An exchange-traded fund (ETF) would provide investors and institutions easy access to bitcoin, representing an alternative to digital exchanges. An ETF could incentivize investors that are not comfortable with the current means of acquiring and holding bitcoins to enter the cryptocurrency market.
There have been attempts to create a bitcoin ETF for the past 4 years, with all of them being rejected by the SEC. Still, Cathie Wood, CEO of ARK Investment Management remains cautiously optimistic: “I don’t think we’ll see an ETF within a year, but maybe within two years and with a lot of education”. The company's actively managed ARK Innovation ETF allows investors access to the cryptocurrency indirectly, with the Bitcoin Investment Trust comprising 4.14% of the fund's weight. Wood expects a bitcoin closed-end fund (CEF) to appear before a bitcoin ETF.
The creation of derivatives on bitcoin will open the door for bitcoin ETFs, according to industry executives such as Don Wilson, founder of DRW Holdings LLC: “Once a derivative is launched, a bitcoin ETF will follow”.