Finally, a bitcoin ETF has been approved. While for many years, there has been speculation about ETF’s, many applications were filed, all of which got denied. Until yesterday when The Ontario Securities Commission approved a bitcoin ETF in Canada.
The application was approved on Thursday, February 11 and includes 11 states in Canada. Accelerate Financial Technologies filed February 2 for a preliminary prospectus with Canadian regulators for the Accelerate Bitcoin ETF (ABTC). Although a Canadian product, the fund will offer services in US and Canadian dollars. The management fee is determined at 0.7 percent and the ABTC shares will be listed on the Toronto Stock Exchange.
Julian Klymochko, Accelerate Chief Excecutive Officer, on February 2 commented on their filing:
“Ever since launching Canada’s first bitcoin fund in July 2017, I’ve been an advocate for the asset class. Bitcoin has been one of the best performing asset classes on a 1-year, 3-year, 5-year and 10-year basis, both absolute and risk-adjusted. Given bitcoin’s historical track record and future potential, along with its portfolio diversification properties, we are looking forward to offering investors exposure to the asset class in an easy-to-use, low-cost ETF.”
In mid-January, Canadian investment fund manager Arxnovum also filed a prospectus for a Bitcoin ETF with the Ontario Securities Commission.
Canada, yes; United States, no?
ETFs on bitcoin are also still being discussed in the US. The new government has also changed the management of the Securities and Exchange Commission. A bitcoin-based exchange-traded fund could therefore see the light of day in 2021.
During the Trump administration, at least 10 companies filed but were denied approval, with the SEC often citing security concerns and market immaturity as reasons for its denials.
Jeff Kilburg, founder and CEO of KKM Financial and a partner at Valkyrie is confident about ETF in the United States and said: “This is all coming together here in 2021.”
He then added: “Bitcoin ETF would be a win-win solution for all active and passive investors, even the ‘hodlers.’”
Valkyrie filed with the SEC to launch a bitcoin ETF in late January and they see the odds in their favor as Kilburg commented:
“If they can provide a solution through an ETF, regulate it, and the ETF can act more accurately on When we have companies like Tesla making bitcoin a major balance-sheet asset and we have companies for whom that is their whole balance-sheet asset trading on the pink sheets, I think it’s going to get hard for them to say no for very much longer.”
What is an ETF?
ETF stands for Exchange Trade Funds. A bitcoin ETF closely follows the course of bitcoin. Investors do not have to buy bitcoin directly and create a wallet with an ETF, but they can speculate indirectly on a price movement. According to many cryptocurrency experts, accepting a bitcoin ETF can lead to more attention for bitcoin among institutional investors.
An ETF is a marketable security that represents a basket of securities, stocks, bonds, commodities and / or currencies. If an investor wants to invest in gold but does not want to go through the trouble of buying, transporting and securing gold, they can also choose to invest in a gold ETF. It tracks the value of gold and you can sell an ETF at will. Another good example is oil. You would not want to keep them in your backyard either.
It remains to be seen what effect an ETF on bitcoin will have on the actual price of bitcoin.
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