.jpeg)
.png)
On October 15, the world woke up to the news that the United States Securities and Exchange Commission (SEC) has finally approved Bitcoin Exchange Traded Funds (ETFs) for the American financial market. On the strength of that news, the price of Bitcoin went on a rally that saw it reach an all-time high of $66,930.
The US SEC had been hesitant for quite a while over approving Bitcoin ETFs, but it now looks like the regulatory giant is gradually warming up to the fact that cryptocurrency is the way to go. Though Bitcoin ETFs were already trading legally in some countries such as Sweden and Canada etc before coming to the US, the US is the world's biggest financial market. As such, getting approved in the US marks a new milestone in the growing legitimacy surrounding the use of cryptocurrencies and their derivatives.
While a good number of people know about Bitcoin and other cryptocurrencies, Crypto ETFs are a new concept to many others. In this article, we take a look at Crypto ETFs (of which Bitcoin ETF is an example) to help our readers understand the subject better.
A Crypto Exchange Traded Fund (ETF) is an investment fund that enables people to invest in a particular cryptocurrency or a group of cryptocurrencies without a need to own or keep the actual crypto assets. However, the price of a Crypto ETF follows the price of the particular cryptocurrency on which the fund is based.
We will use a scenario to try and make it clearer: let us say that a company owns a cache of Bitcoin, Ethereum, Solana, and Binance Coin. The company then desires to set up ABC ETF to track the price of those 4 crypto assets. To do so, the company will split the ownership of its crypto assets into shares. These shares of ABC ETF are then listed on a stock exchange. An investor could purchase, say 100 shares at $20 per share. Assuming that in 2 years the crypto assets held in the company's portfolio experienced growth in market value. At the end of the 2 years, the value of each ABC ETF share may have risen to say, $60, and the original investment of $2,000 would then be worth $6,000.
We can see that the investor in the above scenario is not in custody of the crypto assets even though his investment is affected by what goes on in the crypto market. The investor simply outsources the custody and management of the crypto assets to the company.
Keep in mind that cryptocurrencies can be very speculative and there is no guarantee that the valuation will always go up. If a crypto asset loses market value, the price of the shares of any ETF that is based on that particular crypto asset will go down as well.
Crypto ETFs are regulated instruments like shares/stocks and can be bought or sold on traditional exchanges such as New York Stock Exchange, Toronto Stock Exchange etc
Though it took the US quite a while before licensing Crypto ETFs, they have been around for some time in a few countries.
According to PRNewswire, In October 2015, CoinShares floated the world's first publicly traded Bitcoin ETF on NASDAQ Stockholm and followed it up with the listing of an Ethereum ETF - the Ether Tracker One, in 2017. Earlier in 2021, Canada approved the listing of Purpose Investments' Bitcoin ETF and Evolve's Bitcoin ETF on the Toronto Stock Exchange.
United States financial regulators have been much more conservative and hesitant to approve Crypto ETFs. In a May 7th CNBC report, the SEC stated that the potential for fraud and manipulation in the Bitcoin market was a major reason why the regulatory watchdog was cautious.
But then, in August the SEC's posture towards Crypto ETFs began to turn positive. Finally, after turning down many applications over the years, the first Bitcoin ETF in the US market - ProShares Bitcoin Strategy ETF, got SEC-approved and commenced trading on the New York Stock Exchange on October 19. Other Crypto ETFs that have gotten SEC approval and are trading include Valkyrie Bitcoin Strategy ETF and VanEck Bitcoin Strategy ETF.
Presently, all crypto ETFs fall into one of three categories:
In this type, the company that issues the ETF units first buys the actual cryptocurrency. It then creates a fund that equates the value of the crypto. The fund is broken up into shares that are listed on a stock exchange. Investors who subscribe to this type of ETF get exposed to the price movement of the crypto without the hassles associated with owning and managing it.
