On July 26, the U.S. Securities and Exchange Commission (SEC) scrapped[1] the application for a Bitcoin exchange-traded fund (ETF) run by brothers Tyler and Cameron Winklevoss. While the market took the news negatively and the price of BTC crumbled — though it jumped back to the green within 24 hours — the ETF case is far from being closed: As soon as September, the SEC will face another wave of similar proposals from a number of actors.
What’s an ETF (and a Bitcoin ETF)?
Cointelegraph has previously covered the nature of ETFs in a separate article[2]. In short, an ETF is a kind of investment fund that is tied to the price of an underlying asset — a commodity, an index, bonds, or a basket of assets — like an index fund and is traded on exchanges, available to both retail and institutional investors.
A Bitcoin ETF, in turn, tracks Bitcoin (BTC) as the underlying asset. It is an indirect way of purchasing BTC, where the investor only holds the corresponding security without having to store the actual coins. One of the key aspects of a Bitcoin ETF is that, if listed on a regulated U.S. exchange, it could pave the way for large mainstream investors, potentially pushing Bitcoin toward mass adoption and broader recognition on Wall Street.
The Winklevoss twins’ self-titled fund, the Winklevoss Bitcoin Trust, was submitted to the SEC to be listed on Bats BZX Exchange (BZX) as COIN, an ETF “that can track the price of Bitcoin because its only asset will be Bitcoin,” as per its website[3]. Shares of COIN would represent fractional ownership of the fund’s total Bitcoin holdings.
