Despite the growing adoption of many exchange-traded funds (ETFs) around the world, the global trading community continues to ask one question: When will the Bitcoin spot ETF (BTC) be operational in the US?
According to some ETF analysts, the Bitcoin spot ETF could become real in the middle of 2023, after years of rejection by the US Securities and Exchange Commission (SEC). Although the SEC is clearly unwilling to allow such a product, industry players like Grayscale continue to actively push for a BTC ETF right away.
There are a decent number of reasons why the potential approval of a Bitcoin ETF by the SEC is one of the most anticipated events in the community.
Hani Rashwan, CEO of 21Shares, believes that this spot Bitcoin ETF will open up the cryptocurrency market for institutional and individual investors who are currently excluded from participating in the digital asset space.
“On the institutional front, investors are being left out due to investment constraints and regulatory uncertainty,” Cointelegraph’s CEO said in an interview.
“For retail investors who are less tech-savvy, the main hurdles to investing directly in cryptocurrency include creating a portfolio and trading on exchanges and platforms they are not familiar with. Accessing cryptocurrencies by investing in an ETF will solve these problems,” Rashwan said.
He noted that the new asset class is associated with some risks, but “this is exactly the same for other products.”
One of the main differences between holding cryptocurrencies versus crypto ETFs is that investors can buy and sell ETFs via a regular bank or broker on existing investment or trading portfolios, according to the CEO of 21Shares. “You do not need to create new accounts or wallets to save tokens,” Rashwan noted.
Total invested assets in crypto ETFs reached $16.3 billion
While the US Securities and Exchange Commission (SEC) has not approved any pure Bitcoin ETFs yet, these investment products are increasingly popular in other countries. Canada launched its first-ever Bitcoin ETF, the Purpose Bitcoin ETF, in February 2021, becoming one of the first countries in the world to adopt a spot BTC ETF.
On May 12, Australia is expected to begin trading three new crypto ETFs, including the BTC ETF from Cosmos Asset Management as well as BTC and Ether (ETH) ETFs from 21Shares.
Aside from pure asset-based ETFs, there is also a large variety of ETFs linked to asset derivatives such as futures or contracts that combine stocks of major companies in the crypto industry.
Crypto exchange-traded funds are growing in popularity, with total assets invested in crypto-traded funds and exchange-traded products (ETPs) totaling $16.28 billion at the end of the first quarter, according to data compiled by research firm ETFGI.
Related: SEC Approves Valkyrie Bitcoin Futures ETF
“We firmly believe that this growth will continue as more markets open up to cryptocurrencies and Europe has been at the forefront of cryptocurrency ETF innovation and adoption,” said 21Shares CEO, adding:
“The main lessons learned are that more and more investors see cryptocurrency personalization as an integral part of portfolio diversification and prefer to do so with ETFs for the reasons mentioned above – ease of access, cost-efficiency, and transparency.”
Since debuting one of the first crypto ETPs in 2018, 21Shares has launched a total of 31 cryptocurrency ETPs so far with listings covering the major exchanges in Frankfurt, Zurich, Paris and Amsterdam. The company has also attempted to launch a Bitcoin ETF in the United States, where it filed with the SEC for an ETF with Ark Investment Management in June 2021. The Securities and Exchange Commission (SEC) officially rejected the ETF application on March 31.