Stocks-based crypto ETFs gives indirect exposure to the cryptocurrency industry. It is based on the stocks of publicly listed blockchain companies such as Coinbase, or companies whose treasury includes a significant amount of cryptocurrencies (such as Tesla). A good example of this class is Bitwise Crypto Industry Innovators ETF. This type of ETF only gives partial exposure to crypto price movement because its value does not necessarily track the value of a particular crypto.
Futures is a type of crypto derivatives. It speculates on the future price of a commodity without a need to purchase the actual crypto. This type of Crypto ETF is based on a futures contract which is an agreement to buy or sell an asset at a specific time in the future and for a specific price. The fund can thus be set up such that an investor can make a profit when the market is in both upward and downward trends, that is, bull and bear markets.
Here are some of the reasons why people may prefer investing in crypto ETFs instead of directly buying and owning crypto:
The prices of some cryptocurrencies such as Bitcoin and Ethereum may be beyond the reach of many people. At the time of writing, 1BTC costs around $57,000 while 1ETH is around $4,000. However, the price of 1 share of a Bitcoin or Ethereum Crypto ETF is far less than those prices. Thus, investors with much less capital can easily invest in a Crypto ETF and still benefit from the price movements of the actual coin.
Many people find investing in Crypto ETFs more convenient than getting involved with the actual crypto. Buying crypto means having accounts on a crypto exchange, needing to set up wallets, and a real-time need to always protect one's private keys etc. Some people would rather prefer to delegate the trouble involved with crypto ownership to fund managers while still enjoying the benefits of crypto investment.
There are Crypto ETFs that follow the price of more than one crypto asset. Investing in such a multi-asset ETF will give an investor exposure to multiple markets with just one investment. It offers an easy way to diversify one's investment portfolio.
Hackers and thieves are an ever-constant threat to any crypto bought and kept on a crypto exchange or wallet. No such risk exists with Crypto ETFs because the investor does not own or keep any cryptocurrencies.
All that glitters is not gold, you would say. Yes, crypto ETFs have their downsides too. Some notable downsides include:
Perhaps the most famous attribute of cryptocurrencies is volatility. Prices of crypto can swing wildly. Crypto ETFs are not immune to volatility. Any direction the price of the underlying crypto swings, the value of the Crypto ETF will follow it.
Crypto ETFs are still an emerging market. There are not many to choose from. However, with the recent approval from the world's largest financial market - the US, many more Crypto ETFs are likely to spring up throughout the world.
Crypto ETFs are convenient, but the investment company will charge some management fees for the convenience it offers investors. These fees, which are compounded into the cost of 1 ETF share, have to be borne by investors.
The stock exchanges where crypto ETFs are traded do not operate round the clock, unlike crypto exchanges that operate 24hrs each day. Choosing to invest in a Crypto ETF means that the investor will potentially miss out on any positive and profitable price movements that happen outside traditional market hours.
Apart from the value of the investment, there may not be much utility associated with crypto ETFs. Buying a Crypto ETF instead of the actual crypto will mean the loss of several exciting utilities which crypto offers such as yield farming, DeFi, GameFi etc
It all depends on the preference and goal of each individual. An investor who is only concerned about the long-term investment potential of crypto could choose to invest in ETFs. On the other hand, if an investor prefers to profit from the real-time and short-term benefits of crypto such as means of payment, DeFi, swing trading, etc, buying the actual cryptocurrencies and being in the custody of them would probably be the way to go.
SEC's approval of Bitcoin ETFs is a significant turning point in favour of the global adoption of cryptocurrencies and their derivatives. In the coming months, we are likely to witness rapid growth in the investment niche of crypto ETFs.
As the dust of the excitement crypto ETFs settles, it is important to note that the crypto ETF market is still developing and there is room for amendment in its regulatory framework. Also bear in mind that the value of crypto ETFs is still prone to the volatility of the crypto market. Hence, it may be necessary to avoid allocating a huge percentage of your investment portfolio to such a market still in its regulatory and operational infancy.
Faraland, a play to earn project built on Binance Smart Chain, launched the iOS and Android versions of its game.
