Looking for the adrenaline rush of investing in Bitcoin but without the bother of crypto-exchanges and digital wallets? An exchange-traded fund might do the trick. For years U.S. regulators have blocked their development, even as similar products traded in Europe and Canada. But the Securities and Exchange Commission’s worries about volatility, potential manipulation and thin liquidity appear to have faded, in light of a new approach -- and a new SEC chairman. The first ETF tracking Bitcoin futures started trading Oct. 19, in a landmark event for the $6.8 trillion ETF industry and for the world of cryptocurrencies.
ETFs are part of a broader family known as exchange-traded products, though people frequently use “ETFs” to refer to all of them since they are by far the largest and most popular category. There are two types of ETFs that issuers are trying to launch: one that physically holds Bitcoin and one that invests in Bitcoin futures. While some say a fund holding Bitcoin would be preferred by investors, the Securities and Exchange Commission favors the futures approach, since that kind of fund can operate under the same rules that mutual funds follow, which SEC Chairman Gary Gensler says offer greater investor protections.