America has its eyes glued on the SEC, awaiting the long-awaited decision on a Bitcoin ETF. The country and crypto world wants an American Bitcoin ETF badly, so every time the SEC stalls or declines a proposal the crypto markets take a big hit. Europe has had its own Bitcoin ETF for quite some time, along with an array of ETNs. Originally launched in 2015, the XBT Provider AB Bitcoin ETN was only denominated in Swedish Krona or Euros, but has now been listed in USD. This means that US investors can now get their hands on a regulated Bitcoin ETN.
What is the Difference Between an ETF and an ETN?
Simply put, they are two very similar financial vehicles. They both have low fees and track an underlying asset, however an ETN is a more unsecured – similar to a bond. That means that if the provider was to go bust or cease to exist, investors would lose everything. An ETF is slightly more desirable as it holds the assets that it tracks, meaning if the provider goes bust, the underlying assets are still there and investors will receive their portion back. In addition to this, an ETN is slightly more tax friendly and only triggers payable taxes once it is sold.
A Door Opens for American Investors
This new currency listing means that American platforms can list the Bitcoin ETN on their platform. American’s can subsequently start to invest into Bitcoin without the added hassle and risk of using a crypto exchange. Within the next few days we can expect to see American trading platforms adding the USD denominated ETN, so expect the US cash to flow.
You Don’t Own Bitcoin with ETF or ETN
Unfortunately, holders of a Bitcoin ETF or ETN don’t actually have any Bitcoin held in their name. The money is simply collected into a pool, the company then buys Bitcoin and keeps a record of what percentage of the total Bitcoin has been purchased with your money. You can’t withdraw your Bitcoin from this type of investment, making it rather similar to Skrill’s app. With the Skrill app, users also don’t own the Bitcoin they purchase, but instead a unit that is linked directly to the price of Bitcoin.
For some investors, using a crypto exchange is either too difficult or not permitted by the fund. This new USD denominated offering bridges the gap between traditional financial vehicles and the crypto world. Traditional investors can now gain access to the crypto world and markets through ETFs and ETNs just like these. This means it’s now easier than ever for a novice crypto-investor to get his or her hands on some Bitcoin action using a stockbroker or investment advisor.