Bitcoin ETF Workaround Shows Promise

The last year of cryptocurrency has been a dreary one, to say the least. But while prices have dropped, many financial firms have been trying to find a way to bring Bitcoin to the masses. The most talked about method has been the use of ETFs.

ETFs, or Exchange Traded Funds, are considered one of the most accessible ways for retail investors to place their money in a “basket of goods”. The SEC has been bouncing applications for Bitcoin-related ETFs for a while now. The main concerns of the SEC in the past have been about the chain of custody for Bitcoin. As recent news stories have showed, it is not always the easiest to keep track of the asset in a secure manner. The CBOE, VanEck, and SolidX have all withdrawn and resubmitted applications in the last few months.

Finally, it seems as if a solution has emerged which approaches the problem from a different angle. Realty Shares ETF Trust has filed a registration form with the SEC to list an ETF that would include Bitcoin futures in the assets. The proposed Reality Shares Blockforce Global Currency Strategy ETF would hold sovereign debt instruments on major currencies, money market funds, cash equivalents, and Bitcoin futures. By having a mix of all of these, the risk of pure Bitcoin investment is mitigated.

The Structure of the ETF

Planned to be an actively managed ETF, it will be a mix of numerous stores-of-value. With the SEC adopted a strong risk-averse stance on cryptocurrencies, it was necessary to mitigate the risk in two ways. First, only 15% of assets are devoted to Bitcoin. But the fund will only invest in cash-settled Bitcoin futures contracts, which don’t require the fund to ever hold actual Bitcoin. Instead, the cash equivalent of the amount of Bitcoins is delivered upon the settlement date.

Mati Greenspace, a senior analyst for eToro tweeted the following:

“Seriously, how has nobody thought of this before?! By limiting the fund to just 15% BTC and diversifying with other sovereign currencies this ETF, if approved, will protect investors from whatever manipulation the SEC seems to be afraid of.”

Long-Term Implications

Coinbase does have an index that contains a mix of several cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Zcash, Ethereum Classic, and several more. However, this is far less accessible to retail investors, since they would need to use Coinbase, rather than their own bank’s infrastructure.

After an ETF is approved and money can flow into the space, it is only a matter of time until we see a cryptocurrency recovery. This is because there would be a significant new source of buyers in the space, and it would now be a much simpler affair for literally anyone to participate in the upside of Bitcoin. Although this isn’t true Bitcoin ownership, it will have a correlation as a small group of those new investors decide to find cheaper and more hands-on ways to invest in Bitcoin.

In many respects, this is just further proof that the market always finds a way. Almost from the beginning, it was near certain that we would eventually get a Bitcoin ETF, but now the date seems to be approaching faster than we thought. At this point, it will become much safer to recommend Bitcoin investments for the non-accredited investor.

 

Recommended brokers:

eToro
Key Features
Accepts customers from the USA
Award-winning Cryptocurrency trading platform
Wide variety of crypto assets
One of the fastest growing brokers in the world
Min Deposit
$50
United States
Key Features
Accepts customers from the USA
Award-winning Cryptocurrency trading platform
Wide variety of crypto assets
One of the fastest growing brokers in the world
Payment Methods
Wire Transfer, Bank Transfer
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, Crypto, ETF’s, indices and commodities. eToro offers a wide range of cryptos, such as Bitcoin, XRP and others, alongside crypto/fiat and crypto/crypto pairs. eToro users can connect with, learn from, and copy or get copied by other users.
Cryptoassets are highly volatile unregulated investment products. No EU investor protection. eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
CEX
Key Features
Margin Trading
Legal compliance
Advanced Reporting
Various Payment options
Min Deposit
$200
United States
Key Features
Margin Trading
Legal compliance
Advanced Reporting
Various Payment options
Payment Methods
Credit Card, Debit Card, Wire Transfer, Cryptocurrencies
Cex.io offers exchange of fiat currency for Bitcoin and Ethereum, as well as Bitcoin/Ethereum trading against the USD.
FOREX.com
Key Features
Trade on popular Crypto markets
Go long or short on cryptos from 10p a point
A trading partner you can trust
Min Deposit
$50
United States
Key Features
Trade on popular Crypto markets
Go long or short on cryptos from 10p a point
A trading partner you can trust
Payment Methods
Debit Card, Bank Wire, ACH, Credit Card, PayPal
Founded in 1999, part of GAIN Capital Holdings. Licensed in highly regulated juristictions, FCA, IIROC, NFA, CFTC, CIMA,FSA. Payment methods ACH, debit card, bank wire transfer. $50 minimum deposit.
Forex trading involves significant risk of loss and is not suitable for all investors.
Bittrex
Key Features
One of the largest cryptocurrency exchanges
High volume across all pairs
Perfect for large and small buyers/sellers
Min Deposit
$1
United States
Key Features
One of the largest cryptocurrency exchanges
High volume across all pairs
Perfect for large and small buyers/sellers
Payment Methods
Credit Card
Bittrex Global has one of the most secure trading platforms and digital holding infrastructures in the world where customers can access exciting new products.
Binance
Key Features
Huge range of cryptocurrencies
Highly liquid
2 Factor Authentication
Min Deposit
$1
United States
Key Features
Huge range of cryptocurrencies
Highly liquid
2 Factor Authentication
Payment Methods
Cryptocurrencies
Binance has grown exponentially since it was founded in 2017 and is now one of, if not the biggest cryptocurrency exchanges on the market.
Coinmama
Key Features
Safe & Secure cryptocurrency exchange
Easy Intuitive interface
Impressive limits
Liquidity Accepted in over 200 countries
Min Deposit
$60
United States
Key Features
Safe & Secure cryptocurrency exchange
Easy Intuitive interface
Impressive limits
Liquidity Accepted in over 200 countries
Payment Methods
Debit Card
Coinmama is a bitcoin broker based in Israel. They specialize in selling bitcoins for credit card to nearly anyone in the world.
Coinbase
Key Features
Trusted provider
Online Wallet
2 Factor Authentication
Beginner friendly
Min Deposit
$1
United States
Key Features
Trusted provider
Online Wallet
2 Factor Authentication
Beginner friendly
Payment Methods
Credit Card, Debit Card, Euro Bank Account, 3d Secure Credit Card
Coinbase is one of the first places that made it easy to buy bitcoin and has since become a widely trusted exchange in the market.

 

CEX
Margin Trading
Legal compliance
Advanced Reporting
Various Payment options
Start Trading
FOREX.com
Trade on popular Crypto markets
Go long or short on cryptos from 10p a point
A trading partner you can trust
Start Trading
Forex trading involves significant risk of loss and is not suitable for all investors.
Bittrex
One of the largest cryptocurrency exchanges
High volume across all pairs
Perfect for large and small buyers/sellers
Start Trading