On
Jan.
10,
the
U.S.
Securities
and
Exchange
Commission
(SEC)
ended
the
years-long
wait
for
spot
bitcoin
exchange-traded
funds
(ETFs).
The
approval,
an
important
phase
in
the
maturation
of
Bitcoin,
opened
the
door
for
millions
of
Americans
to
invest
in
the
incumbent
digital
currency,
whose
value
grew
by
more
than
160%
in
2023.
Reza
Akhlaghi
is
a
digital
marketing
and
Web3
consultant
based
in
Toronto,
Canada.
Futures-based
crypto
ETFs
have
been
available
to
U.S.
investors
since
October
2021,
but
unlike
spot
ETFs,
they
are
not
tied
directly
to
the
asset
and
have
no
requirements
for
custody.
In
other
words,
if
spot
ETFs
are
successful,
it
means
there
will
be
a
lot
more
bitcoin
buying
pressure.
In
addition
to
institutional
and
retail
buyers,
there
are
private
bankers,
investment
advisers,
wealth
managers
and
robo-advisers
adding
to
the
dynamics
of
the
spot
bitcoin
ETF.
These
investment
managers
now
have
access
to
a
crypto
product
that
is
liquid,
safe,
and
does
not
require
custodianship
or
reporting.
Investors
rely
on
the
ETF
issuer
to
accurately
track
the
performance
of
the
underlying
asset.
As
of
last
week,
at
least
$7.7
billion
has
flowed
into
the
10
live
spot
bitcoin
ETFs
in
the
U.S.,
a
figure
that
Sylvester
Flood,
senior
product
manager
for
Morningstar,
called
a
“big
success.”
It
isn’t
yet
clear
whether
this
pace
of
adoption
will
continue
—
and
so
it
might
make
sense
to
look
at
markets
where
ETFs
have
traded
for
years.
In
Canada,
investors
have
had
access
to
both
spot
bitcoin
and
spot
ether
ETFs
since
February
2021,
and
since
then
the
country’s
global
market
share
in
spot
crypto
ETFs
has
grown
to
46%,
according
to
CoinGecko.
The
country’s
six
spot
bitcoin
ETFs
account
for
$2.79
billion
in
total
assets.
Canadian
investors
have
adopted
ETFs
as
a
financial
vehicle
that
is
safe
and
delivers
the
returns
of
digital
assets,
despite
their
well-publicized
volatility.
Moreover,
in
Canada,
investing
in
crypto
ETFs,
versus
buying
crypto
directly,
is
eligible
for
use
in
registered
investment
accounts,
including
TFSAs
and
RRSPs
(Canadian
401K).
It
remains
to
be
seen
exactly
how
U.S.
spot
bitcoin
ETFs
will
impact
the
investment
management
industry.
Some
industry
observers
argue
that
crypto
ETFs
in
general
will
bring
volatility
into
401Ks
while
others
think
these
investment
vehicles
will
contribute
to
the
stability
of
crypto
markets.
The
market
has
certainly
embraced
spot
bitcoin
ETFs.
The
week
of
Feb.
5
U.S.
spot
bitcoin
ETFs
saw
net
inflows
of
$1.1
billion.
For
the
continued
success
of
this
market,
it
is
becoming
increasingly
clear
that
investors
and
advisers
need
to
understand
the
crypto
economy,
both
from
technical
and
business
model
perspectives.
Indeed,
the
total
crypto
market
opportunity
is
only
growing:
In
2023,
for
instance,
the
number
of
global
cryptocurrency
users
increased
34%
to
580
million
from
432
million
year-over-year.
“Spot
bitcoin
ETFs
improve
access
to
in-demand
investment
opportunities
with
educational
resources
playing
a
central
role
in
addressing
the
nuances,
risks,
and
growth
opportunities,”Alexandra
Levis,
founder
and
CEO
of
ARRO,
a
New
York-based
PR
and
communication
firm
that
has
been
serving
the
ETF
markets
in
the
U.S.,
said.
It’s
a
point
echoed
by
Sarah
Morton,
chief
strategy
officer
at
Meetami,
a
Vancouver-based
company
that
educates
wealth
management
advisers
about
cryptocurrency,
who
believes
that
there
is
a
huge
need
for
education
in
the
cryptocurrency
and
digital
asset
space.
“There’s
bitcoin
as
well
as
numerous
other
coins
that
have
different
use
cases
and
applications.
So
there’s
this
need
to
understand
how
they
work
and
what
their
growth
potentials
are,”
Morton
said.
“Canada’s
three-year-old
spot
bitcoin
ETF
market
has
driven
exposure,
awareness
and
regulatory
clarity
in
the
market,
and
it
will
be
interesting
to
see
if
the
U.S.
market
will
follow
suit.”
See
also:
Where
Coinbase
Canada
Goes,
so
Does
the
World
|
Opinion
Indeed,
Frederick
Pye,
chairman
and
CEO
of
3iQ,
the
Canadian
digital
asset
company
that
played
an
instrumental
role
in
making
spot
bitcoin
ETFs
possible
in
Canada,
said
there
will
always
be
competitive
price
pressures
on
the
spot
bitcoin
ETF
markets,
whether
they
are
in
Canada
or
the
U.S.
“ETFs
should
never
be
judged
on
just
fees
because
experience,
trading,
and
execution
have
a
much
greater
impact.
A
look
at
the
total
return
of
U.S.
ETFs
in
the
first
month
of
their
launch
shows
no
correlation
to
their
fees,”
Pye
said,
adding
that
there
is
little
connection
between
total
management
expense
ratio
(MERs)
and
returns.
Adding
to
the
competitive
pressures
in
the
U.S.
spot
bitcoin
ETF
market
are
the
existence
of
firms
like
MicroStrategy,
which
is
using
its
excess
cash
to
buy
at
least
190,000
bitcoins,
as
of
Feb.
5,
in
effect
making
its
publicly-traded
stock
a
bet
on
BTC
and
a
competitor
to
ETFs.
Pye
welcomes
this
and
asserts
that
there
should
be
many
ways
and
shapes
to
purchase
bitcoin.
A
diverse
field
of
bitcoin
on-ramps
is
all
the
more
important
ahead
of
the
halving,
the
upcoming
event
where
the
Bitcoin
network
automatically
cuts
the
amount
of
bitcoin
that
enters
into
circulation
via
mining
in
half,
which
often
drives
attention
to
the
cryptocurrency.
Pye
says
that
this
process
of
cutting
the
supply
has
typically
been
positive,
and
induces
demand.
“This
underlines
the
significance
of
education
for
advisers,”
Pye
said.
“In
Canada
five
years
ago,
I’d
say
5%
of
advisers
were
educated
about
digital
assets
and
crypto.
Today,
it
is
around
40%.”
