The current state of Bitcoin & Cryptocurrency ETFs

Trakx
Trakx
Sep 6, 2018 · 3 min read

Why cryptocurrency ETFs?

Bitcoin Exchange Traded Funds or ETFs have been all over the news again recently after the United States Securities and Exchange Commission decided to delay its decision regarding the investment firm VanEck’s proposal of a bitcoin backed ETF for trading on CBOE and review nine recently rejected applications.

The most recent proposal to date is from Bitwise and they filed for a cryptocurrency ETF that would track not only Bitcoin, but a basket of 10 cryptocurrencies. At the moment, there have been more than 10 applications filed and while we have yet to see a successful proposal, the cryptocurrency community is enthusiastic that we will soon see a regulated ETF for these digital assets.

A cryptocurrency based ETF will cut down technical complexities in investing in bitcoin such as having the need to create multiple exchange accounts or managing and storing private keys. ETFs are marketable securities that track an index, commodity, or basket of assets. With the industry plagued by heavy volatility and scams, many investors would rather use a vehicle like an ETF to participate in the cryptocurrency space. With such tool, they would be able to benefit from the great opportunities that crypto present without having to run the risk of actually owning them. Crypto ETFs bridges the gap and makes investing more accessible for everyone. As more investors come in, scepticism furthers goes down thus creating more demand for the asset.

After many tentative, Crypto ETFs still have to get accepted by regulators

Despite the high interest of investors for such product, the SEC has kept rejecting ETF applications in the crypto industry. In fact, on August 22, the SEC has rejected a total of nine applications to list various Bitcoin ETFs from three different applications. The disapprovals came one day ahead of the anticipated deadline, August 23, stipulated for a pair of Bitcoin ETFs that had been submitted by ProShares in conjunction with the NYSE Arca. The SEC also rejected a further seven proposed ETFs alongside the ProShares pair — these being five further proposed ETFs from Direxion, also for listing on NYSE Arca — and two proposals from GraniteShares, for listing on CBOE.

However, shortly after these recent rejections, the SEC released letters stating their intention to review this decision, without specifying any deadline for the decision. It is still unclear whether the SEC, wary of potential fraud and manipulations, will give the go-ahead for Bitcoin and crypto ETFs.

What are the alternatives for crypto investors?

Although it is not possible to own a Bitcoin or cryptocurrency ETF, asset-backed tokens, such as Trakx Crypto Traded Indices, offer an interesting alternative to cryptocurrency investors. Just as ETFs, their goal is to replicate the performance of a stated index. However, we do not plan on offering Bitcoin Crypto Traded Index, but rather a large panel of truly useful CTIs, hoping to fit any kind of investment strategy.

Our CTIs will be strictly regulated securities and we will apply all the good practices in terms of security, starting with the cold-storage of their reserves. With Trakx, users will be able to trade onto the platform digital tokens that are positively or negatively correlated to the tracked underlying crypto assets. Trakx will progressively offer a wide panel of Crypto Traded Indices which will include, non-exhaustively, inverse, levered, basket and stablecoins.

The illustration below offers a quick overview of the various products that we will launch. Although the first launches may be decided by Trakx, we intend to involve the community as much as possible in our product development. For example, TKX token holders, among all the benefits of owning tokens, will also have the opportunity to vote on what product should be launched next.

Trakx is building a one-stop shop for Crypto Traded Indices. Discover more about our project on our website and social media channels, such as Telegram http://t.me/trakx_io.

Trakx

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Trakx

One stop shop for Crypto Traded Indices

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