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What Is a Bitcoin ETF?

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What is a Bitcoin ETF?.

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Bitcoin ETFs provide investors exposure to the leading cryptocurrency without having to own it.

A bitcoin exchange-traded fund (ETF) provides investors exposure to BTC through traditional exchanges without the need to directly buy or sell the digital asset on a cryptocurrency exchange.

A bitcoin ETF is an exchange-traded fund that tracks the price of a particularly major cryptocurrency and allows traders to buy and sell a security on an exchange throughout the day. They can be paid in cash or physically; This means that traders will receive fiat currency or real bitcoin, respectively, on exit.

ETFs are traditionally regulated financial products and can be purchased through a number of consumer-friendly mobile trading apps, including Robinhood, Trading212, TD Ameritrade, and Fidelity. The most popular major stock indices, such as the Standard & Poor's 500 Index, or other traditional assets and commodities such as oil and gold.


Bitcoin ETFs have been a hot topic in the crypto space for many years, ever since the bitcoin ETF "COIN" submitted by the Winklevoss twins to the United States Securities and Exchange Commission (SEC) was rejected in 2013. It was widely believed that a bitcoin ETF would start a new wave of institutional investors in the crypto industry and bring much-needed maturity and stability to the market. But seven years later, the SEC still has a bitcoin ETF in 2018 despite dozens of proposals from multiple companies, including a second Winklevoss Twin ETF, one from Bitwise, five from Direxion, two from GraniteShares, and much more. did not approve. 

The main arguments put forward by the SEC for these repeated denials were that the bitcoin market is too volatile, lacks adequate oversight, and is too easily manipulated.

However, things may be about to change as Canada's financial regulator, the Ontario Securities Commission (OSC), has recently repeatedly approved the world's first two bitcoin ETFs. The Purpose Bitcoin ETF (BTCC) and Evolve Bitcoin ETF (EBIT) are physically resident ETFs and have applied for listing on the Toronto Stock Exchange. TradeBlock, a subsidiary of CoinDesk, is the index provider of the Purpose ETF.


With the advent of a bitcoin ETF in North America, most people will soon follow suit in the United States, especially if it is approved by Gary Gensler, former commissioner of the Commodities and Futures Commission (CFTC) and blockchain teacher at MIT. optimistic that it will. The United States. The Senate will replace former SEC Chair Jay Clayton.

"I think we're getting an ETF this year," says Mike Novogratz, CEO of Galaxy Digital and Gensler's former colleague at Goldman Sachs in the late 1990s.

“Gary taught a course on blockchain and crypto at MIT. He coldly understands. He's progressive, isn't he? And progressives will go after tenants globally. Crypto is not a leaseholder... Crypto is trying to disrupt leaseholds.

Bloomberg's Senior ETF Analyst Eric Balchunas tweeted his support for new Bitcoin ETFs, adding: “The US usually follows soon. It bodes well for the US bitcoin ETF.

CF Benchmarks CEO Sui Chung also predicts the SEC will now be under pressure to follow up on the case. “Now that the OSC has stated that if a product is built well enough, the crypto market is mature enough for such financial products, industry attention is inevitably turning south of the border to the United States. Unified."


Who can invest in ETFs and how to trade them?

You don't have to be an accredited investor to buy an ETF. Anyone can invest in it. To start investing in ETFs, all you need is to create an online brokerage account or download one of the many mobile trading apps. From here, you'll be able to buy and sell a wide variety of ETFs that track the number of different markets. A list of the main mobile commerce services can be found here.


What are the pros and cons of ETF trading?

While it may seem counterintuitive to invest in a bitcoin ETF instead of buying real bitcoins, there are a number of advantages to doing it this way:

  • No need to go through the process of having to securely store crypto yourself
  • Buying an ETF through an online broker is much safer, faster, and less error-prone than buying digital assets directly from a crypto exchange.
  • There are much clearer tax implications and recommendations for traditional financial products than for digital assets
  • Exchanges are more liquid than crypto exchanges, so buying and selling ETFs is much easier
  • However, there are a number of downsides to investing in a bitcoin ETF rather than purchasing the asset outright.
  • While ETFs can only be traded during market trading periods, crypto markets operate 24/7. This means that if the bitcoin price moves sharply, you may have to wait hours before you have a chance to unload to buy more.
  • Holding your own bitcoin is free, but ETFs charge a management fee.
  • Buying ETFs requires know-your-customer (KYC) checks, but bitcoin can be purchased anonymously between peers.
  • ETFs require you to trust third-party protectors.

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