We have already witnessed the launch of futures contracts based on the price of Bitcoin, but there has been virtually no development where other crypto-related financial instruments are concerned. The argument for Bitcoin exchange-traded funds (ETFs) just got a serious boost as JPMorgan called such a release a “holy grail” for investors.
In a note dispatched to clients, the bank argued that ETFs would make investments in Bitcoin more accessible.
“Investors need wallets to trade the physical Bitcoins today, making it hard to access. ETFs are frequently traded and highly accessible via investors' brokerage accounts,”
the Wall Street behemoth wrote.
This could also alleviate some security concerns given that a number of wallet providers have experienced breaches in the past, which has in turn led to some people losing all of their cryptocurrency holdings.
The note added that ETFs would be insured by the Securities Investor Protection Corporation (SIPC). Bitcoin exchanges have no such insurance and therefore “expose holders to potential fraud and theft,” according to the document.
Although CBOE filed for approval to launch six different ETFs for Bitcoin almost two months ago, US regulators are still wavering and want to analyze the market for potential risks to investors and unforeseen circumstances.
For now, these ETF applications are gathering dust, and it is quite possible that such products launch in another country before US regulators make up their minds.
JPMorgan compared the prospect of a Bitcoin ETF with the first-ever gold-based ETF, SPDR Gold Shares.
“Today, the SPDR Gold Shares ETF is one of the biggest ETFs in the market with over $35 billion under management,” the bank said in its note.
It’s no surprise then that companies are itching to launch cryptocurrency-based ETFs. It is quite possible that the future brings a rush to explore ETFs in cryptocurrencies other than Bitcoin.