Getting Ready for a Bitcoin ETF
Originally published in Forbes CryptoAsset & Blockchain Advisor, May 2020
Today bitcoin futures are available for retail and institutional traders, but U.S. investors have limited options for investing directly in Bitcoin exchange-traded funds (ETFs). Let’s look back at the history of ETFs to see how Bitcoin ETFs could enable U.S. investors to invest directly, and what options are currently available.
Learning Form ETF History
In 1989, the first attempt at an ETF hit the American Stock Exchange. Following the success of John Bogle’s First Index Investment Trust in 1975 and index futures in 1982, the Index Participation Shares fund was set up to proxy an index fund of the S&P 500.
At the outset, investor interest was extremely high. However, a federal court in Chicago quickly found that Index Participation Shares functioned too much like futures contracts. The court ruled that the fund needed to be traded on a futures exchange to be legally viable. This ruling led to the launch of State Street’s S&P Trust ETF (SPY) in 1993, the first regulated ETF a.k.a. SPDR. Today, SPY is one of the best-rated ETFs with the greatest trading volume and more than $260 billion assets under management (AUM).
