BitCoin ETF: What It Is and How It Works In Malaysia
The US Securities and Exchange Commission (SEC) has given the green light to the first spot bitcoin exchange-traded funds (ETFs) on January 10th, Eastern Time, a significant milestone anticipated to attract both retail and institutional investors to the cryptocurrency market.
We think that the SEC approval, should we and others get it, is a green light for institutions. We've been talking to quite a few of them, and they're much more interested now that the SEC effectively is paving the way," Ark Invest CEO Cathie Wood said. Ark Invest has partnered with 21 Shares on a proposed Bitcoin fund.
In this article, we will dive deep into the following questicons:
What are Bitcoin ETFs and what does it mean for investors?
Are Malaysians available to trade BitCoin ETF?
What are BitCoin ETFs and what does it mean to Malaysian investors?
If you're looking for a hassle-free way to invest in assets or a group of assets, ETFs are the way to go. And now, with the emergence of Bitcoin, you can become a cryptocurrency investor without having to create a digital wallet or register with a crypto trading platform. Thanks to recently approved spot Bitcoin ETFs, investors can now own actual Bitcoin without the need for direct ownership. This decision is a major shift by the SEC, which has rejected Bitcoin ETFs for over a decade.
The value of a Bitcoin ETF's shares mirrors the performance of Bitcoin, making it a similar investment vehicle to traditional ETFs. While there are still expenses like management fees and brokerage commissions associated with Bitcoin ETFs, investors can avoid costs like exchange fees by not holding Bitcoin directly. Overall, spot Bitcoin ETFs are an accessible way for mainstream investors to invest in exchange-traded funds.
11 Bitcoin ETFs and their symbols approved by the SEC:
ARK 21Shares Bitcoin ETF (ARKB)
Bitwise Bitcoin ETF (BITB)
Fidelity Wise Origin Bitcoin Trust (FBTC)
Franklin Bitcoin ETF (EZBC)
Grayscale Bitcoin Trust (GBTC)
Hashdex Bitcoin ETF (DEFI)
Invesco Galaxy Bitcoin ETF (BTCO)
iShares Bitcoin Trust (IBIT)
Valkyrie Bitcoin Fund (BRRR)
VanEck Bitcoin Trust (HODL)
WisdomTree Bitcoin Fund (BTCW)
Bitcoin ETFs and their expense ratio
There are several Bitcoin ETFs with 0% management Fee, but charge after waiver
ARK 21Shares Bitcoin ETF (ARKB)
fee 0% (after waiver 0.21%), waiver 6 months or $1 billionBitwise Bitcoin ETF (BITB)fee 0% (after waiver 0.20%), waiver 6 months or $1 billion
Fidelity Wise Origin Bitcoin Trust (FBTC)
fee 0% (after waiver 0.25%), waiver until July 31, 2024
Franklin Bitcoin ETF (EZBC)
fee 0.29%
Grayscale Bitcoin Trust (GBTC)
fee 1.50%
Hashdex Bitcoin ETF (DEFI)
fee 0.90%
Invesco Galaxy Bitcoin ETF (BTCO)
fee 0% (after waiver 0.39%), waiver 6 months or $5 billioniShares Bitcoin Trust (IBIT)fee 0.12% (after waiver 0.25%), waiver 12 months or $5 billion
Valkyrie Bitcoin Fund (BRRR)
fee 0% (after waiver 0.49%), waiver 3 months
VanEck Bitcoin Trust (HODL)
fee 0.25%
WisdomTree Bitcoin Fund (BTCW)
fee 0% (after waiver 0.3%), waiver 6 months or $1 billion
Is Bitcoin performing well？
After the approvals, Bitcoin witnessed a surge of approximately 3.4% and reached $47,500. The price of the original cryptocurrency had plummeted by 64% in 2022, but in 2023, it more than doubled primarily due to the speculation that the SEC would approve ETFs. The approval would enable investors to gain exposure to Bitcoin through their conventional brokerage accounts, rather than relying on crypto-oriented startups that have been subjected to heightened regulatory scrutiny following a series of sector scandals and bankruptcies.
Is it available to trade BitCoin ETFs in Malaysia?
Yes.
Malaysians should be able to trade Bitcoin ETFs through a broker, as Bitcoin ETFs are traded on security exchange markets. However, it is important to note that investing in Bitcoin ETFs involves high risks, as the underlying assets they track are Bitcoins. Moody's Analytics senior director Yiannis Giokas has warned that Bitcoin's notorious price volatility could expose mainstream investors to a less familiar spectrum of investment risks.
The SEC Chair Gary Gensler has also emphasized that investors should remain cautious about the myriad risks associated with Bitcoin and products whose value is tied to crypto. Commissioner Caroline Crenshaw has expressed her concerns that these products will flood the markets and land squarely in the retirement accounts of US households who can least afford to lose their savings to the fraud and manipulation that appears prevalent in the spot bitcoin markets. Therefore, those who are interested in trading Bitcoin ETFs in Malaysia should do thorough research and consult with financial professionals to fully understand the risks involved.