There’s
an
exchange-traded
fund
(ETF)
for
everything
these
days.
Now
there
are
even
more.
Yesterday
the
US
Securities
&
Exchange
Commission
(SEC)
approved
the
sale
of
exchange-traded
funds
(ETFs)
linked
to
the
spot
price
of
Bitcoin.
It’s
a
move
that
tops
off
years
of
wrangling
over
how
viable
cryptocurrency
investing
actually
is
–
not
to
mention
the
manipulability
of
markets
themselves.
For
now,
it
looks
like
Bitcoin
trading
is
getting
another
tailwind,
though
for
how
long
isn’t
clear.
This
latest
development
originates
in
the
US,
where
cryptocurrencies
have
rarely
been
out
of
the
headlines
in
the
past
two
years
–
for
both
good
and
bad
reasons.
But
can
UK
investors
get
involved
too?
See
our
FAQ
below
for
more
information.
Can
I
Buy
The
New
US
Spot
Bitcoin
ETFs
in
the
UK?
The
short
answer
to
this
question
is
no.
Though
fans
of
cryptocurrency
may
see
this
latest
US
news
as
a
landmark
step,
UK
counterparts
may
be
waiting
some
time
before
similar
developments
in
Blighty.
AJ
Bell’s
head
of
investment
analysis
Laith
Khalaf
says
anyone
trying
to
make
the
case
to
the
Financial
Conduct
Authority
(FCA)
that
things
have
changed
and
that
now
is
the
right
time
to
fall
in
line
with
the
US
may
well
have
a
difficult
time.
“Even
with
the
SEC
approval,
it
isn’t
a
slam
dunk
that
we
will
get
one
over
here
because
the
UK
regulator
may
not
approve
their
sale,”
he
says.
“US
ETFs
are
not
available
for
sale
in
the
UK
because
they
don’t
issue
a
Key
Investor
Document,
so
fund
groups
would
need
to
launch
funds
specifically
for
the
European
or
UK
market. In
2021
the
FCA
banned
the
sale
of
exchange-traded
notes
containing
‘unregulated
transferable
cryptoassets’.
These
contained
really
complex
whizzy
derivatives
and
financial
engineering
to
gain
exposure
to
the
asset
class.
“At
the
time
[the
FCA
said]
crypto
had
no
inherent
value,
was
wildly
volatile,
rife
with
financial
crime,
and
didn’t
fulfil
a
financial
planning
need
for
investors.
It’s
difficult
to
make
a
case
that
any
of
that
has
changed.”
Why
Can
Europeans
Invest
in
Crypto
ETFs
and
I
Can’t?
The
simple
answer
is
the
rules
differ
in
each
country.
Countries
like
Switzerland,
Germany
and
France
have
a
more
advanced
regulatory
framework
for
crypto
adoption.
Last
year
the
first
European
Bitcoin
spot
ETF
listed
in
Amsterdam.
The
UK
regulator
has
taken
a
decidedly
more
cautious
approach.
Will
UK
Cryptocurrency
Regulation
Change
Now?
We’ll
save
you
the
politics,
but
suffice
to
say
the
FCA
is
in
something
of
a
bind
over
the
current
direction
of
political
travel
in
the
UK
(an
almost-desperate
impetus
for
economic
growth
and
technological
innovation)
and
its
own
statutory
mandate
to
protect
consumers.
Sometimes
it
feels
as
though
the
regulator
is
trying
to
put
a
tick
in
each
box,
one
after
another.
In
recent
years,
however,
cryptocurrency
has
been
the
exception.
That
comes
despite
talk
in
central
government
and
even
the
Bank
of
England
of
a
shift
to
a
digital
currency
monikered
as
“Britcoin”.
For
his
part,
Khalaf
reckons
the
regulator
is
walking
a
tightrope
on
this
issue.
“The
UK
regulatory
landscape
is
shifting,
with
crypto
activities
being
brought
under
the
supervision
of
the
FCA,
so
this
may
pave
the
way
for
crypto
ETFs
at
some
point
in
the
future,”
he
says.
“If
or
when
that
might
happen
is
anyone’s
guess.
