A Guide to Cryptocurrency and Bitcoin ETFs
2021 will be a significant year in the cryptocurrency market. Bitcoin and Ethereum reached their peak, then fell, but new tokens caught up and other cryptocurrencies followed the trend. The U.S Securities and Exchange Commission, which is similar to cryptocurrency, is an important player in this market. The SEC has blocked attempts to create a Bitcoin exchange-traded funds in the past. Canada, its neighbor, has allowed cryptocurrency EFTs. The USA is not permitted to do so. The Grayscale Bitcoin Trust is the only one available in the US. Although this is a good option, GBTC does not trade on major crypto exchanges and has poor liquidity. It also sells at a discount. A Bitcoin ETF, on the other hand, will be more attractive to investors.
The Time to Buy Crypto ETFs
Gary Gensler has been named the chairman of the SEC. Citizens hope that this will change the SEC’s mind on ETFs. This will take time, as with all things. The SEC stated that Bitcoin, and the potential exposure to it through the bitcoin futures markets, are highly speculative investments. Investors should be aware of the volatility of Bitcoin and Bitcoin futures markets, as well the potential fraud and manipulation in the underlying Bitcoin market.
ETFs should be approved by the SEC, according to crypto experts. Matthew Le Merle, managing partner at Blockchain Co-investors, believes that it is difficult for regulators to approve ETFs if the underlying assets are not well-understood. However, that is still their job to make investable assets accessible to as wide a possible audience. ETFs are one of best options to do that.
What’s stopping the SEC from working?
The SEC requires that an ETF be approved before it can be traded. Crypto doesn’t meet these requirements. The SEC will ensure that prices are not managed or manipulated in any potential ETF asset. Bitcoin was initially only available on a few popular exchanges. With enough liquidity and price discovery, Bitcoin is now functionally equivalent to assets like gold or copper when used in ETFs.
There have been concerns within the Bitcoin community about ETFs and how they might make it difficult for independent cryptocurrency exchanges. There could be many negative conversations if crypto becomes ETFs.