1 min read.Updated: 26 Mar 2021, 08:00 PM ISTSaloni Kothari
Bitcoin exchange-traded funds track the value of Bitcoin and trade on traditional market exchanges, without the need for the traders to directly buy or sell the digital asset on a cryptocurrency exchange
A month after the first Bitcoin exchange traded fund (ETF) made its debut, more players are in the prep to join the race for a Bitcoin ETF. Global funds giant Fidelity and leading banking institution Goldman Sachs are gearing up to become the first to launch Bitcoin ETF in the United States and expand their digital asset businesses.
Bitcoin ETF is the talk of the town and if you still do not know much about it, here are a few pointers to help you with the all-abouts of this buzzing trend.
A traditional ETF is a type of security like stocks, commodities or bonds, or a mixture that trades on an exchange and the funds units (or shares) are bought and sold throughout the day just like stocks.
Bitcoin exchange-traded funds track the value of Bitcoin and trade on traditional market exchanges, without the need for the traders to directly buy or sell the digital asset on a cryptocurrency exchange.
First Bitcoin ETF
The Purpose Bitcoin ETF was the first ever Bitcoin ETF, launched in Canada last month on the Toronto Stock Exchange. Just a month after the launch, the ETF has hit the $1 billion mark in assets under management (AUM). Soon after, two more Bitcoin ETFs were launched to start trading in the traditional stock exchange.
Last week, Brazil also received an approval for its first-ever Bitcoin ETF from the Brazilian Securities and Exchange Commission to list an ETF composed solely of bitcoin on its stock exchange.
Several cryptocurrency-linked exchange-traded products (ETPs) exist in Europe that trade like stocks and can track almost any asset class. Various Bitcoin ETPs have also been launched in the region.
Fidelity and Goldman Sachs have filed prospectus with the U.S. Securities & Exchange Commission (SEC) to get its approval for setting a Bitcoin ETF. However, it is not yet assured if the SEC will approve the plan. The regulator has been receiving proposals for ETF launch from various companies over years but hasn’t given approval to any as yet. The U.S’ financial watchdog argued that the bitcoin market is too volatile, lacks sufficient surveillance and is too easily manipulated.
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