‘A Big Win for Bitcoin’: U.S. Investors Tired of Waiting for a Bitcoin ETF Now Have Easy Access to Something Almost As Good

Siamak Masnavi

On Wednesday (15 August 2018), an "F share" (ticker: CXBTF) became available for "Bitcoin Tracker One", an exchange-traded note (ETN) that tracks Bitcoin (BTC/USD), and is issued by Swedish company "XBT Provider", a wholly-owned subsidiary of UK company Global Advisors (Holdings) Limited.  

This Bitcoin ETN trades on Nasdaq Stockholm (Stockholm Stock Exchange). Although this is a non-U.S. security, being available as a F share (quoted in USD) makes it more accessible to U.S. brokerage/retirement accounts.

According to Bloomberg, which announced this news, Ryan Radloff, the CEO of CoinShares (Holdings) Limited, the company that holds all the shares in the capital of XBT Provider (the issuer of "Bitcoin Tracker One"), explained why this news was significant:

“Everyone that’s investing in dollars can now get exposure to these products, whereas before, they were only available in euros or Swedish krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”

Although some people may see this product as being very similar to Grayscale Bitcoin Investment Trust (ticker: GBTC), which also offers exposure to Bitcoin, the latter has lower liquidity and is more expensive (according to Seeking Alpha, a single share of GBTC trades roughly 50% over the price we would expect from the underlying asset).

Radloff agrees: "I do see this as a competitive product. Our products historically have not traded at a premium and are liquid.” 

Thomas Lee, Fundstrat Global Advisor's Head of Research, took to Twitter to explain why he was excited by this news:

According to this ETN's Fact Sheet, it first started trading on the Nasdaq Stockholm exchange 18 May 2015. Much more detailed information about the product is available via the 2018 Prospectus.

If you look up CXBTF via a U.S. brokerage account or a market data provider such as ADVFN, you will see a quote that looks something like this:

CXBTF.png

On 17 January 2018, a CNBC article titled "What the US can learn from Sweden about how to launch a bitcoin fund" explained what was special about this ETN:

"An ETN is an unsecured debt instrument that promises to pay the pattern of returns of the bitcoin price. Ironically, despite being an unsecure instrument, the XBT product tracks the spot price of bitcoin by holding the actual currency and forward contracts in case of a liquidity shortfall."

At that time, Laurent Kssis, who serves as CEO and Head of Product Development for the ETN business at XBT Provider AB, told CNBC:

"At that point in time [18 May 2015], the ETN structure was the best route to bring the products to market. As a result of using this structure to bring the product to market, investors have been able to gain exposure to the price movement of bitcoin since 2015. This stands opposed to the U.S., where most investors are still waiting for access to bitcoin exposure via their normal brokerage account."

Matt Hougan, the Global Head of Research at Bitwise Asset Management, who used to be the CEO of Inside ETFs, also spoke to CNBC back in January 2018:

"The [XBT] products are very well designed for what they do. They deliver, unlike GBTC. They give exposure to the returns of bitcoin and ether pretty well. I think they were well executed and they've done their job."

 

Featured Image Credit: Photo via Pexels.com 

Could President Trump Ban Bitcoin? Experts Weigh In

  • Experts weigh in on the possibility of President Trump banning bitcoin.
  • Increasing concern over libra and large platform digital currencies is driving political agenda. 

Following last week’s attack on bitcoin and Facebook’s libra, experts have voiced their opinion on whether US President Donald Trump could realistically impose a ban on cryptocurrency. 

Not a Fan of Bitcoin

On July 11, President Donald Trump published a series of tweets attacking bitcoin and digital currencies, while championing the dollar. 

President Trump’s comments come in the midst of growing concern over Facebook’s libra, as political regulators around the world scramble to enact policies to deal with the rise of digital currencies. 

Members of the crypto community have questioned the impact of the US President taking an unfavorable stance towards bitcoin. Some crypto pundits predicted the tweets would be good for the price of BTC and ultimately increase exposure to cryptoassets. However, others worry that political influence may lead to a crackdown on cryptocurrency usage. 

Scenarios for Banning Crypto

Alex Kruger, economist and market analyst, published a tweet thread examining the legality and possibility of President Trump banning bitcoin. 

According to Kruger, It would be almost impossible for the US government to outlaw bitcoin as a technological instrument. Aside from the Herculean task of eradicating a decentralized, digital technology, bitcoin is code, which is protected under the first amendment.

However, that same protection is not extended to third-party operators, including cryptocurrency exchanges. 

Kruger quoted Abra CEO and Founder BIll Barhydt, who explained in a Forbes article how the government could target fiat onramps to exchanges, 

“You can’t prevent people from holding ones and zeroes on a device in their pocket. That ship has sailed. We already know that. The question is: What can they do at the edge of the network -- the onramps and offramps, the places where they exert control over the banking system, the exchanges, [and the] stablecoins.”

The US government could prevent retail investors from having access to crypto-assets through exchanges and prevent banks from allowing transfer of funds. Users would still be able to buy crypto through alternative channels, but the current ease of investing would be severely hampered. 

Unlikely, But Not Impossible

President Trump could also issue an executive order banning citizens from dealing in bitcoin, similar to the one he issued against the Petro. While there is a precedent for this route, Kruger claims the order could be easily overturned by Congress, 

Ultimately, Kruger believes that it is unlikley the President or Congress would move to ban bitcoin, and it would be difficult to enact fool-proof policy. However, it's worth considering the political landscape as regulatory concerns mount over Facebook's libra.

Just last week, a copy of a bill reportedly drafted by the House Financial Services Committee surfaced online, under the title "Keep Big Tech Out of Finance." The bill would put an end to Facebook and other large platforms from issuing digital currencies without incurring a severe penalty.

The same could be extended to bitcoin in the event the government finds crypto-assets no longer tolerable for the general public.