The idea of launching an ETF to offer investors access to the most popular cryptocurrency – bitcoin – first appeared in 2013, yet four years later the debate around whether it is safe to allow the public to trade this instrument is ongoing.
However, the stakes seem to be getting higher and higher, as the cryptocurrencies continue to rise in popularity and value – for example the price of bitcoin has nearly doubled since the beginning of 2017.
According to an article published by CNBC, investors are flocking to the cryptocurrency as a safe haven asset, on par with gold, as many believe the financial world is on the brink of serious turmoil. The attraction is that the currency is not regulated by any government and has allowed users to protect assets from inflation and political upheaval.
The first to seek a bitcoin ETF launch were the Winklevoss brothers – Tyler and Cameron – back in 2013, who already run the WinkDex, a bitcoin price index, and Gemini, a bitcoin custodian exchange.
The ETF would have been the first of its kind, but the US Securities and Exchange Commission (SEC) has stalled on making a decision about whether or not to allow the launch, citing concerns about the currency’s stability and safety.
Since then however, other issuers have following the Winklevoss duo in seeking approval for a exchange-traded product investing in the digital currency, unable to ignore its rise any longer.
VanEck has proposed a product investing in certain bitcoin instruments through a subsidiary, while ETF firm REX wants to launch a products investing in bitcoin derivatives – the REX Bitcoin Strategy ETF and REX Short Bitcoin Strategy ETF – according to Seeking Alpha.
Yet the SEC is still stalling, though according to reports it looks likely a decision will be made in the near future, given the rising pressure for them to allow such a launch.
Not least of these is the fact the Russian government is expected to make cryptocurrencies legal financial instruments as of next year, according to CNBC, while the Chicago Board Options Exchange (CBOE) has teamed up with Gemini, the bitcoin exchange backed by the Winklevoss brothers, to launch derivatives trading in bitcoins.
Meanwhile, six global banks – Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street – have teamed up to create their own digital currency, according to the Financial Times.
So it seems like the race is on, and the ETF world will soon get behind the times if the regulator continues to stall its decision on a bitcoin ETF.
Investing in bitcoin
However, this does not mean European retail investors are not able to get exposure to the rapidly rising currency through other means.
A Swedish issuer XPT Provider launched two exchange-traded note (ETNs) back in 2015 offering access to the cryptocurrency, Bitcoin Tracker One and Bitcoin Tracker Two, listed on the NASDAQ OMX in Stockholm. They were the first bitcoin-based securities available on a regulated exchange.
In the UK, fund platform Hargreaves Lansdown started offering access to these ETNs in June, which aim to mirror the return of the underlying currency in Swedish kronor and euros (respectively). Both notes are available in 179 countries and traded in the same manner as any other shares or instruments on the Swedish exchange.