Bitcoin ETF rules let British investors out of the global delusion

The excited introduction of a Bitcoin ETF in the USA does not take the United Kingdom with some other large markets when maintaining its blockade of the access of private customers to stock markets.

The US regulatory authorities follow Canada and European nations such as Germany and Sweden when they give the listed products in connection with cryptocurrencies, which supporters claim that they are a more secure way for private investors to access volatile cryptom markets.

Access to this type of fund for British private investors, however, remains blocked by the Financial Conduct Authority (FCA), which has explained that it will only allow a fund that has a commitment to cryptocurrencies when it is satisfied with the integrity of the underlying market.

The FCA has repeatedly expressed concerns about cryptocurrencies, including its extreme volatility and the lack of a solid basis for their value.

The British restrictions for these funds, which have attracted billions of dollars of investments in other legal systems, emphasize the debate as to whether the reluctance of the FCA, regulated vehicles for crypto investments, leads to small investors looking for risk to access to more popular digital assets.

"From the point of view of investment products, the investment products were slower than most other countries," said Jason Guthrie, Head of Digital Assets at Wisdomtree, which offers stock exchange crypto products in Europe and applied for the laying down of funds in the USA.

The strict approach of the UK in the crypto regulation has not invalidated the enthusiasm of some investors for digital assets. Although the FCA repeatedly warned of the risks of crypto investments and prohibited digital asset derivatives, residents of the UK can still buy cryptocurrencies directly on online exchanges such as Coinbase and Gemini.

Some exchanges have established themselves in Great Britain and have received different official permits for the company. But offshore exchanges also offer their online service in Great Britain with little regulatory supervision.

According to the latest FCA research, more than 4 percent of adults in Great Britain or 2.3 million people have cryptocurrency. Shares associated with crypto have also proven to be popular with retail buyers.

Many private investors want to see regulated crypto vehicles on the market. A survey under British investors under the age of 30, which flocked to crypto investments, showed that six out of ten young British investors believe that there are insufficiently regulated companies that are not enough to access cryptocurrencies.

According to data from Trackinsight, almost 50 stock market-traded products that are connected to crypto-assets are offered with total assets of $ 14 billion. The largest Canadian fund, which was listed in Toronto, Purpose Bitcoin ETF has grown to $ 1.7 billion in February.

The Proshares Bitcoin Strategy ETF launched in New York on Tuesday attracted significant demand from investors at an early stage.

But despite the appetite on this fund, the FCA rejects it to let British private investors participate in global enthusiasm.

"Significant price volatility, combined with the inherent difficulties of reliably evaluating crypto-assets, sponsored private customers a high risk of suffering losses from trade," said Sheldon Mills, Executive Director of Strategy & Competition of the FCA this year when the regulatory authority prohibited crypto derivatives.

The careful approach of the watchdog is supported by some market participants. Hargreaves Lansdown, the largest investment platform in Great Britain, said that in view of the associated risks, it was careful to offer cryptofonds, even if the FCA would allow one in the future.

AJ Bell said that the US ETFs would appear on its platform, but only for customers who are classified as professional dealers.

LAITH Khalaf, head of investment analysis at AJ Bell, said that stock exchange -traded crypto products "are usually extremely complex and are associated with risks for which most investors do not have tools or information to evaluate them".

A tricky question concerns the way Funds Bitcoin or other crypto coins are exposed. Some ETFs are covered by real bitcoins that are kept by a custodian bank. However, there are a number of other structures, including funds with crypto futures.

The new US fund ProShares falls into the latter camp and uses Bitcoin futures to imitate the price of the crypto token. This facility was preferred by the US regulatory authorities because futures are traded on the regulated chicago mercantile Exchange, but critics say that this can cause additional costs.

A Canadian ETF who follows Bitcoin futures is almost frozen in May during an extreme market gesture.

Defense lawyers of crypto funds argue that ETFs are still safer than other access routes to crypto markets, since the funds are managed by mainstream players and customers do not have to keep the crypto-assets themselves. Some fear that the ban on the FCA is pushing investors on risky paths.

"Many people still go to the unregulated internet area," said Guthrie. "I think it is a role for real service providers to come with actual products and to be on the hook for what they deliver."