Why the world needs a spot Bitcoin ETF in the US: 21Shares CEO explains

Published at: May 12, 2022

Despite the growing adoption of various cryptocurrency exchange-traded funds (ETFs) all over the world, the global trading community continues to ask one question: When will a spot Bitcoin (BTC) ETF go live in the United States?

According to some ETF analysts, a spot Bitcoin ETF could become real in mid-2023, following years of rejection by the U.S. Securities and Exchange Commission (SEC). Despite the SEC’s apparent unwillingness to allow such a product, industry players like Grayscale continue to actively push for a spot BTC ETF.

There are a decent number of reasons why a potential approval of a spot Bitcoin ETF by the SEC remains one of the most anticipated events in the community.

21Shares CEO Hany Rashwan believes that a spot Bitcoin ETF would open up the crypto market to institutional and retail investors who are currently excluded from participating in the digital asset space.

“On the institutional front, investors are excluded due to investment restrictions and regulatory uncertainty,” the CEO told Cointelegraph in an interview.

“For retail investors who are less tech-savvy, the main hurdles of investing directly into crypto include creating a wallet and trading on exchanges and platforms they are not familiar with. Accessing crypto by investing in an ETF would solve these problems,” Rashwan said.

He pointed out that the new asset class is associated with certain risks, but “This is exactly the same for other products.”

One of the key differences between holding cryptocurrencies versus crypto ETFs is that investors can buy and sell the ETF via a normal bank or broker into existing investment or trading portfolios, according to 21Shares CEO. “You don’t need to create new accounts or wallets to hold the tokens,” Rashwan noted.

Total assets invested in crypto ETFs hit $16.3 billion

While the U.S. SEC has not yet approved any pure Bitcoin ETF, such investment products have been growing increasingly popular in other countries. Canada debuted its first-ever Bitcoin ETF, the Purpose Bitcoin ETF, in February 2021, becoming one of the first countries in the world to adopt a spot BTC ETF.

On May 12, Australia is expected to start trading three new spot cryptocurrency ETFs, including a BTC ETF from Cosmos Asset Management as well as BTC and Ether (ETH) ETFs from 21Shares.

Apart from pure asset-based ETFs, there is also a huge variety of ETFs linked to asset derivatives like futures or contracts combining stocks of major companies in the crypto industry.

Crypto ETFs have been growing increasingly popular, with total assets invested in crypto ETFs and exchange-traded products (ETP) hitting $16.28 billion by the end of Q1, according to data compiled by the ETF research firm ETFGI.

“We firmly believe that this growth will continue as more markets open up to crypto and Europe has been at the forefront of crypto ETF innovation and adoption,” 21Shares CEO stated, adding:

“The main lessons learned are that more and more investors regard an allocation into crypto as an integral part of portfolio diversification and that they prefer to do this with ETFs for the above mentioned reasons — ease of access, cost-efficiency and transparency.”

Since debuting one of its first crypto ETPs in 2018, 21Shares has launched a total of 31 crypto ETPs so far, with listings spanning major stock exchanges in Frankfurt, Zurich, Paris and Amsterdam. The company has also attempted to launch a spot Bitcoin ETF in the United States, filing with the SEC for the ETF with Ark Investment Management in June 2021. The SEC officially disapproved the application for the ETF on March 31.