The long-anticipated bitcoin ETF has yet to materialize, but American investors seeking to gain exposure to the flagship cryptocurrency through their standard brokerage accounts now have a consolation prize.
“Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona,” said Ryan Radloff, CEO of CoinShares Holdings — the parent of the company that offers the bitcoin ETN — in an interview with Bloomberg. “Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”
Technically, Bitcoin Tracker One will be publicly-quoted as a foreign debt instrument on a U.S.-based over-the-counter (OTC) market, the same type of platform that lists Grayscale Investments’ popular Bitcoin Investment Trust (OTC: GBTC).
Like GBTC, CXBTF holds bitcoin on behalf of shareholders, allowing them to invest in bitcoin while offloading the custodial risk in exchange for an annual management fee.
However, Bitcoin Tracker One could prove to be a more attractive option. That’s because GBTC and its cousin, the Ethereum Classic Investment Trust (OTC: ETCG) regularly trade at a significant premium to their net asset value (NAV). CXBTF, on the other hand, is listed on an exchange, albeit not in the U.S., providing it with more liquidity and helping it to trade at less of a premium.
“I do see this as a competitive product,” added Radloff. “Our products historically have not traded at a premium and are liquid.”
Can someone point me to a new IRA provider that will let me trade this? I'll move my funds over today. https://t.co/a3Q2QRnO30
— Spencer Noon 🕛 (@spencernoon) August 15, 2018
Competitive, that is, if investors can convince their brokerage account providers to make the bitcoin ETN available on their platforms. Many investors reported that their providers either do not yet support CXBTF trading or require them to jump through extra hoops to place an order, such as calling a representative and trading shares over the phone.
Of course, the real reason that many cryptocurrency investors are hoping that regulators will approve a bitcoin ETF is that they believe it will lead to more mainstream adoption — particularly on Wall Street — and by extension a massive price boom.
This announcement is not likely to have that effect, at least not to the extent that an actual bitcoin ETF would. However, it does provide GBTC with its first real competition in the U.S., which could help lower the premium on that fund and provide investors with more options when it comes to holding the flagship cryptocurrency in tax-advantaged accounts.
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