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An ETF can be set up to track anything from the price of one or many commodities to specific investment strategies. This merger of Bitcoin and ETFs, though odd, might be beneficial in some cases. ETFs also have an associated price that allows them to be easily bought and sold.
What is a Bitcoin ETF?
A Bitcoin ETF matches the price of the cryptocurrency, giving an alternative method for investors to invest in. It is important to keep in mind that these investors don’t actually own Bitcoin but something that is tracking its price and allows them to focus on gains and losses. This lets investors bypass the storage and security measures that are crucial to owning cryptocurrencies. This also puts them at a lower risk of being hacked and stolen.
Recent cases of money laundering via Crypto Exchanges have made investors lose faith in companies that provide such services. Besides, digital wallets being hacked have also become quite common. In addition to ransomware attacks which companies can’t do seemingly anything about.
However, this doesn’t hinder them from investing in traditional stock Exchanges which gives them the added benefit to short sell shares. This benefits people outside the Crypto industry who are not as keen on cryptocurrencies as most Bitcoin investors.
The SEC is not on board with Bitcoin ETFs!
The Securities and Exchange Commission protects investors from fraud, uncovers illegal investment schemes, and investigates insider trading. The SEC has been denying Bitcoin ETF proposals since 2017 and continues to do so. The SEC ideally takes 45 days to render a decision on such proposals.
Van Eck is the CEO of VanEck, a private firm. The SEC has delayed its decision on approving the VanEck Bitcoin Trust. The CEO is sure that the SEC doesn’t have any intention to make a quick decision but to drag it for as long as possible only to deny the request. He also believes that there is only a limited amount of time before Bitcoin shoots up again, and after that, it will be too late for people to get on the Bitcoin ETF train.
It is hard to figure out why this decision is being delayed from the SEC, this is not only beneficial for centralized Exchanges but also for investors who want to get the best of both worlds. However, this has not discouraged investors from putting pressure on the SEC for a reasonable and appropriate decision.
Purpose Bitcoin ETF’s huge success!
The Purpose ETF is one of the only ETFs to make it through the strict regulations of the US. Purpose ETF has been growing immensely after the huge crash, which ended up benefitting the fund. The ETF is the proud holder of 21,114 BTC tokens worth around $720 million. This season of volatility has proven to benefit short-sellers who have bet their money not on the rise of Bitcoin’s value but on the dip.
DWAYNE D’CUNHA, WRITER ON MEDIUM.
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Are Exchange-Traded Funds A Better Way to Invest in Bitcoin? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.