Soul stones can now be farmed through your mobile phones. These are used to summon Demi Heroes and can be swapped for energy to be used in-game. The Faraland team excitedly announced the availability of their game on iOS and Android through its official Twitter account on November 30.
“Faraland Game is live! Faraland is excited to announce the official version for Android & iOS. The moment we all have been waiting for has arrived! Let’s get started right now!” Faraland excitedly tweeted.
Interested players can register for an account by visiting the Faraland website. You would need to connect your Metamask or other cryptocurrency wallets to their systems as well.
The team further announced that the rewards farmed in-game, Soul Stones, and experience points, are recorded and will be available for claiming in the coming week.
Faraland has been checking off items listed on their roadmap. Recently, they even saw themselves as one of the top Binance Smart Chain games in terms of security score as audited by Certik.
The release of their expedition game on mobile adds another milestone for the role-playing strategy mobile multiplayer GameFi project. A world map, land system, and monster introductions headline the team’s goals for Q1 of 2022.
The Faraland native token, FARA, has also maintained a solid price throughout the last month. FARA currently trades at $3.21 according to CoinMarketCap, which is right in the middle of its 30-day high/low of 4.21 and $2.90. So far the mobile launch has not seen an increase in price.
Be sure to join the DeFi Direct Discord to participate in all the community discussions and events! Don’t forget to download the BSC News mobile application on iOS and Android to keep up with all the latest news for Binance Smart Chain and crypto!
Blockademia, the first Proof-of-truth Cardano-based solution for issuing and checking the authenticity of issued documents, launched the community sale of its ACI token on November 29th. Until December 5th, a total of 37.5 million ACI tokens at the price of 0.30 Euros will be available to investors. The minimum investment is 100 euros and the maximum is 5,000 Euros.
Document manipulation cases are far too prevalent, which is why Blockademia's founders decided to develop a solution that stops them once and for all. The Croatian startup's motto is "Let's shape the world with truth!" and they aim to do so by putting an end to falsified documents. Thanks to blockchain technology, Blockademia, which also has a referral program, will be able to guarantee authenticity of every document issued through its system, making forged diplomas, certificates, and contracts a thing of the past.
Blockademia will enable the verification of documents issued by educational institutions such as universities, high schools, primary schools, and adult education institutions. Blockademia will also benefit other issuers of documents who believe protection against counterfeiting is essential. These include insurance companies, pharmaceutical companies, and public institutions. Blockademia will provide issuing and verification tools for any digital document or file type while enabling usage through their web app, mobile app, or integrated into a customer's customized solution.
Blockademia is for all institutions and companies that need to check whether a document is authentic or counterfeit. The only thing that matters is first to authenticate the document through the Blockademia app. The app will then continue to verify it quickly and reliably and thus guarantee its authenticity.
Thanks to funds received through the token sale, Blockademia will further strengthen the team to have a franchise network and worldwide customers in 18 months. Blockademia will finish the token sale by the end of 2021, focusing on exploring markets and presenting the solution worldwide. The goal is to finalize the Blockademia app in the first two quarters of next year and test it on its first users. In Q3 2022, the plan is to complete the web and mobile app for verification. In Q4 of 2022, they plan to be on the mainnet.
"The successful completion of the private sale is a sign that investors have recognized the quality of Blockademia and what our dApp will offer. We will use the funds raised to strengthen our team and launch the Blockademia dApp on the mainnet by the end of next year. We are immensely pleased with the exceptional interest of partners and franchisors. We already have over ten collaborations and are in the process of concluding new and exciting ones," said Marin Kramarić, Blockademia's CEO.
The good news for the Croatian crypto startup is that the USA is no longer on the list of countries unable to participate in public sales. Blockademia's ACI tokens are now available to investors from the US.
Make sure to visit their Telegram group to keep the conversation going. If you have any questions, feel free to ask their admins!
