Investors waiting for Bitcoin (BTC) exchange-traded funds (ETFs) to be approved in the United States have been waiting with hope for a long time. The U.S. Securities and Exchange Commission (SEC) has yet to backtrack on approving any domestic Bitcoin ETFs, although ETFs tracking Bitcoin (BTC) have been approved in many countries such as Canada, Brazil and Dubai. The first physically backed Bitcoin (BTC) ETF application was filed in the US in 2013, and surprisingly, 10 years later, investors and organizations proposing Bitcoin ETFs are still holding out hope.
An ETF is a publicly traded investment vehicle that tracks the value of an underlying asset. In the case of Bitcoin ETFs, the underlying asset is Bitcoin (BTC) itself. Investors can trade without having to hold the digital currency through Bitcoin ETFs to gain exposure to BTC.
While no ETFs are currently approved in the US, there are several promising Bitcoin (BTC) ETFs that could potentially be adopted.
BlackRock US
BlackRock, the largest asset management company worldwide, took the step of applying for Bitcoin ETF (Exchange Traded Fund) on June 15. The company's application proposed BNY Mellon as cash custodian and Coinbase as digital asset manager and market data provider.
This step by BlackRock created great excitement in the cryptocurrency market. Many hold out hope that the US Securities and Exchange Commission (SEC) will approve the application, given BlackRock's influence and financial strength.
Invesco Galaxy ETF Bitcoin
Galaxy Digital and Invesco announced a joint initiative, the Invesco Galaxy ETF Bitcoin (BTC), on September 2, 2021. However, by making a change this time, we can say that this new ETF essentially takes a different approach. Additionally, I can make the article more comprehensive by adding my own information.
Created in collaboration with Invesco and Galaxy Digital, this new ETF aims to offer Bitcoin (BTC) in a “physically backed” way. First, it is important to note that the ETF will be based on actual Bitcoin holdings, rather than using derivative instruments such as futures contracts. This approach aims to provide investors with more direct access to cryptocurrency by offering them the opportunity to own Bitcoin (BTC) directly.
Invesco Capital Management LLC serves as the sponsor of this Bitcoin (BTC) ETF. However, there is uncertainty about which company will hold Bitcoin (BTC) assets. At this point, investors and industry experts take into consideration what kind of storage solution the company adopts and how Bitcoin (BTC) assets are stored in terms of security and reliability. This information is important to ensure that investors have confidence in the ETF and are confident in the security of their Bitcoin (BTC) holdings.
On the other hand, this development is an indication that Bitcoin (BTC) is increasingly adopted by institutional investors and traditional financial institutions. While the ETF offers broader investor bases the opportunity to invest in Bitcoin (BTC), it could also increase widespread adoption of the cryptocurrency. However, since Bitcoin (BTC) and other cryptocurrencies are still subject to volatility, investors should carefully evaluate the risks and do their own research.
Ark Invest CS
In July 2023, Ark Invest filed for the Ark21Shares ETF. Ark21Shares ETF is a product of collaboration between Ark Invest and 21Shares AG, a Switzerland-based ETF issuer. If the application is approved, this ETF will trade on the Cboe BZX Exchange under the ticker symbol ARKB.
Ark Invest has made a clarifying move regarding charges on its Bitcoin ETF. The company plans to charge a fee of 0.95% to cover operating costs, according to what is stated in the application.
These developments point to the further spread of Bitcoin-based financial products in the cryptocurrency world. The collaboration between Ark Invest and 21Shares AG can enable investors to access Bitcoin more easily and at a lower cost. Additionally, trading this product in ETF format on the Cboe BZX Exchange can provide investors with the opportunity to invest in Bitcoin in the broader market.
Bitcoin ETFs could be an important step in accessing cryptocurrencies for investors in traditional financial markets. By allowing investors to indirectly invest in Bitcoin, ETFs can alleviate some concerns such as cryptocurrencies' volatility and storage issues.
However, the regulatory approval process for Bitcoin ETFs can often be complex. In the past, Bitcoin ETF applications have been denied or delayed by the U.S. Securities and Exchange Commission (SEC). Therefore, it is unclear how Ark Invest's application will turn out and when the Bitcoin ETF will launch.