Are Bitcoin ETFs coming soon?

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Cryptocurrencies are unregulated in the UK. Capital Gains Tax or other taxes may apply. The value of investments is variable and can go down as well as up.

New institutions submit Bitcoin Spot ETF filings

Source(s): 1

The race for Bitcoin Spot ETFs is hotting up.

• In last weeks edition of Crypto Market Watch, BlackRock had filed for a Bitcoin ETF.
• A few days after which they were joined by Invesco, WisdomTree and Valkyrie who also submitted filings for Bitcoin ETFs to the Securities and Exchange Commission (SEC) for their respective cryptocurrency-linked products.
• WisdomTree's filing is for the WisdomTree Bitcoin Trust, while Invesco seeks approval for the Invesco Galaxy Bitcoin ETF. Both firms have previously faced rejection from the SEC in their attempts to launch a bitcoin ETF.
• In 2021, Invesco initially filed for a spot bitcoin ETF in collaboration with Galaxy Digital, and WisdomTree also made a previous filing for a similar product.
• The Securities and Exchange Commission (SEC) has only approved bitcoin ETFs linked to U.S.-traded futures, citing the lack of robust market surveillance as a reason for not approving a bitcoin spot ETF.
• Invesco's filing highlighted that the U.S. is unique among major markets by lacking a vehicle for spot exposure, contrasting with other countries like Canada and Brazil.

 

What would this mean for the market?

• If the SEC approve any of the applications, it would be ground-breaking for the industry as there has not been a spot bitcoin ETF approved to date and could lead to a whole new category of investors into the Crypto market.
• Approval of a bitcoin spot ETF would provide a regulated and accessible investment vehicle for retail and institutional investors to gain exposure to bitcoin. This could potentially attract a broader range of investors who may have been hesitant to invest directly in cryptocurrencies.
• Bloomberg Intelligence ETF analyst, James Seyffart, examines the potential impact of BlackRock's spot bitcoin ETF application, highlighting its significance as the ultimate gateway to bitcoin exposure in traditional financial markets.
• Seyffart says that BlackRock's spot bitcoin ETF application is the "holy grail of bitcoin exposure in the TradFi markets."

 

Charles Schwab, Fidelity and Citadel-backed crypto exchange, EDX Markets goes live

Source(s): 1

EDX will offer trading in four cryptocurrencies: bitcoin, ether, litecoin and bitcoin cash.

• EDX Markets, supported by Citadel Securities, Fidelity Investments, and Charles Schwab, is set to launch today as a non-custodial cryptocurrency exchange offering trading in bitcoin, ether, litecoin, and bitcoin cash.
• Unlike traditional exchanges, EDX operates as a platform for executing trades between cryptocurrencies and fiat currencies but does not directly handle customers' digital assets.
• EDX plans to establish a clearinghouse for trade settlement in the future but currently relies on third-party banks and a crypto custodian for holding customer assets, prioritizing security and avoiding conflicts of interest.
• While catering to retail brokerages, EDX does not directly serve individual investors and is backed by Paradigm, Sequoia Capital, Virtu Financial, and new investors from its second funding round, including Miami International Holdings and affiliates of proprietary trading firms DV Trading, GTS, GSR, and Hudson River Trading.

 

What would this mean for the market?

• The backing of major financial players like Citadel Securities, Fidelity Investments, and Charles Schwab, along with other prominent investors, signals growing institutional interest and support for the cryptocurrency market. This participation from established financial institutions lends credibility and legitimacy to the sector.
• EDX's non-custodial model and focus on traditional finance standards aim to address concerns over security and customer asset protection. By leveraging third-party banks and a crypto custodian, EDX aims to provide a more robust and secure trading environment. This development contributes to the overall improvement of market infrastructure, which is essential for attracting institutional investors and broader market participation.
• Regulatory Implications: Despite recent regulatory challenges faced by major cryptocurrency exchanges, the launch of EDX demonstrates ongoing innovation and progress in the industry. It showcases efforts to establish compliant and regulated platforms, which can potentially influence regulators' perception of the cryptocurrency market and pave the way for greater regulatory clarity and acceptance.