, 2 years ago

SEC denies Bitcoin ETF – Here is why you don’t have to care at all

The SEC granted approval to the first Bitcoin ETF in October 2021. However, this was not the ETF everybody was waiting for in the first place, because it was based on futures. Last Friday another ETF was waiting for approval, but the Security and Exchange Commission turned VanEcks Bitcoin ETF down. Why is the SEC doing this and why don’t you need to worry or care at all?

Spot vs. Futures

An ETF based on futures was granted but is considered quite a product because the fund doesn’t hold BTC in its portfolio. Instead, it makes use of futures contracts to get the same performance as Bitcoin. The reason everybody is waiting for an ETF that is replicating through the spot market is easy to see. The fund would be required to buy and hold Bitcoin.

It would also be required to hold a certain amount. With more investors buying shares of such a fund it would need to buy and hold more and more Bitcoin on the spot market. Many analysts are speculating that this could skyrocket the Bitcoin price. While this could be indeed the case, it is worth remembering that Bitcoin is not just an asset.

Bitcoin is a way to opt-out of the traditional banking system and allows any individual to gain sovereignty over its finances. And this leads us to the most pressing question.

What do we need a Bitcoin ETF for?

Of course, having an ETF is better than no product at all, right? But that is already the case. Those investors who are interested in such a product already have access. It doesn’t matter if it’s based on futures or holding Bitcoin bought on the spot market. They are looking for exposure to the Bitcoin price, but don’t like to get too involved.

But in both cases, investors are crippled, because they lack access to the new and groundbreaking Bitcoin network. There is nothing in between. You are either capable of withdrawing Bitcoin from an exchange on your own wallet or you are not.

Let’s say you are not interested in taking part in all the benefits this new technology has to offer. Even in this case you are most likely better off buying Bitcoin at a true Bitcoin exchange like LiteBit. The market is open all year, day and night with only a few exceptions, like when there is ongoing maintenance. Fees are not only cheaper as with most banks that offer to trade ETFs, but on most exchanges you only pay for the trading itself. Most funds ask for a maintenance fee holding assets for you, which seems especially pointless in the case of Bitcoin.

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