Bitcoin ETF Explained + News From SEC
Chances are you’ve already heard of Bitcoin ETFs and the hype around them. We’ve made a short guide for those who want to know more about the matter and the benefits (and risks) that it has in store for us.
First, let’s make sure you know what an ETF is. An ETF, which stands for the Exchange-Traded Fund, is an investment vehicle that tracks the price and performance of a specific asset, or a selection of assets. In this way, ETFs allow investors to diversify their portfolios without really owning the assets.
Have you ever dreamed of making money on bitcoin without the trouble of going to crypto exchanges, paying fees and taking security measures? If so, you have dreamed of a Bitcoin ETF. Indeed, a bitcoin ETF allows investors to get on board without going through the intricate process of trading and storing bitcoin. Moreover, since ETF holders won’t be directly investing in bitcoin, they will skip the trouble of complicated security or declare procedures demanded of cryptocurrency investors.
Further, with ETFs, there is no more need to deal with cryptocurrency exchanges. One can buy and sell the ETF through regular exchanges. And last, but not least: ETFs are much more appreciated across the investment world than cryptocurrencies. An investor looking to benefit from digital currency assets without having to dig deep into the matter could go for trading an ETF that he has a better understanding of already.
However, companies trying to launch bitcoin ETFs have faced struggles with regulatory authorities so far. For instance, the Winklevoss brothers, known as the first bitcoin billionaires, had their first application to launch a bitcoin ETF (“Winklevoss Bitcoin Trust”) declined by the USA SEC in 2017. The reason was that bitcoin is widely traded on various unregulated exchanges, giving room for potential fraudsters.
CBOE Global Markets, Inc. also applied for digital currency-related ETFs, but hadn’t got the SEC approval as well. VanEck and SolidX, a fintech company involved in a range of bitcoin-related projects, tried to launch a VanEck SolidX Bitcoin Trust ETF (XBTC), widely recognized as the most promising bitcoin ETF in the industry. But on September 21st SEC delayed the decision on it.
The SEC, therefore, hasn’t approved any digital currency ETFs so far. But crypto enthusiasts remain optimistic. If the bitcoin ETFs are launched, they will eventually succeed, as both traditional investors and crypto supporters will benefit from them.
If you have your own thoughts on bitcoin ETFs, we’d love to hear from you in the comment section.
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