Jan. 17, 2024 at 9:40 am

US regulators back Bitcoin ETFs: effect on UK crypto fans

January 17, 2024no commentNo tags

US regulators have approved the country’s first investment products set up to directly track the price of Bitcoin.

The US Securities and Exchange Commission (SEC) last week approved the launch of 11 exchange traded funds (ETFs), which follow the price of Bitcoin, and are known as spot ETFs.

The SEC has previously opposed these products, explained MoneyWeek, “claiming the asset is open to fraud and manipulation” but it has given the go-ahead after courts queried its opposition.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week’s Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Gary Gensler, chairman of the SEC, remains cautious though. He said that while listings from investment providers such as BlackRock, Fidelity and Grayscale were approved, “investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto”.

What is Bitcoin?

Bitcoin is the world’s oldest and best-known cryptocurrency.

It is a digital token that was launched in 2008 by someone calling themselves Satoshi Nakamoto, explained BBC News, and “remains the most valuable and famous”.

The price of Bitcoin and other cryptocurrencies is very volatile though, depending on supply, demand and sentiment. The Bitcoin price hit $70,000 or £50,000 in 2021, before falling to $16,000 in 2022 “as scandals shook the industry”, but in recent months it has risen “steadily” to around $44,000.

What is a Bitcoin ETF?

An ETF aims to replicate the performance of a broad index such as the FTSE 100 or individual assets such as shares or bonds.

A Bitcoin ETF gives investors a “regulated way to gain exposure without needing to hold it directly”, said The Times.

Cryptocurrencies such as Bitcoin are unregulated, so there is no investor protection if a trading platform collapses or your money is stolen.

A Bitcoin ETF gives you exposure to the cryptocurrency’s “huge swings in value”, added The Times, but in theory you are still protected by the Financial Services Compensation Scheme if the investment firm behind the ETF were to fail.

The SEC approval doesn’t remove the volatility of Bitcoin though, added MoneyWeek, as the price is “still subject to wild price swings depending on sentiment and there are risks of big losses”.

Who can invest in a Bitcoin ETF?

The latest Bitcoin ETFs are only available to US investors.

There would be “regulatory hurdles” to selling a Bitcoin ETF to UK investors, said Financial News. US-based ETFS are “not permitted” to be sold to UK investors, so asset managers would have to launch “specifically tailored” products for the UK or European market.

The Financial Conduct Authority (FCA) has already “cracked down” on crypto marketing and banned the sale of crypto-backed exchange traded products to UK investors, added ThisIsMoney, and has “made it clear” that it thinks there are risks that come with cryptocurrency investing. This makes the path to any UK approval “a long one”.

There are other ways for UK crypto fans to get exposure to Bitcoin.

One option is to invest directly in Bitcoin through an FCA-regulated platform, said Morningstar, or “for those feeling somewhat more cautious”, you could buy shares of companies involved or exposed to cryptocurrency mining or blockchain.

Existing crypto investors may also benefit from more money going into Bitcoin, added MoneyWeek, “but it also risks making the value more volatile”.

Source link

add a comment

US regulators back Bitcoin ETFs: effect on UK crypto fans

Leave a Response Cancel reply

Russian Lawmakers Approve Cryptocurrency Use in International Trade

US job openings fall marginally, consumers less upbeat on the labor market By Reuters

Elegance, Empowerment and Polo: The Impactful Legacy of Access Bank UK Polo

UK tourists in Madrid warned ‘don’t spend money’ and ‘stay out of restaurants’

Russian Lawmakers Approve Cryptocurrency Use in International Trade

US job openings fall marginally, consumers less upbeat on the labor market By Reuters

Elegance, Empowerment and Polo: The Impactful Legacy of Access Bank UK Polo

UK tourists in Madrid warned ‘don’t spend money’ and ‘stay out of restaurants’

Russian Lawmakers Approve Cryptocurrency Use in International Trade

Revised UK GDP figures put the economy at risk of recession

‘We don’t plan to be Netflix fodder’ – UK crypto firm says Central Bank has found ‘sweet spot’ for currency trade

Flight attendant reveals his top tips for ‘skiplagging’ WITHOUT getting caught after 17-year-old was banned by United for using money-saving travel tactic

Top 10 Strongest Currencies In The World In 2023 – Forbes Advisor INDIA

Popular posts

[Event] Crypto and Digital Asset Fraud & Recovery – April 25th – 26th, South Kensington, London, United Kingdom | American Conference Institute (ACI)

My top 5 dividend shares for 2023!

Why Indian regulators have stood up to an overbearing Europe

Taxes fund disaster rebuilding cycle

Crypto Community Demands Investigation Into Gensler-FTX Ties

Sections

Contact Info

Leave a Response Cancel reply

You Might Also Like