For further information on Blockademia, visit the following links:
Investing in Crypto ETFs has advantages, but there are also downsides to be aware of.
On October 15, the world woke up to the news that the United States Securities and Exchange Commission (SEC) has finally approved Bitcoin Exchange Traded Funds (ETFs) for the American financial market. On the strength of that news, the price of Bitcoin went on a rally that saw it reach an all-time high of $66,930.
The US SEC had been hesitant for quite a while over approving Bitcoin ETFs, but it now looks like the regulatory giant is gradually warming up to the fact that cryptocurrency is the way to go. Though Bitcoin ETFs were already trading legally in some countries such as Sweden and Canada etc before coming to the US, the US is the world's biggest financial market. As such, getting approved in the US marks a new milestone in the growing legitimacy surrounding the use of cryptocurrencies and their derivatives.
While a good number of people know about Bitcoin and other cryptocurrencies, Crypto ETFs are a new concept to many others. In this article, we take a look at Crypto ETFs (of which Bitcoin ETF is an example) to help our readers understand the subject better.
A Crypto Exchange Traded Fund (ETF) is an investment fund that enables people to invest in a particular cryptocurrency or a group of cryptocurrencies without a need to own or keep the actual crypto assets. However, the price of a Crypto ETF follows the price of the particular cryptocurrency on which the fund is based.
We will use a scenario to try and make it clearer: let us say that a company owns a cache of Bitcoin, Ethereum, Solana, and Binance Coin. The company then desires to set up ABC ETF to track the price of those 4 crypto assets. To do so, the company will split the ownership of its crypto assets into shares. These shares of ABC ETF are then listed on a stock exchange. An investor could purchase, say 100 shares at $20 per share. Assuming that in 2 years the crypto assets held in the company's portfolio experienced growth in market value. At the end of the 2 years, the value of each ABC ETF share may have risen to say, $60, and the original investment of $2,000 would then be worth $6,000.
We can see that the investor in the above scenario is not in custody of the crypto assets even though his investment is affected by what goes on in the crypto market. The investor simply outsources the custody and management of the crypto assets to the company.
Keep in mind that cryptocurrencies can be very speculative and there is no guarantee that the valuation will always go up. If a crypto asset loses market value, the price of the shares of any ETF that is based on that particular crypto asset will go down as well.
Crypto ETFs are regulated instruments like shares/stocks and can be bought or sold on traditional exchanges such as New York Stock Exchange, Toronto Stock Exchange etc
Though it took the US quite a while before licensing Crypto ETFs, they have been around for some time in a few countries.
According to PRNewswire, In October 2015, CoinShares floated the world's first publicly traded Bitcoin ETF on NASDAQ Stockholm and followed it up with the listing of an Ethereum ETF - the Ether Tracker One, in 2017. Earlier in 2021, Canada approved the listing of Purpose Investments' Bitcoin ETF and Evolve's Bitcoin ETF on the Toronto Stock Exchange.
United States financial regulators have been much more conservative and hesitant to approve Crypto ETFs. In a May 7th CNBC report, the SEC stated that the potential for fraud and manipulation in the Bitcoin market was a major reason why the regulatory watchdog was cautious.
But then, in August the SEC's posture towards Crypto ETFs began to turn positive. Finally, after turning down many applications over the years, the first Bitcoin ETF in the US market - ProShares Bitcoin Strategy ETF, got SEC-approved and commenced trading on the New York Stock Exchange on October 19. Other Crypto ETFs that have gotten SEC approval and are trading include Valkyrie Bitcoin Strategy ETF and VanEck Bitcoin Strategy ETF.
Presently, all crypto ETFs fall into one of three categories:
In this type, the company that issues the ETF units first buys the actual cryptocurrency. It then creates a fund that equates the value of the crypto. The fund is broken up into shares that are listed on a stock exchange. Investors who subscribe to this type of ETF get exposed to the price movement of the crypto without the hassles associated with owning and managing it.
