“With global BitCoin exposure north of $2 billion and global currencies on the verge of a valuation war one has to wonder how this new asset is going to make its way into our lives,” said Chris Hempstead, director of ETF execution services at WallachBeth Capital.
Nevertheless, Hempstead does not believe Bitcoins can be structured to fit the ETF vehicle. For instance, if a Bitcoin ETF were to act like another currency offering, it would require futures contracts.
“You’d need securities that are based in Bitcoins,” Hempstead said. “Since the Bitcoin is unregulated and no futures exist, an ETF is not possible today.”
Nevertheless, there are some fervent supporters who are trying to bring Bitcoins to Wall Street. For instance, Peter Vessenes, CEO of Coinlab, is trying to develop a safe way for U.S. and Canadian investors to do large block trades of Bitcoins and protect them from loss, reports Teri Buhl for Bitcoin Magazine. Vessenes has argued that whoever can figure out a way to store Bitcoins in large trading blocks can help clients feel safe and entice large money investors into the digital currency.
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.