Having disapproved more than 20 exchange rule filings for spot Bitcoin exchange-traded products over the last seven years, the US Securities and Exchange Commission finally gave the green light for Bitcoin exchange-traded funds in January.
The move gave investors the opportunity for direct exposure to the cryptocurrency rather than secondary exposure via ETFs that invest in Bitcoin futures contracts, which have been available since December 2017.
At the time of writing, the price of Bitcoin was $42,243.20, down from $46,376.10 when the first Bitcoin ETFs hit the market on January 11. But proponents of the new funds are confident that investors will be attracted by lower costs and more secure access to the cryptocurrency.
ETF manager VanEck was one of the first to come to market.
Matthew Sigel, its head of digital assets research, says that Bitcoin ETFs provide retail investors with cost savings of more than 50% over buying Bitcoin on centralized crypto exchanges, while for institutional investors the ETF wrapper allows them to hold Bitcoin at low cost and high liquidity and maintain the custody requirements demanded by US regulation.
“While many banks and brokers do not currently offer Bitcoin ETFs on their platform, we predict this will change,” Sigel says.
