A Bitcoin ETF in the Works?
Bitcoin enthusiasts received some welcome news earlier this week when Jeff Kilburg, CEO of KKM Financial, shared some positive news regarding a Bitcoin ETF. So far, at least ten different companies have tried to file and gain approval for a Bitcoin ETF. All of them have been denied by the SEC. The reasons provided are either security concerns or the immaturity of the market to accept such a product.
Bitcoin has recently received a lot of interest from around the world, which has helped it gain legitimacy and exposure. Most recently, Tesla CEO Elon Musk announced that his firm had bought $1.5 billion worth of Bitcoin. The announcement itself resulted in a surge in Bitcoin’s price as more and more people went on a buying spree. The price surge was also a result of some short positions liquidating within hours of the announcement.
Bitcoin is considered a very volatile asset and not recommended by most investors. However, as more and more institutions start viewing it favorably, the SEC might soon be forced to accept the inevitable. Kilburg believes a solution in the form of an ETF will provide benefits to both passive and active investors. He believes a regulated product like an ETF might be able to trade more accurately than Bitcoin itself does.
Valkyrie, a firm where Jeff Kilburg is a partner, has already sent an application to the SEC for its own Bitcoin ETF. He is confident 2021 is the year Bitcoin finally goes mainstream. If it does, the market will open up to everyday investors. This might help reduce the volatility in the asset and bring about some stability, something that will help all kinds of investors. Even those who buy and hold will be able to hold a more stable asset.
Gary Gensler is the former head of Commodity Futures Trading Commission and set to receive an important position at the SEC during President Joe Biden’s term. While he isn’t as confident as others in how soon a Bitcoin ETF could be launched, he does believe it is inevitable.
According to him, the product is not more than two years away. If he sees a tradeable product coming out during his term at the SEC, it does point to improved perceptions of the cryptocurrency in the eyes of regulators. US Senators in the past have shown reluctance towards the cryptocurrency because of their lack of control over it and also due to the possibility of its use in illegal activities, such as payment for drugs or funding terrorism.
The Chief Investment Officer of ETF Trends is also confident about a Bitcoin ETF. He claims products like the Grayscale Bitcoin Trust and the Bitwise 10 Crypto Index Fund have already received a lot of success and interest from investors. When Bitcoin starts appearing on companies’ and institutions’ balance sheets, the SEC will eventually have to work towards approving Bitcoin-based trading products.
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