Bitcoin Exchange Traded Funds on course for US debut

The first Bitcoin Exchange Traded Fund that is listed in the USA will come onto the market next week, which marks the highlight of an eight-year fight for the approval of the Securities and Exchange Commission.

It is assumed that the Proshares Bitcoin Strategy ETF will receive the green light for trading on Tuesday and the Investco Bitcoin Strategy ETF. The permits will probably open the locks for a current of similar products, which may lead to a further increase in the price of the cryptocurrency.

All ETFs are based on Bitcoin futures contracts and not on the cash price, whereby the SEC is known to be concerned about a possible lack of liquidity and the risk of price manipulation of cash exchanges.

Last week, Gary Gensler, Chairman of the SEC, described crypto finances as the "Wild West or the old world of the 'buyers caution', which existed before securing securities laws", and added that it "fully fraud and abuse".

However,

Gensler indicated that he feels more comfortable with the trade in regulated appointment exchanges such as the Chicago Mercantile Exchange.

overnight the Office of Investor Education and Advocacy of the SEC tweeted : "Before you invest in a fund that holds Bitcoin Futures contracts, you should carefully weigh up the potential risks and advantages."

The likely permits are made eight years after entrepreneurs and Olympic rowers have requested the Winklevoss twins to launch the first Bitcoin ETF in the USA, at a time when Bitcoin was traded at $ 1,000 than is currently at $ 59,000.

Since then, a number of proposed funds have bitten the dust, with the United States being overtaken by jurisdiction such as Sweden, Switzerland, Jersey, Germany and Canada, which have grown the stock market.

According to data from Trackinsight, almost 50 crypto ETPs with total assets of $ 14 billion are now in operation worldwide. This includes 16 Bitcoin ETPs, including inverse vehicles, the price of which increases when Bitcoin falls and vice versa.

However,

investors had access to private trusts such as the Grayscale Bitcoin Trust, which has grown to $ 37 billion in 2013, which indicates the appetite for cryptocurrency in the USA.

The weekly net inflows in dedicated cryptocurrency funds reached a four-year high of more than $ 2.5 billion according to data providers EPFR at the beginning of this month.

Although the SEC is of the opinion that Bitcoin futures are more suitable for private investors than trading on the underlying spot market, it is unlikely that they will deliver the same returns.

The Bitcoin Futures market is typically acted with a slightly rising curve, which is known as a contango. This means that in most cases a fund suffers a loss if it converts the front month contract into a longer-term contract.

Matt Hougan, Chief Investment Officer from Bitwise Invest, who applied for the introduction of a spot bitcoin ETF, estimates the costs of this roller return to 5 to 10 percent per year.

Dave Abner, global director of Gemini's business development, a crypto exchange, said: "While Bitcoin-Futures-ETFs should offer more protection for investors, this approach could unfortunately achieve other returns that do not correspond to investment that do not correspond to reality Bitcoin exposure".