American investors who were waiting for bitcoin ETF to become a reality are left high and dry by the financial regulators. The idea of a crypto ETF was gaining popularity as it can be used to enjoy exposure to premier digital currencies through their standard brokerage accounts. However, things are not as bad as they seem as investors have a consolation prize for now.
As per recent reports, Bitcoin Tracker One, will now be trading US brokerage accounts. The exchange-traded note (ETN) which has been listed on Nasdaq Stockholm since 2015 will be open for brokerage accounts with the ticker symbol CXBTF.
CEO of CoinShares Holdings, which is also the premier company to offer bitcoin ETN, Ryan Radloff, said, “Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”
On papers, Bitcoin Tracker One will be formally noted as a foreign debt instrument on a U.S.-based over-the-counter (OTC) market. It will copy the ethics of the same platform that lists popular Bitcoin Investment Trust (OTC: GBTC) of Grayscale Investments.
CXBTF manages bitcoin on behalf of its users like GBTC. Thus they are able to invest in the leading digital coin without bearing the custodial risk after paying an annual management fee.
One should know that Bitcoin Tracker One has the potential to become the more luring option. It’s possible as GBTC and closely related Ethereum Classic Investment Trust (OTC: ETCG) are continuously traded at heavy premiums to their net asset value (NAV). On the other hand, CXBTF is listed on a non-US based exchange which not only provides it more liquidity but also helps it to trade at a lesser premium.
Radloff added, “I do see this as a competitive product. Our products historically have not traded at a premium and are liquid.”
Despite the advantages it would only work if the investors are able to persuade their brokerage account managers to include bitcoin ETN available on their platforms. Majority of the investors claim that their providers put on extra formalities to place an order or simply deny any support to CXBTF trading. Hence, the time wasted in calling a representative and placing an order hurts the investors.
It should, however, be noted that almost all the crypto investors pressuring the regulators to adopt bitcoin ETF are hoping for its mainstream usage. They see bitcoin being traded at Wall Street which would lead towards price rocketing sky high.
Despite all the assumptions, the recent announcement will hardly push any buttons in comparison to the effects an actual bitcoin ETF would have. But, it has opened GBTC to real competition for the first time in US, which would likely lower premiums on those funds and shoot more options for investors. Especially in a situation where one has to hold the leading digital currency in a tax-advantaged country.
If ETF gets sanctioned, then SEC will have the task of making sure about its disclosure and informing people about aspects of ETF that are taken for granted in securities-based ETFs.