As worldwide interest grows in crypto, the need for exchange-traded funds (ETFs) is growing along with it. Some countries and institutions have got on board, filed, and have been approved, while the decision for others still looms.
What Is a Cryptocurrency ETF?
A crypto ETF is a fund consisting of cryptocurrencies. While most ETFs track an index or basket of assets, a crypto ETF tracks the price of one or more digital tokens. The price fluctuates daily based on investor sales and purchases, and provides many benefits to investors. These include significantly lower crypto ownership costs and outsourcing of the steep learning curve associated with trading cryptos.
For the crypto enthusiast, ETFs are the holy grail that will boost liquidity and the adoption of cryptocurrencies for the purpose of investment.
Crypto ETFs are trading in a number of countries, but thus far US regulation has denied attempts to offer ETFs on exchanges. Many companies who have applied to the Securities and Exchange Commission are expecting to hear the outcome later this year.
Interest in ETFs is Growing
Entering the crypto market can be challenging, with concerns including price volatility, market manipulation, and lack of fundamentals to properly gauge value. ETFs offer an easier way to access the cryptosphere. Instead of trading cryptos on an exchange, ETFs trade on market exchanges such as the NASDAQ or NYSE, thereby circumventing the often daunting process of purchasing cryptos.
Crypto News Australia recently reported on a survey conducted regarding institutional interest in digital assets and crypto-based products such as ETFs across the US, Europe and Asia. It was found that over half were already invested in cryptos, while nine in 10 found crypto appealing and saw the potential upside.
Bitcoin-ETFs Rising Globally
Canada, the first country in the world to offer ETFs, launched a third Bitcoin-ETF earlier this year with the world’s lowest management fee, at only 0.4 percent per annum. Dubai has become the first city-state in the Middle East to offer ETFs and has launched a Bitcoin-ETF which is listed on the Nasdaq Dubai Exchange.
It is expected that Australia will see its first crypto ETF soon, as there is growing sentiment among millennials to retire at the age of 50 via investment in ETFs.
Earlier this year it was reported that the Australian crypto ETF could launch on the ASX in 2021. The Aussie ETF is currently delayed due to uncertainty in deciding how the arrangement with custodians will work. The Australian Securities and Investments Commission is, however, in the final stages of consultation to decide if a crypto ETF will be allowed to trade locally.
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