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Why the world needs a spot bitcoin ETF in the US: 21Shares CEO explains

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Despite the increasing adoption of various cryptocurrency exchange-traded funds (ETFs) around the world, the global trading community continues to ask one question: When will a Bitcoin (BTC) spot ETF go live in the United States?

According to some ETF analysts, a spot Bitcoin ETF could become a reality in mid-2023 after years of being rejected by the US Securities and Exchange Commission. Despite the SEC’s apparent reluctance to allow such a product, industry players like Grayscale continue to actively push for a spot BTC ETF.

There are a decent number of reasons why a potential SEC approval of a spot bitcoin ETF remains one of the most anticipated events in the community.

Hany Rashwan, CEO of 21Shares, believes that a spot bitcoin ETF would open up the crypto market to institutional and retail investors who are currently barred from participating in the digital asset space.

“On the institutional front, investors are being shut out due to investment restrictions and regulatory uncertainty,” the CEO said in an interview with Cointelegraph.

“For retail investors who are less tech-savvy, the main hurdles to investing in crypto directly are creating a wallet and trading on exchanges and platforms they are unfamiliar with. Accessing crypto by investing in an ETF would solve these problems,” Rashwan said.

He pointed out that the new asset class is associated with certain risks, “but the same applies to other products”.

One of the key differences between holding cryptocurrencies and crypto ETFs is that investors can buy and sell the ETF into existing investment or trading portfolios through a regular bank or broker, according to the CEO of 21Shares. “You don’t need to create new accounts or wallets to hold the tokens,” Rashwan noted.

Total assets invested in crypto ETFs reached $16.3 billion

While the US SEC has yet to approve a pure Bitcoin ETF, such investment products are gaining popularity in other countries. Canada launched its first-ever Bitcoin ETF, the Purpose Bitcoin ETF, in February 2021, becoming one of the first countries in the world to launch a spot BTC ETF.

On May 12, Australia is expected to start trading three new spot cryptocurrency ETFs, including a BTC ETF from Cosmos Asset Management and BTC and Ether (ETH) ETFs from 21Shares.

Aside from pure asset-based ETFs, there are also a variety of ETFs linked to asset derivatives such as futures or contracts that combine stocks of large companies in the crypto industry.

Crypto ETFs are growing in popularity, with total assets invested in crypto ETFs and exchange-traded products (ETPs) reaching $16.28 billion by the end of the first quarter, according to data from ETF research firm ETFGI.

Related: SEC Approves Valkyrie’s Bitcoin Futures ETF

“We strongly believe that this growth will continue as more markets open to crypto and Europe is at the forefront of crypto ETF innovation and adoption,” stated the CEO of 21Shares, adding:

“The key takeaways are that more and more investors are considering an allocation to crypto as an integral part of portfolio diversification, preferring to do so with ETFs for the reasons outlined above – ease of access, cost-efficiency and transparency.”

Since launching one of its first crypto ETPs in 2018, 21Shares has launched a total of 31 crypto ETPs with listings on the major exchanges in Frankfurt, Zurich, Paris and Amsterdam. The company has also attempted to launch a spot bitcoin ETF in the United States and filed the ETF with Ark Investment Management with the SEC in June 2021. The SEC officially denied the application for the ETF on March 31.