US approves ‘‘bitcoin lite’’ ETFs

published 15 October 2021

US regulators are still on the fence about cryptocurrencies. The US Securities and Exchange Commission (SEC) has begun to approve bitcoin-themed exchange-traded funds (ETFs), but with important caveats. Last week the SEC gave the nod to the Volt Crypto Industry Revolution and Tech ETF, says Hassan Maishera on FXEmpire. The ETF will offer investors exposure to some of the leading crypto firms on the market, such as Nasdaq-listed MicroStrategy. But the SEC has still yet to approve any cryptocurrency ETF “that seeks to directly track the performance of bitcoin”.

Investors use ETFs to track the performance of assets such as gold or equities, says Nathan Reiff on Investopedia. For all the hype, bitcoin remains difficult to invest in, requiring investors to turn to specialised exchanges and deal with “complex storage and security procedures”. A bitcoin ETF would allow a much larger pool of investors to buy bitcoin in the same way and on the same platforms where they trade stocks.

The approval of “bitcoin lite” ETFs such as Volt is a “sop” to investors, says Steve Johnson in the Financial Times. US regulators are still refusing to approve any ETFs “that invest in the cryptocurrency itself”, even though similar vehicles have already been launched in Canada and parts of Europe. SEC chair, Gary Gensler, has called cryptocurrencies a “wild west” and an “asset class…rife with fraud, scams and abuse”.

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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.