An alternative to Bitcoin ETFs – Securities.io
Exchange Traded Funds (ETFs) are a type of investment fund that trades on an exchange just like the common shares of a company. ETFs can be created for almost any type of investment, including stocks, bonds, commodities, and even real estate.
The main difference between ETFs and mutual funds is that ETFs trade on the stock exchange, while mutual funds trade through banks or brokerage houses. Since investors can buy and sell these ETFs at will, a Bitcoin ETF would make it much easier for retail and institutional investors to gain exposure to cryptoassets without having to store their coins themselves. This accessibility and assurance make them more suitable and attractive to traditional institutions as well as to individual investors.
What is a Bitcoin ETF?
In short, a Bitcoin ETF provides stock market investors with exposure to a basket of cryptos, including Bitcoin exposure. Bitcoin ETFs would be a valuable tool for investors with a high risk, high return investment objective.
One of the main reasons Bitcoin ETFs are because they make investing in crypto as easy as investing in stocks or mutual funds.
The second reason is custody. With the custody solutions provided by an investment vehicle such as an ETF, you can securely store your coins safe from hackers while accessing them whenever needed, giving you control over your assets and your safety at the same time. Traditionally, investors have had to maintain their own digital portfolios and manage the associated safety factors.
Finally, Bitcoin ETFs would offer investors alternative exposure to the market without paying exorbitant fees. With the introduction of Bitcoin ETFs, ordinary people around the world have the opportunity to get involved in this exciting new financial technology space.
The latest news with Bitcoin ETFs
There are currently no Bitcoin ETFs approved by the Securities and Exchange Commission. In other words, no American exchange offers a Bitcoin ETF.
That said, as ETF.com reports, there is currently 12 active Bitcoin ETF applications in the pipeline, including by VanEck, Invesco, Valkyrie, ProShares and others. Each applicant has submitted a prospectus for information purposes for the purpose of being approved under the SEC’s view on digital assets.
There is also the Grayscale Bitcoin Trust (GBTC), the issuer of which aims to convert to an ETF once it is authorized to do so.
All active deposits were deposited this year.
That said, regulators continue to block the approval of any ETF, delaying any potential ETF launch.
The SEC has already made it clear that it has no plans to approve crypto-based ETFs, including Bitcoin, yet. This rejection is mainly due to the vulnerability of crypto to volatility and price manipulation and the fact that foreign exchanges do not offer the same level of protection as the US stock market. As long as the price of Bitcoin remains volatile and Bitcoin exchange platforms remain risky, it is not known when a Bitcoin ETF will be approved.
That said, Bloomberg reports that current SEC Chairman Gary Gensler has signaled a lane upon approval of the Bitcoin ETF. Additionally, blockchain market conditions have improved and crypto is now seen as a legitimate alternative asset class by many investors.
What is the best alternative to a Bitcoin ETF?
If you want to expose yourself to Bitcoin without having to store and trade your coins yourself, then a Bitcoin IRA (aka Crypto IRA) may be more appropriate.
A Bitcoin Individual Retirement Account (IRA) is an account that allows individuals to save money tax-free for retirement. IRAs allow investors to invest in a wide variety of assets, and with iTrustCapital, you can invest in cryptocurrency and gold in your IRA.
Like any other type of IRA account, your investments are immune to taxable events. All gains made in a Traditional, Simple, or SEP-IRA are tax-deferred until the funds are withdrawn. Gains made in a Roth IRA are tax exempt as long as no funds are withdrawn before age 59 and a half.
What are the advantages of a Bitcoin IRA?
The main advantage of a Bitcoin IRA is that it is now available through iTrustCapital, unlike Bitcoin ETFs, which are still pending SEC approval. Once your contributions have been paid and processed, you have increasing access list of crypto-currencies.
Another benefit of iTrustCapital’s Bitcoin IRA is that it offers greater security. The cryptocurrencies on their platform are held in cold room on secure SOC2 compliant servers owned by custodian partners.
Unlike regular crypto accounts, where gains made are subject to capital gains or income tax, gains from Bitcoin IRAs are immune to taxable events.
Furthermore, iTrustCapitals trading fees are clearly marked and are low cost – with just 1% fees on crypto transactions. This is in stark contrast to other Bitcoin IRA companies, which charge up to 15% transaction fees.
In conclusion, a Bitcoin IRA offers greater control and tax benefits than directly buying cryptos on an exchange. Since Bitcoin ETFs aren’t available and wouldn’t offer the same tax benefits anyway, a Bitcoin IRA is an obvious solution.