A bitcoin exchange traded fund still does not exist in the U.S., but when such a product or products do become available, evidence suggests those funds will quickly gather assets.
XBT Provider, a unit of CoinShares, offers bitcoin and ethereum-based exchange traded notes denominated in euros and Swedish krona that trade in Stockholm. Those products are fairly new and proving successful in terms of adding assets.
“According to Eric Balchunas, a senior ETF Analyst for Bloomberg, Sweden’s Bitcoin exchange-traded fund (ETN) is bigger than around 80 percent of US exchange-traded funds (ETFs),” reports CoinTelegraph.com.
At the end of November, the Stockholm-listed bitcoin ETN had $700 million in assets under management, a massive number for an exchange traded product trading in Sweden.
An ETN is a bond security. A issuing financial institution promises to pay ETN investors a return on a benchmark index before the ETN matures. Additionally, some ETNs provide current distributions to investors. Since ETNs are a type of debt security, investors will have to watch out for the credit worthiness of the issuing bank.
ETNs provide access to hard-to-reach asset classes and sectors, such as master limited partnerships, business development corporations and commodities, among others. Investors realize gains or losses upon the sale, maturity or repurchase by the issuer of the ETNs. The ETN structure provides a tax-efficient way to invest in a range of asset classes.
“XBT Provider, the Bitcoin ETN listed on Nordic Nasdaq, a major Swedish stock exchange, is currently one of the three methods of investing in Bitcoin through a strictly regulated market, apart from Grayscale Investment’s Bitcoin Investment Fund (GBTC) and LedgerX’s US Commodities and Futures Trading Commission (CFTC)-approved Bitcoin derivatives, options and futures exchange,” according to CoinTelegraph.
On Wednesday, it was revealed that CBOE will launch bitcoin futures on December 10th. CME Group and Nasdaq Inc. are also looking to launch futures on the cryptocurrency. A successful bitcoin futures market in the U.S. is seen as potentially green-lighting the long awaited debut of bitcoin ETFs in the world’s largest ETF market.
For more information on the cryptocurrency market, visit our Bitcoin category.