Under the ticker CXBTF, Bitcoin Tracker One (SEK) will now be quoted in the United States with US dollars. Unlike a regular ETF, it will act as an open-end unsecured debt note. The regulators of the United States have been cautious about releasing an actual Bitcoin ETF largely due to the concerns about liquidity and manipulation. Now, the release of the Bitcoin ETN shall act as a soft opening towards the eventual approval of the Bitcoin ETF.
Released in 2015, in Sweden’s capital of Stockholm, Bitcoin Tracker One was the first bitcoin-based security on the NASDAQ/OMX regulated exchange. These securities trade like any other instrument on the NASDAQ exchange located in Sweden, Europe, and the United States. The tracker synthetically tracks the performance of BTC on the market for no fee, providing exposure through the non-equity linked certificate securities.
In 2018, Bitcoin Tracker One sank by 51% following the wide-scale collapse of many major cryptocurrencies’ prices. Although, it has managed to stay afloat and avoid total price collapse, given the current bearish market.
Ryan Radloff from the parent company of the ETN, CoinShares Holdings noted that this is a huge step towards accessibility for Bitcoin. The release of the ETN has resulted in a large flow of investments from United States traders who have anticipated the release for several months.
22/ When institutions gain more access, they in turn create more access points for retail investors who are uncomfortable leaving their traditional financial surroundings or have capital "locked up" in the legacy financial system.
— Ryan Radloff (@RyanRadloff) August 17, 2018
The gradual spread and adoption of ETN across the States will most likely be an influential factor for the United States Securities and Exchange Commision (SEC) decision regarding a Bitcoin-based exchange-traded fund. “https://kryptomoney.com/bitcoin-price-drops-as-us-sec-postpones-bitcoin-etf-decision/” target=”_blank” rel=”noopener noreferrer”>The decision has already been pushed to September 30 at the earliest, further delays are expected as SEC contemplates the submitted proposals.
One of the two major differences is that ETN posses a higher credit risk to investors of an exchange over an ETF. It is due to the fact that investors do not actually control the assets that they are trading, in case that the institution for the ETN could go bankrupt the investor will lose the affected assets.
The second difference is taxation, only the difference between the price at sale and purchase is taxable for ETN’s, providing greater long-term gains in the capital. Whereas ETF’s are subject to much greater taxation since within the fund the ETF directly buys and sells assets and thus creates short-term capital gain taxes, which are placed at a much higher tax rate than the ETN.
Despite the critics and postponements, several other cryptocurrencies are likely to assemble in favor behind the decision for a US-based Bitcoin ETF. However, the decision is anticipated in 2019 rather than this September.
Read more: Crypto Influencer Andreas Antonopoulos says Bitcoin ETF is a Terrible Idea
Arshmeet Hora
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