The words Bitcoin (BTC) exchange traded fund (ETF) have been in the crypto news a lot lately. And that’s not surprising, because the first American Bitcoin ETF ever will be launched tomorrow. It is a hugely important step because such funds make it easier for the traditional investor to invest in bitcoin. But for some time now, many eyes have been on Grayscale’s huge bitcoin fund, which manages tens of billions of dollars in bitcoins. Will they drive the next major development in the field of an ETF?
The wonderful world of investment products is one that may be complex for many. ETFs can be set up for anything and everything; shares of a particular sector, shares of the largest companies in the whole world, gold and so on. An ETF is a listed fund that makes it easier, especially for traditional investors, to invest in the underlying assets in a safe way and also to comply with all legal requirements.
A bitcoin ETF thus opens the doors to bitcoin exposure for both the small retail investor who finds buying bitcoin too technical, and the large pension funds that want to invest in bitcoin but do not want to break the law (the regulations regarding crypto are still very bad). vague, so investing as a company can cause headaches). Tomorrow will launch the first Bitcoin ETF, though it is not a physical Bitcoin ETF.
This is because it concerns a Bitcoin futures ETF, which means that the underlying asset is not directly bitcoin, but bitcoin futures contracts. While it is a step in the right direction, many feel that this is not yet the “real thing”. An ETF of which bitcoin is the direct underlying asset would mean that the ETF fund must buy bitcoin directly from the market. Grayscale, the largest bitcoin investment fund, could be one of the first to take an important step in this direction. Today, Grayscale’s Jennifer Rosenthal announced that it will finally be filing an application to convert its fund into an ETF. Good news for the crypto sector!
What does that mean? Once there’s official and verifiable evidence of the SEC’s comfort with the underlying #Bitcoin market – likely in the form of a Bitcoin Futures ETF being deemed effective – the #NYSE Arca will file a document called the 19b-4 to convert $GBTC into an ETF.
— Jennifer Rosenthal (@jenn_rosenthal) October 18, 2021