By Matthew Sullivan, CEO of QuantmRE
The crypto community is chomping at the bit for the SEC to approve an ETF for Bitcoin, and rightly so.
For the uninitiated, an ETF (exchange traded fund) is a common investment vehicle, an index fund which tracks various stock market indexes and trades like stocks. There are fixed-income funds, commodity funds, currency funds, real-estate funds, etc. You get the picture.
The SEC approving an ETF for Bitcoin would be a clear signal that it views Bitcoin as a legitimate asset and would have the following positive effects on financial markets:
- The ETF would act as a bridge between traditional institutional capital and the crypto world
- The ETF would provide an acceptable regulatory structure that would enable institutional investors to purchase shares in the ETF without the friction of having to use wallets and other technology barriers, which would lead to a significant demand for Bitcoin
- The ETF could become a large scale purchaser of Bitcoin and this type of fund would likely be replicated by other similar ETFs in other major financial jurisdictions, such as Europe