Navigating Spot Bitcoin ETFs in the US: What You Need To Know
In 2013 an entity affiliated with the Winklevoss twins sent the first application to The United States Securities and Exchange Commission (SEC) to create a spot Bitcoin (BTC) exchange-traded fund (ETF). The SEC officially approved spot Bitcoin ETFs on Jan. 10 this year.
It has taken over 10 years for spot Bitcoin ETFs to be approved in the US, resulting in a new-found interest in ETFs. Many individuals are now wondering what an ETF is and how the financial product can be used to buy Bitcoin.
Yesha Yadav, professor of law and associate dean at Vanderbilt Law School, told Cryptonews that an ETF has rapidly come to represent a popular and versatile investment innovation within securities markets. According to Yadav, the basics behind ETFs are fairly straightforward. She said:
“In an ETF, investors put their money into a fund in return for shares in this fund. Returns on these shares are determined by particular products that a fund tracks – such as basket of stocks, bonds, certain commodities, or even a particular investment strategy. For example, a bond ETF will deliver returns to fundholders based on the interest income being generated by its basket of bonds.”
Yadav added that the major innovation behind an ETF, which distinguishes it from a typical mutual fund, is that an ETF’s shares are traded on a stock exchange like a normal stock. “This helps make ETFs very attractive to investors who can move in-and-out of ETF shares smoothly and generally at relatively low cost,” said Yadav. She further remarked that because ETFs are traded like stocks, they are regulated by the SEC.
This is important to point out, as both retail and institutional US investors for the first time have access to regulated Bitcoin. Moreover, because
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