How to Invest in Bitcoin ETFs in 2019

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Investing in Exchange Traded Funds (ETFs) means you’re placing your money in a regulated asset that is audited and overseen by a financial authority. The process for investing in ETFs depends on a per-asset and broker basis. If you’re already registered and your account is linked to a broker of your choice, asking them to provide you with ETF options won’t be a hassle; then you’ll do your due diligence, and come to a conclusion on whether you want the broker to invest your money in that ETF. Now what about cryptocurrency, more specifically, Bitcoin ETFs? Are those possible?

While this guide will assess the current market status in terms of crypto ETFs and what they are exactly, we will also review the process for buying Bitcoin in an alternative way that can mirror as a makeshift investment vehicle for certain jurisdictions who haven’t approved things such as Bitcoin ETFs yet.

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How to Buy Bitcoin in a Regulated Manner

  1. Create an account on Coinbase, and be prepared to provide verification documents.
  2. Press ‘Complete Verification’ and submit the necessary documents.
  3. Assuming your account is approved, then, proceed to the ‘Deposit’ section of your exchange and verify a payment method.
  4. Indicate how much worth you want to deposit and process the transaction.

On execution, your Coinbase account will now have actualized cryptocurrency, and you will have bought and held Bitcoin on a financially regulated exchange. There are a few other exchanges that are registered/regulated, and a list of these supported exchanges can be found here.

 

Buy Bitcoin On a Regulated Platform Now

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We’ve done our own due diligence on brokers and exchanges best suited for regulated cryptocurrency so that you don’t have to; however, in any case, you can review from the list indicated to see for yourself.
What is an ETF?

ETFs are acronyms for the investment vehicle Exchange Traded Fund that is composed of over $3 trillion in institutional capital. Exchange Traded Funds are sort of similar to diversified investment portfolios that are purchasable on the open markets. They are typically niche-related and seek to outperform what is known as their underlying ‘benchmark’, or an investment reference. The majority of ETFs on the open markets are considered to be registered and regulated investment firms and offer unique tax benefits, as well as unique asset class exposure depending on the product.

ETFs are widely invested in by different investment managers as well as proprietarily by certain companies/firms. Since they offer attractive tax benefits, incur very small fees as far as management goes, and enable exposure to a particular type of asset, they are amongst the top choices for investment vehicles in hedge funds, proprietary banks, and more.

Take the following into consideration: A Blockchain ETF is a registered, regulated pool of different stocks on the open markets that are targeted specifically in the blockchain industry. So for example, a Blockchain ETF might consist of J.P. Morgan and IBM stock, which are two major companies utilizing blockchain on larger levels.

What is a Bitcoin ETF?

Now, imagine the benefits that an ETF offers; having your funds invested in an asset class for you automatically without having to worry about security, insurance, and whatever else, make ETFs very attractive. Bitcoin is an extremely complicated concept to grasp for older investors and institutional money, and buying Bitcoin is even more challenging. As a result, an ETF offers a wide range of new capital, over a trillion dollars for that fact, the opportunity to safely and confidently invest in Bitcoin.

 

However, at this time, there is no approved Bitcoin ETF and while there are some online makeshift ETFs that function through smart contracts and in an unregulated manner, the bottom line is that you can’t go on the financially approved markets and buy Bitcoin itself through an investment vehicle, you have to actually buy Bitcoin yourself.

A Bitcoin ETF would be a regulated price index that would mirror the market action and movement of Bitcoin’s price. A Bitcoin ETF would essentially be a registered investment vehicle, recognized by major financial authorities of the market it’s active in, that would be available for all investors or traders in the market.

There are pending Bitcoin ETFs that will reach approval decisions within the near future, however, there’s nothing verified at the moment – so what can you do if you don’t want to wait for these vehicles to come out? Our recommendation is that if you do not want to wait for registered crypto ETFs to acquire an investment in Bitcoin, to access the next best possible option: Buy Bitcoin on Coinbase since it is a registered, regulated exchange.

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The Best Way to Legally Invest in Bitcoin

While Bitcoin ETFs at this moment still coming to fruition, and there is no confirmation on when, if ever, Bitcoin investments will be enabled as a regulated investment vehicle, a very common question that is asked is “Can I legally buy Bitcoin?” – the answer is yes!

Bitcoin, although not available for purchase at this time via an ETF or similar investment vehicle, is still legal to buy and invest in. It’s important if you’re buying Bitcoin to do so in a compliant and regulated manner. As a result, we believe that Coinbase is the best option for buying Bitcoin in a compliant way.

What’s the Difference Between Buying and Trading Bitcoin?

Buying

  • You own actual Bitcoin
  • You can move the Bitcoin and do with it what you’d like
  • Buying Bitcoin is usually for longer outlooks
  • Buying is considered ‘lower risk’

Trading

  • Trading involves market positions, not actually owning actual Bitcoin
  • Price movement is the only utilization when trading
  • You can use multiple financial products to trade Bitcoin (Ex: CFDs)
  • Trading is considered riskier

FAQs

When will Bitcoin ETFs be available?

There is currently no set date for when Bitcoin ETFs will be instantiated, however, there are multiple ETFs in review currently by the SEC (United States Securities and Exchange Commission).

What is the safest way to buy Bitcoin?

Traditionally, an ETF would be the safest and generally most secure way to buy an asset, which would be Bitcoin’s case, however, since there currently are no cryptocurrency ETFs, Coinbase is the second-best alternative.

Who are the providers of Bitcoin ETFs?

There are multiple companies and ‘sponsors’ looking to host the creation of a Bitcoin ETF: This includes the billionaire Winklevoss twins, the investment firm VanEck, and more.

Where can I buy a Bitcoin ETF?

While currently there are no exchanges, brokers, or platforms where you can buy a compliant Bitcoin ETF, if they do come to fruition, they will be available to buy on regulated brokers by, at first, the SEC.  

Is Bitcoin a good investment even though there's no ETF?

Although Bitcoin is not registered and available through ETFs at this moment, the asset has still yielded profits and demonstrated growth. However, all in all, deciding if it’s a good investment is always subjective.

Remember, all trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

About John

John Iadeluca is the founder of the Wall Street hedge fund Banz Capital. He's a blockchain developer, quant, and consultant that specializes in the digital asset sector.