Bitcoin ETF possibility, meaning, and value explained
A Bitcoin ETF, exchange traded fund, s again a possibility with a new SEC (Securities and Exchange Commission) filing from Van Eck Securities Corp.
What is an ETF and why is it important?
An exchange traded fund (ETF) is an investment type that can be bought on the stock market and makes dividends. ETF’s are bought and sold as shares.
A Bitcoin ETF will be a huge deal for several reasons. Firstly, because it will open the door for other cryptocurrencies to become ETFs. Secondly, a Bitcoin ETF will make it easier for investors to get into Bitcoin. One of the biggest barriers to entry with investing in any cryptocurrency is how technical the process is. Lastly, and possibly most importantly, a Bitcoin ETF will create added legitimacy for cryptocurrency as an investment. This is because a Bitcoin ETF will likely lead to other major financial institutions getting into crypto.
There are already major institutional players (Goldman Sachs, IBM, and Microsoft, etc.) that are getting into crypto. However, a Bitcoin ETF will only create further interest from major companies, banks, as well as individual investors.
Long story short, if a Bitcoin ETF become available, this is a huge positive sign for the future of cryptocurrency as a whole new asset class.
How close are we to having a Bitcoin ETF?
“Asset manager Van Eck Securities Corp and blockchain company SolidX Partners Inc plan to launch a bitcoin-linked investment product that could be traded as easily as a stock, the two companies said in a regulatory filing on Tuesday.” (Published by Rueters June 6th)
Van Eck Securities Corp currently has $46 billion is assets it is currently managing. They have already filed with the SEC twice to have a Bitcoin ETF issued and have withdrawn the request both times. This time could be different though as they have a new aim. Van Eck is looking to target institutional investors with shares being priced at $200,000 each. If all goes as planned, the ETF shares would go live on Cboe in the first quarter of 2019.
One of the biggest hurdles so far with getting the SEC to agree to a Bitcoin ETF has been the secure storage of Bitcoin. This time around, Van Eck is working hard to make sure this is not an issue.
“A properly constructed physically-backed bitcoin ETF will be designed to provide exposure to the price of bitcoin, and an insurance component will help protect shareholders against the operational risks of sourcing and holding bitcoin,” says Van Eck.