The
FCA
is
walking
a
bit
of
a
tightrope
here
between
keeping
consumers
safe
and
the
government’s
ambition
to
make
the
UK
a
global
hub
for
cryptoasset
technologies.
Bitcoin
has
endured
a
number
of
scandals
and
huge
price
volatility,
but
large
investment
groups
are
clearly
still
interested
in
packaging
it
into
a
tradeable
product
for
punters.
“This
is
presumably
because
there
would
be
large
consumer
demand
for
Bitcoin
ETFs,
but
sometimes
you
should
be
careful
what
you
wish
for.
It’s
hard
to
make
a
case
that
crypto
fulfils
a
genuine
financial
planning
need
that
can’t
be
met
by
other
assets,
but
it
definitely
does
open
up
investors
to
the
possibility
of
very
heavy
losses.”
How
Can
I
Get
Exposure
to
Bitcoin?
Even
if
you
cannot
yet
buy
a
Bitcoin
spot
ETF
in
the
manner
now
approved
by
the
SEC,
there
are
a
number
of
ways
to
get
exposure
to
Bitcoin
and
other
cryptocurrencies.
This
article
does
not
constitute
advice
to
attempt
to
do
so,
and
readers
are
reminded
they
do
so
at
their
own
risk,
and
may
incur
substantial
–
if
not
comprehensive
–
losses.
One
option
is
to
buy
Bitcoin
itself
from
an
FCA-regulated
trading
platform.
At
the
time
of
writing,
the
price
of
a
single
Bitcoin
is
up
1.13%
to
$47,199
(£37,199).
For
those
feeling
somewhat
more
cautious,
you
can
gain
exposure
to
cryptocurrencies
by
buying
the
shares
of
companies
themselves
involved
or
exposed
to
cryptocurrency
mining.
Nvidia
(NVDA)
is
one
example,
but
payment
companies
like
Paypal
(PYPL)
and
Block
(SQ)
would
be
others.
What’s
The
Difference
Between
a
Bitcoin
ETF
and
a
Bitcoin
Spot
ETF?
If
you
want
to
understand
how
cryptocurrency
investing
works,
it’s
important
to
know
the
difference
between
products
directly
linked
to
cryptocurrency
prices,
and
those
with
a
more
secondary
exposure.
That
is
essentially
the
difference
between
spot
price
ETFs
and
broader
exchange-traded
products
exposed
to
cryptocurrency.
“The
primary
difference
between
a
spot
ETF
and
other
crypto
ETFs
is
in
the
assets
they
hold
and
how
they
attract
their
value,”
says
Monika
Calay,
director
of
passive
research
strategies
at
Morningstar.
“A
spot
ETF
like
the
recently-approved
spot
Bitcoin
ETF
primarily
holds
the
actual
cryptocurrency
itself
such
as
Bitcoin.
It
physically
owns
and
stores
Bitcoin,
and
the
ETF’s
value
is
directly
tied
to
the
real-time
price
of
Bitcoin.
“When
you
invest
in
a
Bitcoin
spot
ETF
you’re
essentially
owning
a
share
of
the
cryptocurrency
itself,
and
its
performance
closely
mirrors
the
price
of
that
cryptocurrency
–
minus
fees
and
costs.”
But
that’s
not
the
only
way
of
doing
it.
Other
ETFs
will
invest
in
cryptocurrency-related
instruments,
such
as
futures,
contracts,
futures,
options,
or
shares
of
companies
related
to
the
cryptocurrency
industry
0
see
above.
“Compared
to
these
structures,
spot
Bitcoin
ETFs
are
an
immediate
improvement
in
purity
of
Bitcoin
exposure,”
Calay
says.
Has
Cryptocurrency
Investing
Just
Gotten
Safer?
Purer?
Maybe.
Safer?
No.
Morningstar
Investment
Management,
which
is
Morningstar’s
professional
portfolio
investing
business,
remains
extremely
cautious
on
cryptocurrencies.
“What
started
as
a
pool
of
‘early
adopters’
has
morphed
into
a
growing
group
of
‘quick
profit
traders’,”
it
said
in
2021.
“This
motive
is
innately
understandable
yet
fraught
with
danger.”
That
house
view
has
not
changed.
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