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Bitcoin ETFs have been hot topics over the years. Many speculated that such an asset would help to introduce more traditional investors to Bitcoin. 

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More attempts have been made to get Bitcoin ETFs to market as of late, and they are now more likely to happen than ever.

Fast Facts:

  • Recent proposals for Bitcoin ETFs have been made by VanEck, Valkyrie, NYDIG, Fidelity, Teucrium Trading and One River Digital Asset Management.
  • Attempts for Bitcoin ETFs have been made since Cameron and Tyler Winklevoss made a proposal in 2013 that was later rejected by the SEC.
  • The SEC acknowledged VanEck’s ETF proposal on March 15, giving the regulatory body until April 29 to approve, reject or extend its decision. The SEC has continued its delay on the ETF. 
  • A Bitcoin ETF could provide more traditional investors a way to invest in Bitcoin that they are accustomed to, potentially bringing more interest to the digital currency space as a whole.

What Is a Bitcoin ETF?

An ETF is a security made up of many securities. In other words, an ETF, or exchange-traded fund, is a basket of stocks making up various weights of the fund. This allows investors to purchase exposure to broader industries or sectors rather than trying to make up a portfolio of individual stocks to do the same. For example, the SPY ETF is made up of the stocks that are in the S&P 500 index.

A Bitcoin ETF is similar to this but it specifically tracks the price of Bitcoin. This allows investors to gain exposure to the price movements of Bitcoin without actually having to buy Bitcoin and removes a lot of the technical risk associated with buying and securing Bitcoin by oneself. 

Who Has Applied For a Bitcoin ETF?

Bitcoin ETF proposals have been going on since as early as 2013, though none have been approved thus far in the United States. The only Bitcoin ETFs that exist are listed on the Toronto Stock Exchange (TSX). 

The following companies have applied for a Bitcoin ETF:

  • Gemini
  • VanEck
  • SolidX
  • Grayscale
  • ProShares
  • Direxion
  • GraniteShares
  • Bitwise
  • Wilshire Phoenix
  • Reality Shares ETF Trusts
  • Valkyrie
  • FD Funds Management
  • Teucrium Trading
  • One River Digital Asset Management

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In December, the ETF and mutual fund manager, VanEck, re-filed its ETF application that the SEC actually acknowledged, only to have its application delayed again.

In January of 2021, Valkyrie, the operator of the Valkyrie Bitcoin Trust (BTCV) filed an application with the SEC to list a Bitcoin ETF on the New York Stock Exchange. Later in February, NYDIG, the Bitcoin subsidiary of Stone Ridge Assert Management, also filed for a Bitcoin ETF. 

In March 2021, FD Funds Management, a subsidiary of Fidelity Investments, submitted a filing for a Bitcoin ETF called Wise Origin Bitcoin Trust, that will track Bitcoin through Fidelity’s Bitcoin Index.

Teucrium Trading, an agricultural funds provider, has also thrown its hat in the ring. Teucrium provides ETFs and funds for agricultural commodities like corn, wheat, soy and more. 

The company filed for a Bitcoin ETF on May 20th. The ETF would track a benchmark of Bitcoin futures. If approved, the ETF would trade on NYSE Arca exchange with the symbol BCFU. 

The most recent company to file for a Bitcoin ETF has been One River Digital Asset Management. One River provides long-term Bitcoin and Ethereum investment funds for institutional investors. 

Should the firm's ETF be approved it will be called the One River Carbon Neutral Bitcoin Trust and will be traded on the NYSE. The fund will track the performance of Bitcoin measured against the company's "One River Carbon Neutral Bitcoin Index." The index is made using various Bitcoin spot market prices with adjustments to reflect the current spot price of carbon credits. 

When Will a Bitcoin ETF Come Out?

It is not yet clear when a Bitcoin ETF will emerge onto the markets. The SEC was supposed to come to a decision on VanEck’s filing by April 29, which has long passed.

In a CNBC interview in early April Todd Rosenbluth, the head of ETF and mutual fund research at CFRA Research, said “We’ve got a number of firms that have either gone through the filing process or have previously filed but are waiting for more clarity."

“The SEC is less likely to try to pick a winner, we think, as to who comes first and we’re more likely to see them -- If they do approve any ETF — to approve multiple bitcoin-related ETFs. We’ve got a number of firms that have entered and we think we’re likely to see one in the coming year or two, but we don’t have a firm time frame as to when the answer would be yes,” he added.

So, while it seems inevitable that a Bitcoin ETF will come eventually, the timeframe it could take for approval seems vague.

After the SEC's extension, J. Matthew DeLesDernier, the assistant secretary at the SEC, said the group found it appropriate to take more time to take everything into consideration. 

“The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the comments received,” said DeLesDernier.

What Does a Bitcoin ETF Mean For Crypto?

Some have made the argument that Bitcoin ETFs are not necessary as investors can simply buy Bitcoin to gain exposure to the asset's price action. While this is true, It doesn't take into account the more traditional investors or perhaps less tech-savvy demographic that may still want exposure to Bitcoin. 

A Bitcoin ETF gives this type of demographic the ability to gain exposure to the price movements of Bitcoin without going through the learning experience of Bitcoin wallets, seed phrases and public vs. private keys. 

The Gemini Exchanges 2021 State of UK Crypto Report found that 27.5% of the people in the age group between 18-24 years old were invested in cryptocurrency. On the other end of the spectrum, just 7.4% of those that are 55 and older were crypto investors.

When breaking down investors based on their career paths, the study found that, of the top 10 sectors, those in IT and telecom industries were the most likely to invest, followed closely by those in architecture and engineering industries. This trend may suggest a correlation with the level of crypto investment and how tech-savvy the investor is. 

A Bitcoin ETF available on large stock exchanges may lower the barrier to entry and allow broader demographics of investors to become involved. In doing so it would invite more money into Bitcoin's ecosystem and help to even further secure Bitcoin's place as a standard investment asset.