The SEC Could Approve the First Bitcoin ETF in 2019

For a long time now, mutual funds have dominated the cryptocurrency trading market by offering investors professional management, daily liquidity, broad diversification, and relatively low cost. Exchange Traded Funds (ETFs) enhance these benefits even further, and this is one of the main reasons why they are on the rise now more than ever.

Most intellectual financial experts agree that the pros of ETFs certainly overshadow the cons by a huge margin.

What are ETFs Exactly?

In simple terms, an ETF is a basket of securities you can trade through a broker on a stock exchange. ETFs are offered for investors of stocks, bonds, and commodities and have both the properties of mutual funds and common stock. Bitcoin ETFs were created to offer investors a diversified portfolio of their assets at a relatively low cost and with better transparency concerning where to trade Bitcoin.

Benefits

Here are some of the benefits of ETFs compared to mutual funds.

  • Tax-efficiency: Investors have more control during the payment of capital gains tax;
  • Higher trading control: ETFs trade over an exchange across the day compared to mutual funds which are only traded once a day at the closing NAV price. This gives traders a better selling/buying control and the power to set stop-loss limits on their trades;
  • Zero Investment Minimums: You dont need a minimum to purchase shares on ETFs- even one share will set the ball rolling for you;
  • Lower fees: ETFs have zero sales load except for brokerage commissions.

Past Attempts to Approve Bitcoin ETF

The U.S. Securities and Exchange Commission (SEC) has been rejecting bitcoin ETF approvals since 2014 for different reasons.

Direxion and GraniteShares have had five and two ETFs rejected respectively based on the grounds that the organizations putting forth the proposals dont have the capacities to implement the products.

Winklevoss Twins, founders of the Gemini Exchange, have also made two attempts at ETF approvals but have hit a dead end too. Even worse, they have actually been barred by SEC from ever trying again.

The most recent proposal is one by VanEck which happened late last year but this too didnt manage to see the light of the day.

Light at the End of the Tunnel

Things are certainly looking up now on the wake of SECs big announcement that it is indeed making great strides as far as ETF proposal is concerned. On February 15th, the Commission published a proposal filed by Bitwise Asset Management and NYSE Arca. The decision on whether to approve, refute, or extend the period of the proposal is yet to be made by SEC which it intends to do in 45 days from the day the proposal was published on Fed Register.

Expectedly, the approval process is quite complex. It has ...

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Tags: Bitwise Asset Management, U.S. Securities and Exchange Commission, Bitcoin, Investor, Cryptocurrency