Stocks-based crypto ETFs gives indirect exposure to the cryptocurrency industry. It is based on the stocks of publicly listed blockchain companies such as Coinbase, or companies whose treasury includes a significant amount of cryptocurrencies (such as Tesla). A good example of this class is Bitwise Crypto Industry Innovators ETF. This type of ETF only gives partial exposure to crypto price movement because its value does not necessarily track the value of a particular crypto.
Futures is a type of crypto derivatives. It speculates on the future price of a commodity without a need to purchase the actual crypto. This type of Crypto ETF is based on a futures contract which is an agreement to buy or sell an asset at a specific time in the future and for a specific price. The fund can thus be set up such that an investor can make a profit when the market is in both upward and downward trends, that is, bull and bear markets.
Here are some of the reasons why people may prefer investing in crypto ETFs instead of directly buying and owning crypto:
The prices of some cryptocurrencies such as Bitcoin and Ethereum may be beyond the reach of many people. At the time of writing, 1BTC costs around $57,000 while 1ETH is around $4,000. However, the price of 1 share of a Bitcoin or Ethereum Crypto ETF is far less than those prices. Thus, investors with much less capital can easily invest in a Crypto ETF and still benefit from the price movements of the actual coin.
Many people find investing in Crypto ETFs more convenient than getting involved with the actual crypto. Buying crypto means having accounts on a crypto exchange, needing to set up wallets, and a real-time need to always protect one's private keys etc. Some people would rather prefer to delegate the trouble involved with crypto ownership to fund managers while still enjoying the benefits of crypto investment.
There are Crypto ETFs that follow the price of more than one crypto asset. Investing in such a multi-asset ETF will give an investor exposure to multiple markets with just one investment. It offers an easy way to diversify one's investment portfolio.
Hackers and thieves are an ever-constant threat to any crypto bought and kept on a crypto exchange or wallet. No such risk exists with Crypto ETFs because the investor does not own or keep any cryptocurrencies.
All that glitters is not gold, you would say. Yes, crypto ETFs have their downsides too. Some notable downsides include:
Perhaps the most famous attribute of cryptocurrencies is volatility. Prices of crypto can swing wildly. Crypto ETFs are not immune to volatility. Any direction the price of the underlying crypto swings, the value of the Crypto ETF will follow it.
Crypto ETFs are still an emerging market. There are not many to choose from. However, with the recent approval from the world's largest financial market - the US, many more Crypto ETFs are likely to spring up throughout the world.
Crypto ETFs are convenient, but the investment company will charge some management fees for the convenience it offers investors. These fees, which are compounded into the cost of 1 ETF share, have to be borne by investors.
The stock exchanges where crypto ETFs are traded do not operate round the clock, unlike crypto exchanges that operate 24hrs each day. Choosing to invest in a Crypto ETF means that the investor will potentially miss out on any positive and profitable price movements that happen outside traditional market hours.
Apart from the value of the investment, there may not be much utility associated with crypto ETFs. Buying a Crypto ETF instead of the actual crypto will mean the loss of several exciting utilities which crypto offers such as yield farming, DeFi, GameFi etc
It all depends on the preference and goal of each individual. An investor who is only concerned about the long-term investment potential of crypto could choose to invest in ETFs. On the other hand, if an investor prefers to profit from the real-time and short-term benefits of crypto such as means of payment, DeFi, swing trading, etc, buying the actual cryptocurrencies and being in the custody of them would probably be the way to go.
SEC's approval of Bitcoin ETFs is a significant turning point in favour of the global adoption of cryptocurrencies and their derivatives. In the coming months, we are likely to witness rapid growth in the investment niche of crypto ETFs.
As the dust of the excitement crypto ETFs settles, it is important to note that the crypto ETF market is still developing and there is room for amendment in its regulatory framework. Also bear in mind that the value of crypto ETFs is still prone to the volatility of the crypto market. Hence, it may be necessary to avoid allocating a huge percentage of your investment portfolio to such a market still in its regulatory and operational infancy.
.jpg)
