US investors can now explore the world of cryptocurrency through a new investment avenue – Bitcoin ETNs.
Once upon a time, the world’s first cryptocurrency was created and was available for the low low price of less than one cent. Then December 2017 happened and everybody wanted a piece of the action. However, with prices set to almost $20,000, not everybody could afford it. People wanted to benefit from it but not necessarily own any bitcoins.
Futures trading was, and still is, a way to do this but the cryptocurrency community and even institutional investors wanted more in the form of a Bitcoin ETF. However, possible approval on this has been delayed to next month. Now, thanks to Sweden, a new player has entered the US market as of the 15th of August – a Bitcoin exchange-traded note (ETN).
Welcome to the US
According to Bloomberg, the ETN, known as Bitcoin Tracker One, began trading on the Nasdaq Stockholm exchange back in 2015. While it is listed and regulated in Sweden, Wednesday saw it being quoted in US dollars with the CXBTF ticker. This opens the playing field to US investors and creates even more awareness about the industry.
Referred to as F-shares, investors will be able to pay in USD but the trade will be settled, cleared, and held in custody in Sweden.
More exposure for Bitcoin
UK-based CoinShares Holdings is the parent company of the entity issuing the notes, XBT Provider AB. The former buys the required amount of bitcoins. This means that the investor is exposed to the market without actually having to buy any bitcoins. In this case, the ETN acts as a debt instrument as it is backed by the issuer and not the investors.
Ryan Radloff, the CEO of CoinShares Holdings briefly touched on how this could assist investors in the current market:
Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.
Increase in competition
Grayscale’s Bitcoin Investment Trust offers a similar product albeit one that trades at a significant premium. This means that there is now room for competition according to Radloff:
I do see this as a competitive product. Our products historically have not traded at a premium and are liquid.
Silence seems to be the name of the game with the US SEC as they have not yet commented on this somewhat new development in the cryptocurrency industry.
After the ETN’s launch on Wednesday, the price of Bitcoin increased temporarily by nearly $400 before closing off at just over $6,200.
Do you think that the introduction of the Bitcoin ETN will improve the chances of an ETF approval? Let us know in the comments below!
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