ETF Blues? Check These Alternative Exchange-Traded Bitcoin-Backed Instruments
A Bitcoin trading frenzy ensued in the weeks and days leading into the Securities and Exchange Commission’s rejection of the Bitcoin ETF. Many investors might be interested to know that numerous regulated Bitcoin-backed instruments exist across several traditional markets already. Also Read: This Key Bitcoin Indicator is Dropping Like a Rock A Bitcoin ETI A […]
A Bitcoin trading frenzy ensued in the weeks and days leading into the Securities and Exchange Commission’s rejection of the Bitcoin ETF. Many investors might be interested to know that numerous regulated Bitcoin-backed instruments exist across several traditional markets already.
A Bitcoin ETI
A bitcoin-backed ETN (Exchange-Traded Note) was approved back in 2015 in Sweden and a Bitcoin ETI (Exchange-Traded Instrument) was approved last summer in Gibraltar. In what represents the latest approved traditionally traded Bitcoin-backed financial instrument, the Bitcoin ETI enabled individuals to invest in an institutional instrument representative of the digital currency.
“BitcoinETI”, an asset-backed ETI tied to Bitcoin, trades under the ticket BTCETI. Gibraltar approved the Bitcoin exchange-traded instrument BitcoinETI for the Gibraltar Stock Exchange, and the instrument was also approved for Germany’s Deutsche Börse.
An exchange traded instrument (ETI) is an asset-backed security. Its value, in this case, is related to Bitcoin’s value. ETI’s are used to re-arrange the value of a Special Investment Vehicle (SIV) into an EU Transferable Security.
“By listing the ETI on the Gibraltar Stock Exchange, which is an EU regulated market, we are able to bring a high-level of transparency and liquidity to investors,” Ransu Salovaara, CEO of Revoltura said in a press release issued at the time.
Revoltura “has plans to introduce and list further digital currency and disruptive technology instruments in the near future.”
Available through regulated brokerage firms in Europe, with settlements managed by Clearstream/Euroclear, BitcoinETI functions as any other security in Europe.
“We continue to work with the private sector and our regulator on an appropriate regulatory environment for operators in the digital currency space. The launch of this ETI on our stock exchange demonstrates our ability to be innovative and to deliver speed to market,” said Gibraltar’s minister for financial services and gaming, Albert Isola.
The instrument allows Europe’s asset managers and pension funds to hold Bitcoin through an European Union stock exchange. Gibraltar, an overseas territory of the UK, has long sought to become a EU virtual currency hub.
“GSX is an EU regulated market which offers efficient and cost effective solutions for innovative companies and financial products. We look forward to supporting the BitcoinETI in its entry to the public markets” said Nick Cowan, Managing Director of the Gibraltar Stock Exchange.
Another publicly traded Bitcoin fund in Europe, XBT Provider, is also designed to track the movements of its underlying asset, bitcoin. The fund offers Bitcoin Tracker One (COINXBT) and Bitcoin Tracker EUR (COINXBE) in the form of an Exchange Traded Note (ETN).
ETN’s are unsecured debt securities issued by banks, and they are backed by the credit of the issuer. Holders of the fund have enjoyed impressive gains over its existence.
COINXBT has risen in value from 10 Swedish kronas to 50 Swedish kronas since its introduction.
Bitcoin Investment Trust
Alan Silbert’s Bitcoin Investment Fund (BIT) was launched first as a private fund, but has since ceased issuing shares under this model. It received approval in 2015 from the OTC Markets Group’s OTCQX.
BIT represented the first product from Mr. Silbert’s Grayscale Investments, a digital assets management firm. Each share of BIT is worth 1/10th of a Bitcoin.
Instead of applying with the SEC, BIT took another path allowed by the Financial Industry Regulatory Authority, which disallows it from being traded as an ETF. It has been reported, however, that BIT could be headed for an IPO.
Alongside the recently rejected Bitcoin ETF, SolidX has also recently filed to become a fund listed on the New York Stock Exchange and even offer full insurance, but its likely the SEC’s recent ETF rejection could put a damper on such plans.
Would you invest in a bitcoin ETI or ETN, or are you waiting for an ETF? Let us know in the comments below.
Images courtesy of Shutterstock, Bloomberg
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