Bitcoin hitting all time highs, multiple countries
approving Bitcoin ETFs, a flurry of financial companies vying to offer crypto solutions
to institutional investors. It seems only a matter of time before the
first US-based Bitcoin ETF is given a green light by regulators. But what is a Bitcoin ETF? And what the heck is taking the US so long
to get one approved? And most importantly, is a Bitcoin ETF good
for crypto? Welcome to the Exodus channel, your home for
the best crypto videos. Hit those like and subscribe buttons and we
will keep the videos coming.
Put simply, an ETF, or Exchange Traded Fund,
is a security that follows the price of something else and can be bought from your local stock
exchange. For example, an ETF can follow the price of
an index (like the S&P 500) the price of commodities (like Gold and Silver) or the price of assets,
like Bitcoin! Although it seems like a no-brainer, US investors
are still unable to purchase Bitcoin through a regulated ETF product. The downside of this is that many US residents
cannot trade Bitcoin on the platforms and markets they are already familiar with. Bitcoin ETFs do exist in other jurisdictions
though. A Brazilian-based fund manager called Hashdex
has teamed up with NASDAQ to launch a Bitcoin ETF in Bermuda. And in February 2021, the Purpose Investments
Bitcoin ETF gained approval in Canada, becoming the first Bitcoin ETF available in mainland
North America that allows investors to hop in and out of the asset as they see fit.
It’s available on the Toronto Stock Exchange
under the ticker BTCC, where it can be bought with either US or Canadian dollars. US-based Grayscale, which manages the popular
Bitcoin trust fund GBTC tried launching a Bitcoin ETF in 2017, but were rejected by
the American Securities and Exchange Commission. And with the SEC having last year rejected
applications from New York based investment firm Wilshire Phoenix, and global investment
manager VanEck, Grayscale warned that investors ‘should not assume that such products will
ever obtain an approval’. In 2019, when the SEC denied the Bitwise Asset
Management company’s ETF application, it said that the application had ‘failed to
show that there was a real market for Bitcoin that was isolated from fraudulent and manipulative
activity.’ And still in 2021, despite a huge growth in
institutional demand for Bitcoin, the SEC continues to cite crypto’s vulnerability
to market manipulation as a reason to blanket-reject ETF applications.
SEC commissioner, Hester Peirce, has dissented
with the continued rejections handed down by the organization, and believes that the
decision should be based on the merits of the assets themselves, and not the exchanges
that they are hosted on. She also voiced disapproval of the SECs ‘stubborn
stodginess in the face of innovation’, which is a feeling that most crypto advocates will
know very well! With multiple companies launching new applications
to the SEC, and the new SEC chairman Gary Gensler at the helm of the organization, 2021
may be the right time for a Bitcoin ETF. Gary Gensler is a former professor of blockchain
at MIT and has already suggested that he’ll seek to safeguard crypto innovation while
protecting investors. The SEC under Gensler will likely increase
government oversight of the crypto market, but his appointment will also bring some much
needed nuance and experience to the discussion. Regulation aside, will the first Bitcoin ETF
actually be a good thing for crypto? The launch of the first US ETF will give additional
mainstream legitimacy to Bitcoin.
And due to ease of investment, may lead to
the increased inclusion of Bitcoin into pension and retirement funds, where a huge amount
of capital exists. This will likely be very positive for the
Bitcoin price. In other words, it’s still not too late
to be early when it comes to buying Bitcoin. Hit that like button if you agree. That’s it for Bitcoin ETF 2021. If this video helped, be sure to subscribe
to the channel for more crypto videos from Exodus..
