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Portfolio > Alternative Investments > Cryptocurrencies

Wating for a Bitcoin ETF? You Might Be Waiting Until 2022

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What You Need to Know

  • Ultimately the SEC will approve several Bitcoin ETFs, according to a panel of ETF experts at a Coinbase conference.
  • A Bitcoin ETF would allow advisors to add guardrails for clients along with ability to rebalance those assets
  • It would essentially make Bitcoin a portfolio asset for many more investors.

The Securities and Exchange Commission will approve a Bitcoin ETF but likely not until late this year or early 2022, according to a panel of ETF specialists at the Coinbase Consensus2021 virtual conference.

At least eight Bitcoin ETFs are pending before the SEC, which has rejected all previous filings, and several are already on a time clock for review, which can run as short as 45 days or as long as 240 days. A decision on the first one up for approval in the latest go-round — the VanEck Bitcoin Trust — was delayed until June 17, but the agency could postpone a decision again.

“I still expect the agency will issue further guidance … we’re going to get a round of comments, and requests for refiling again, which will restart the clock … toward the fall,” said Dave Nadig, chief investment officer and director of research at ETF Trends. “I don’t think the dates we have now…is the next ‘we have to hear something.’ Those have-to’s are never really have-to’s; the SEC could delay as long as it wants. They can throw people back to the starting gate at will.”

The SEC could even approve several ETFs at once, instead of one at a time, according Eric Balchunas, a Bloomberg Intelligence ETF analyst who moderated the session, and Nadig.

None of the four ETF specialists on the panel, including Balchunas, doubted the SEC would eventually approve a Bitcoin ETF and all highlighted the benefits of such a product.

The Benefits of a Bitcoin ETF

“We desperately need a crypto ETF,” said Nadig, noting there is danger in not recognizing the value of moving information and money across the divide between the crypto financial market and what he called the “national securitized markets,” which includes traditional financial assets like stocks, bonds and ETFs.

A Bitcoin ETF would provide “convenience with security,” said Nate Geraci, president of the ETF Store, an investment advisory firm specializing in ETFs for retail investors. Investors in a Bitcoin ETF don’t have to worry about losing the key to a private Bitcoin wallet or their crypto exchange getting hacked.

“They’re going to do this with us or without us,” added Geraci, referring to clients of financial advisors. “If we can help facilitate that through an ETF, have some guardrails in place, we can help them appropriately size their exposure and make sure it’s rebalanced in a disciplined manner.”

A Bitcoin ETF would make Bitcoin a “portfolio asset,” said Nadig. It would also be “the single biggest launch in the history of ETFs,” said Geraci.

The panelists expect the SEC will approve several Bitcoin ETFs, and total assets will range between $20 billion and $50 billion-plus in the first year.

Som Seif, the founder and CEO of Purpose Financial, which launched the first Bitcoin ETF to come to market — in Canada — expects the American market can handle that volume or more.

“The most important principle is that the pipes, the infrastructure supports that kind of demand, and there is liquidity in the background for this asset category,” he said, referencing the Grayscale Bitcoin Trust, which has more than $30 billion in assets.

“It’s going to be massive, It’s going to be bigger than gold,” said Balchunas, referring to the GLD, ETF which invests in gold, and has $63 billion in assets.


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