Bitwise Bitcoin ETF

The Bitwise Bitcoin ETF seeks to remove some of the barriers preventing investors, from asset managers to financial advisers, from directly investing in bitcoin. It charges no management fee during its first six-month lifespan for assets exceeding USD1 billion in assets under management.

Launch of bitcoin ETFs marks an historic event for cryptocurrency. Approved by the Securities and Exchange Commission after years of struggling with regulators, their launch represents a change of course from an organization that once saw bitcoin as risky investment and opposed attempts at creating ETFs for it.

However, these products don’t come without risks. One major risk associated with ETFs is custodianship; many of their holdings are stored with Coinbase – the industry standard – however if Coinbase were ever compromised through cyber attack or government penalties it could lose access to its investors’ funds and no longer allow access.

One risk is that new ETFs may not attract enough inflows to be successful, with their success or failure often determined by how competitive their fees and liquidity offerings are with those from traditional asset managers like BlackRock and Fidelity; market inflows will likely depend on these large traditional asset managers’ charges for bitcoin ETFs; some issuers have also reduced or waived proposed fees altogether in recent filings, with others offering to waive them after six months or five billion in assets have been acquired.