Do any ETFs purchase Bitcoins? Is that scenario possible?

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Is there any ETF that allows for the purchase of Bitcoins?

Is this possible?


More info...

An ETF is like a stock that is publicly traded on the stock market, and it can represent:

  • A collection of stocks
  • An asset, like gold or silver
  • A position, such as a derivative on an index like SPX$

halfbit

Posted 2013-02-12T00:05:24.933

Reputation: 12 166

Also see http://bitcoin.stackexchange.com/q/13971/1475

– Pacerier – 2013-10-22T06:20:13.807

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In case others don't know what an ETC is either... http://en.wikipedia.org/wiki/Exchange-traded_fund

– Highly Irregular – 2013-02-12T02:10:02.100

Answers

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A Bitcoin Trust fund registration statement was filed today with the Securities and Exchange Commission. If approved it would be the first Bitcoin ETF you can trade in the market.

UPDATE: The Bitcoin ETF was not approved.

As discussed further below, the Commission is disapproving this proposed rule change because it does not find the proposal to be consistent with Section 6(b)(5) of the Exchange Act, which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest. The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.

Encore PTL

Posted 2013-02-12T00:05:24.933

Reputation: 166

1So was it approved? – Pacerier – 2013-10-20T18:28:59.830

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There is currently no ETF that allows the trading of bitcoins. The idea of a bitcoin ETF has been suggested before, however nobody has set one up as of yet. The main reason being that to do so would be very complex, requiring a large amount of money and legal advice.

Endgame

Posted 2013-02-12T00:05:24.933

Reputation: 338

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As far as I know, there is no such ETF as of today. However, the recent spike is likely to spark even more the interest of the best ETFs issuers out there (Vanguard, iShares...).

It is not complex at all, actually it would be very cheap compared to setting up traditional ETFs. The fund would just have to keep bitcoins in an offline wallet held in a secure vault somewhere, just as if it were gold or any other precious metal.

Now given the current market volatility of bitcoin vs. other currencies, it could be considered as too dangerous marketing-wise to be offered to retail investors (even if it would be a less complex product than for example leveraged ETFs).

More importantly, at this stage the key preventing factor could be the low liquidity available on the various exchanges (Mt. Gox and others): bitcoins are nowhere as liquid as other currencies, thus transaction costs in terms of market impact could be astonishingly high and significantly affect the fund's performance.

That being said, I do believe this will eventually happen, sooner rather than later, either with bitcoin or with an alternate equivalent currency. Then, you can also expect future and option markets to flourish (for hedging purposes).

Erwin Mayer

Posted 2013-02-12T00:05:24.933

Reputation: 175