Bitcoin ETFs: More Issuers Join The Race
Zacks Investment Research | Aug 25, 2017 12:41AM ET
The rising tide for cryptocurrencies like bitcoin, Ethereum and Explaining Bitcoin and Crypto Currency ).
The currency is in the limelight probably because of the fact that “bitcoin isn’t regulated by CNBC , bitcoin is emerging as a safe haven asset like gold.
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source: coindesk.com
Needless to say, amid a sky-high price rise, the digital currency is gaining favor from ETF issuers, though the SEC is no quite happy with the concept. After rejecting the filing for an ETF on this cryptocurrency by Winklevoss Bitcoin Trust , the SEC is reviewing its decision once again.
The SEC is seemingly looking for more proof of safety in this trade. Meanwhile, some more ETF issuers have lined up to seek regulatory approval with their bitcoin-related products (read: Will We Finally See a Bitcoin ETF? ).
Inside New Filings
Investment firm VanEck Bitcoin Skyrockets, Race to First Cryptocurrency ETF Heats Up ).
VanEck noted that the digital currency cannot even replace the necessity of the dollar, rather it is likely to end up in carving a place for itself as a niche product. VanEck’s proposed product will invest in certain Bitcoin Instruments through the Subsidiary and the investment in that subsidiary is likely to be limited to 25% of the portfolio, thus meaningfully lowering the risks.
After VanEck, ETF Firm REX also planned a new fund that will invest in bitcoin-based derivatives. There are two products filed by REX, namely REX Bitcoin Strategy ETF and REX Short Bitcoin Strategy ETF. The ticker codes and expense ratios of those funds are yet to be disclosed.
As per the filing , the long fund “seeks to achieve its investment objective, under normal circumstances, by obtaining investment exposure to an actively managed portfolio of financial instruments providing long exposure to movements in the value of bitcoin, together with an actively managed portfolio of fixed income instruments” while the short fund is intended to offer the negative exposure of the same asset.
What Lies Ahead?
The tussle between the U.S. Securities Exchange Commission and Winklevoss over the launch has been going on for about three years. In fact, the issuer has restructured the proposal for the Bitcoin ETF multiple times.
However, it looks like that the SEC may approve a fund in the coming days given rising pressure from issuers. Plus, the Russian government is also expected to make cryptocurrencies legal financial instruments in 2018, as per blockchain technology supporting bitcoin.
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Among other interested candidates, the Chicago Board Options Exchange (CBOE) has teamed up with Gemini, the bitcoin exchange backed by investors Cameron and Tyler Winklevoss, in order to launch cryptocurrency derivatives trading.
Bitcoin’s Impact on the ETF World?
While it is still unclear if we will get a bitcoin ETF soon, the sheer success of the cryptocurrencies should benefit semiconductor ETFs like iShares PHLX Semiconductor ETF hardware known as an ASIC (Application-Specific Integrated Circuit) is designed explicitly for mining bitcoin.
As per Should You Buy These Semiconductor ETFs & Stocks Now ).
On the other hand, since some view the currency as “digital gold,” bitcoin trading may snatch some buyers from SPDR Gold Trust (V:GLD) . Bitcoin’s un-correlated nature to the other asset classes and strong momentum may hurt GLD (NYSE:GLD) in the current scenario.
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