While a Bitcoin ETF has been a long-awaited arrival, the SEC’s announcement that it would be delaying its decision regarding an ETF proposal has led many to turn to a worthy alternative — a Bitcoin ETN.
A Decent Alternative to Bitcoin ETF?
According to new reports, a Sweden-based firm going by the name of XBT Provider, which is one of the subsidiaries of Global Advisors Limited, has come up with a new concept that has the potential to replace Bitcoin ETF (exchange-traded fund). Their suggestion is an ETN (exchange-traded note) which they call Bitcoin Tracker One. The important thing is that this investment vehicle will facilitate direct trades with US dollars through the use of CXBTF.
This product is not exactly revolutionary in nature, and something similar already exists (Grayscale Bitcoin Investment Trust – GBTC). However, a Bitcoin ETN seems to be a lot more cost-efficient, not to mention the fact that its liquidity is also a lot higher. Additionally, the shares of GBTC seem to be trading at around 50% of Bitcoin’s spot market price.
How can BTC ETN Make a Difference for US Investors?
Despite the fact that the BTC ETN is currently only available through the Sweden-based Nasdaq Stockholm, it can also reach the US investors quite easily, since it is an F-share product that is quoted in US dollars. This is a new improvement, and until recently, the product was only capable of receiving investments in forms of Swedish Krona and/or Euro.
Thomas Lee of Fundstrat shared a lot of positive impressions regarding this listing in the following tweets.
CRYPTO: @CoinSharesCo just announced a #BItcoin ETN quoted in USD (ticker: CXBTF). Similar to GBTC, so traditional brokerage account can buy. @coinshares products trade at NAV (we talked about before) so returns virtually identical to #Bitcoin https://t.co/j7NNSuoDgn
— Thomas Lee (@fundstrat) August 15, 2018
@CoinSharesCo buys #BTC with each share issuance, which means this ETN functions similarly to an ETF despite differences in structure. See excerpt from their Factsheet… Hence, as shares rise/AUM grows, $CXBTF is buying Bitcoin. pic.twitter.com/pjv7COUDoh
— Thomas Lee (@fundstrat) August 15, 2018
Lee highlighted the similarities between the new ETN and a Bitcoin ETF, especially when it comes to physical BTC certificates that CoinShares is currently holding. Coinshare’s very own CEO, Ryan Radloff, also expressed his excitement for this new development. Radloff stated that this is a huge win for Bitcoin, especially when the regulatory situation in the US is taken into consideration.
Issues and Shortfalls
However, while this specific Bitcoin ETN is a great product, and an excellent alternative for a Bitcoin ETF, it is not without problems and shortcomings. One of the biggest issues is the fact that it has to be purchased via Swedish Kroner since it is a product that is managed by a company from Sweden. This means that the investors will have to deal with additional costs and exchange rates. Even the company itself noted that there is a possibility that this will somewhat affect the product’s market value, along with its final return on investment.
However, there is always a possibility that turning to the ETN might have a positive effect on the decision regarding Bitcoin ETF.
Still, not everyone believes that Bitcoin ETF is a great idea, even among BTC’s biggest public supporters. One of them, Andreas Antonopoulos, recently even uploaded a video on YouTube in which he discusses why he believes that a BTC ETF is a very bad idea. According to him, a Bitcoin ETF might result in an increase in market manipulation, especially from institutional investors.
Many have since agreed with him, believing that a short-term price surge might follow, but that it would not serve the crypto market properly in the long run. It all depends on the SEC now, and while many believe that the delays will lead to rejection of the decision, others think that the SEC is simply waiting for the best moment to allow it. For now, all that can be done regarding the BTC ETF is to patiently wait for September 30th, along with hoping that the SEC won’t announce another delay in the meantime.