The BTC ETF race is over, and the winner is Swiss-based Wisdom Tree Investments (WETF.Q), which has become the first established ETF provider to enter the cryptocurrency space after launching a bitcoin exchange-traded product (ETP).
Mostly, the race for the first ETF has played out on North American soil, but given Switzerland’s unique regulatory climate, which differs from everywhere else in Europe and North America, it isn’t much of a surprise that ETFs opened for trading in that country first. The WisdomTree Bitcoin ETP (BTCW) is listed on the SIX Swiss Exchange with a total expense ratio of 0.95%, the cheapest crypto ETP on the market.
“We have seen enough to believe that digital assets, like bitcoin, are not a passing trend and can play a role in portfolios. We see many parallels between the cryptocurrency space and commodities,” said Alexis Marinof, head of Europe at WisdomTree.
WisdomTree’s target is professional investors, but that will change if they can manage the regulatory environment. BTCW will let invasters access bitcoin without the requirement of actually holding cryptocurrency, handle private keys or interact with blockchain infrastructure. That’s no hot or cold wallet, no misplacing your 2FA password, and no dealing with potentially shady exchanges. BTCW wants to be your one-stop shop for all of your bitcoin needs. The company is handling the custodianship through a third-party agency who maintains cold storage facilities and specializes in physical and digital security procedures.
“We have developed a solution which addresses the difficulties investors face in accessing digital assets and are bridging the gap between the underlying decentralised online blockchain technology and traditional investment structures,” said Rafi Aviav, head of product development, capital markets and technology at WisdomTree.
The solution is reasonably elegant, even if it won’t be enough for the die-hard cryptocurrency enthusiast. The company is actually looking to tokenize Bitcoin by purchasing the cryptocurrency, and then creating smaller sized shares for trading on the exchange. That way any would-be investor can buy in tranches of a bitcoin, just like they would on an exchange, but without incurring the associated risks.
“Bitcoin is here to stay. The cryptocurrency space has the potential to be very disruptive. There is a lack of connectivity between the traditional investment universe and cryptocurrencies. We want to bring these two worlds closer together,” said Jason Guthrie, head of capital markets, Europe, at WisdomTree. Guthrie also said that the company intended on not limiting their options to Bitcoin in the future.
The United States
Meanwhile, on the other side of the pond, the United States continues to drag its heels with the essential recognition of Bitcoin and other cryptocurrencies. In October, the SEC shot down a petition put forth by Bitwise Asset Management for the first North American ETF.
The SEC said it has disapproved the proposal because bitcoin and its underlying blockchain technology does not meet the regulator’s requirements for preventing fraudulent and manipulative acts, and this has been the SEC’s standard operating procedure since denying the Winklevoss Twins the ability to create a Bitcoin ETF.
“I don’t believe the SEC will approve a bitcoin ETF. The SEC just finalised its ETF authorisation process which allows it to focus on more exotic ETFs. I think we will see the SEC will look more on bringing semi-transparent ETFs to the market and I think we will comfortably be sitting here this time next year still questioning a bitcoin ETF.”
The only question that remains is that if the United States were so secure in their position, then why are they being so obstinate about this?