American investors who are looking to gain exposure to bitcoin can now buy a new security: Bitcoin Tracker One.
The Bitcoin Tracker One is not new, though this form of use is. It has been trading on the Nasdaq Stockholm since 2015. It represents an easier way to invest in bitcoin because it doesn’t require actually buying and holding the cryptocurrency.
Bitcoin Tracker One is an Exchange-Traded Note (ETN) which, as of August 15th, is quoted in US dollars under the ticker CXBTF, according to Bloomberg.
UK-based CoinShares Holdings Ltd issues the notes through its subsidiary XBT Provider AB. Bitcoin Tracker One is sold in US dollars but is exclusively listed and regulated in Sweden. All transactions done made settled, cleared, and held in Sweden.
What is an ETN?
An ETN such as Bitcoin Tracker One is a type of debt security. It tracks an underlying asset (bitcoin, in this case) but does not actually require investing in it.
Bitcoin Tracker One holders are rewarded with an amount that depends on the performance of the security (or index) that it tracks. When an ETN reaches maturity rewards are issued. However, ETNs are long-term, so they don’t reach maturity for at least ten years.
In the meantime, ETNs trade on exchanges, similar to stocks. Therefore, the rules of the market determine their prices every day and an investor can buy and sell Bitcoin Tracker One through their brokerage.
ETNs are very close relatives of another type of security: Exchange-Traded Funds (ETFs). Both ETFs and ETNs track an underlying asset, index, or benchmark. However, the main difference is that the issuer of the ETF invests in the underlying security.
This offers an investor the opportunity to own an asset without actually owning it. By comparison, ETNs only offer the possibility to get exposure to the price changes of an asset, such as bitcoin.
Why Is There Not a Bitcoin ETF?
The idea of launching a bitcoin ETF has been in the works for months. In fact, there are at least ten bitcoin-related funds that the US Securities and Exchange Commission is examining.
Earlier this year, startup SolidX and investment firm VanEck proposed a Bitcoin ETF. The VanEck SolidX Bitcoin Trust will buy and hold bitcoins as an underlying asset, according to their SEC filing. There are 10 total bitcoin ETF filings under consideration by the SEC at present.
However, the SEC is currently stalling, and it is unclear if and when they will approve a bitcoin ETF. Therefore, Bitcoin Tracker One currently remains one of the easiest ways to invest in bitcoin.
Another alternative to investing in bitcoin is to buy shares of Grayscale’s Bitcoin Investment Trust (NASDAQ: GBTC), which owns a constant amount of bitcoin. Each GBTC share is equal to a small amount of a bitcoin. However, it is trading at a premium because of the high demand and limited supply.
Bitcoin Tracker One Brings Crypto a Step Closer to Becoming a Mainstream Investment
Crypto investors are watching the developments closely around bitcoin ETFs, and the introduction of Bitcoin Tracker One on the US market is a significant step for them. Bitcoin has been trading well below the last year’s highs of $20,000.
However, there is much hope that launching a bitcoin-related security could boost the price of the cryptocurrency higher. It could open the doors to large investors that currently don’t want to bother with buying and storing bitcoin. Moreover, the popularity that Bitcoin Tracker One might garner among American investors could prompt the SEC to move faster with their decision regarding bitcoin ETFs.