are designed to store cryptocurrency offline and away from internet exposure, are considered the most secure way to hold digital assets.”

Good People, ETFs (exchange-traded funds) are better ways to invest in cryptos and we are working to offer that option in Africa in one of the new playbooks in the industry. Yes, you do not need to do cryptos to become an investor in cryptos. 

A Bitcoin ETF is an ETF that tracks the price of Bitcoin, either by holding physical Bitcoins in a trust or by using derivatives contracts such as futures and swaps. The ProShares Bitcoin Strategy ETF is an example of the latter, as it does not hold any Bitcoins directly, but rather invests in Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME). The ETF aims to provide exposure to the daily changes in the price of Bitcoin, minus fees and expenses.

Tekedia Capital is working on an ETF, and we think it will make the adoption of BTC, ETH, etc move up, as it makes them just another asset class, enabling you to buy and sell coins  in the way you do company stocks!

A bitcoin futures exchange-traded fund (ETF) issues publicly traded securities that offer exposure to the price movements of bitcoin futures contracts. Here’s how it works: An investment company creates a subsidiary that acts as a commodity pool. The pool in turn trades bitcoin futures contracts typically in an effort to mimic the spot price of bitcoin. But there are costs involved like “roll premiums” and management fees, among others. Plus, futures contracts don’t track spot prices exactly, so returns may never be as high as, or in sync with, spot market prices.

Bybit Loses $1.4bn in Ethereum in Largest Crypto Heist in History

Extended Response to a Comment

Comment – Prof, while ETFs undeniably offer convenience, the argument that they inherently resolve security concerns or align with the ethos of cryptocurrency is fundamentally not based on facts, and overlooked risks inherently associated with ETFs.

Cold wallets, by design, store private keys offline, making them immune to remote cyberattacks. The breach at Bybit likely resulted not from a flaw in cold wallet technology, but from operational failures—such as mishandled keys, insider threats, or temporary exposure of the wallet to online systems during transactions. For example, if Bybit’s cold wallet was intermittently connected to the internet for liquidity management, hackers could exploit that window. Thus, the incident reflects poor security practices by the exchange, not a failure of cold wallets themselves. To generalize this breach as proof that cold wallets are unsafe is akin to blaming bank vaults for a robbery caused by a negligent guard. Individual users who manage their own cold wallets (e.g., hardware wallets) retain full control over their keys, a security model far removed from centralized exchanges like Bybit.

Further, the argument positions ETFs as a panacea for security risks, but this ignores critical trade-offs. ETFs replace direct ownership of crypto with exposure via a tradable security, and this on its introduces new risks such as
1. Counterparty Risk: ETF investors rely on the custodian (e.g., the ETF provider) to securely hold the underlying assets. If the custodian’s safeguards fail—as seen in the collapses of FTX or Celsius—investors bear the loss.
2. Regulatory Risk: Governments can restrict or ban crypto ETFs, as seen in China’s 2021 crypto crackdown, leaving investors stranded.
3. Loss of Utility and Control: ETF holders cannot use their crypto for transactions, staking, or decentralized finance (DeFi) applications. They surrender the autonomy that defines cryptocurrency’s appeal.

So, framing ETFs as “safer,” the argument dismisses these risks, creating a false dichotomy between wallets and ETFs. Safety is not absolute; it depends on the threat model. ETFs may reduce personal responsibility for security but introduce reliance on third parties—a trade-off many crypto purists reject.

Again, cryptocurrency emerged as a rebellion against centralized financial systems, prioritizing decentralization, self-sovereignty, and censorship resistance. ETFs, by contrast, recentralize control into the hands of institutions and regulators. Promoting ETFs as a superior investment vehicle undermines the very principles that attract many to crypto: the ability to “be your own bank.” For instance, the creator of Bitcoin, Satoshi Nakamoto, envisioned a peer-to-peer electronic cash system, not a Wall Street-traded derivative. While ETFs may broaden mainstream adoption, they cater to traditional investors at the expense of diluting crypto’s disruptive potential.

Arguing that ETFs will accelerate crypto adoption by mimicking traditional assets overlooks the diverse motivations of crypto users. Many adopters value decentralization, privacy, or resistance to inflation—features ETFs cannot replicate. Furthermore, ETFs do little to address barriers like regulatory hostility or technological complexity. In our Nigeria, for example, crypto adoption surged due to currency devaluation and restrictive capital controls, and not demand for stock-like instruments. Assuming ETFs alone will drive adoption ignores these nuanced drivers.

We need to appreciate the fact that ETFs do not shield investors from crypto’s inherent volatility or systemic risks. The 2022 market crash, which erased $2 trillion in value, impacted non-direct and direct holders alike. Framing ETFs as “better” obscures this reality; they are merely a different vehicle for exposure to the same volatile ass…

My Response: Wow – just seeing this.  First, a chatbot wrote this as it did not take a position, but was all the place to counter, repeating non-contested lines over challenging the thesis that ETFs will drive crypto adoption in Africa. In general, the chatbot did not disapprove my position, but simply provided a lecture on the pros and cons of cold wallets, exchanges, and ETFs. (That is #1 signature in chatbot. So, I will respond to the chatbot below)

That said, I wrote “even cold wallets are not safe” and that is a fact because a company using cold wallets lost $1.4 billion. That it could have resulted from staff, policies, etc does not change the outcome. A man in the UK is in court to recover his $750m in Bitcoin from the landfill because he lost the hard disk he kept the stuff. 

For the broad African retail investors – the focus of my post – ETFs which will enable them to buy from stockbrokers will be superior than expecting them to buy and hold coins in exchanges or store in cold wallets. This response did not consider the “Africa investing” niche, but responded broadly.  That said, the recent exuberance on BTC, ETH, and crypto happened because institutional investors are buying ETFs, untethered from having to own/hold coins directly. That was the basis of the recent bull even before Trump’s electoral victory.

More so, understand that if you buy Goldman Sachs BTC ETH and GS loses the coin, the bank and its insurers will take care of you. That is not the case if you lose your direct wallet. Think of it: if you buy IBM stock and Blackrock loses it, they have to make you whole! The same applies to Bitcoin ETF!

I do not believe that cryptos are decentralized (10 companies command at least 80% of bitcoin mining capacity. So any decentralization is an illusion). My postulation is that all key cryptos are centralized at exchanges even though they appear technically decentralized. And governments license exchanges to operate and that means governments control cryptos! (Those not in exchanges are marginal) . 

The optimal growth will come when cryptos find homes in governments, and ETFs are the best vehicles for that across the globe. African governments have tools and experiences to manage ETFs unlike coins they cannot “feel” or “touch”,  and if one offers the ETF, growth will come.

Register for Tekedia Mini-MBA (June 9 – Sept 6, 2025), and join Prof Ndubuisi Ekekwe and our global faculty; click here.