An Exchange-Traded Fund (ETF) is an investment that can be easily traded on the stock market. Instead of having to directly own a specific stock, commodity, or security, investors can buy and hold an ETF, which tracks the price of the asset. The Bitcoin ETF would track or follow the price of Bitcoin so people who want to speculate on the price of Bitcoin can do so without actually having to own the Bitcoin themselves.
So why wouldn’t people just buy Bitcoin themselves? For most mainstream investors and traders, bitcoin and cryptocurrencies in general are still very risky. Besides having unclear regulations, owning bitcoin requires having a bitcoin wallet and dealing with a crypto asset exchange; both still uncharted and intimidating territory for people unfamiliar with the space. With an ETF, private keys, storage, and general security can all be managed by a trusted party instead of the investors themselves.
What is a Bitcoin ETF?
Basically a Bitcoin ETF combines a traditional investment instrument, the ETF, with the most popular crypto asset: bitcoin. This creates a simple and legally compliant way to invest or trade the price of bitcoin that is accessible on the markets that investors are already familiar with.
Who Invented the Bitcoin ETF?
The Bitcoin ETF is simply a normal ETF with bitcoin as the underlying asset being tracked so no one invented the concept. However, the first application for a Bitcoin ETF was filed with the Securities and Exchange Commission (SEC) by the Winklevoss Bitcoin Trust in 2013 and the U.S. Patent and Trademark Office awarded the Winklevoss’s a patent for “exchange-traded products.”
Did you know?
The SEC has rejected a total of nine Bitcoin ETF proposals in the last six years.
A brief history
- July 2013 – The first Bitcoin ETF proposal is filed by the Winklevoss Bitcoin Trust.
- June 2018 – The Winklevoss’s second Bitcoin ETF proposal is rejected by the SEC.
- October 2019 – Bitwise becomes the latest project to have…