For years now, investors within the United States have waited for a Bitcoin ETF to be approved by regulators. To date, there have been applications put forth by various entities, with each being shut down by the SEC.
While the eventual approval of a Bitcoin ETF seems to be an inevitability as the market matures, there are other investment vehicles currently, or soon-to-be, available to investors while they wait. The following are a few examples of these, from both within, and outside of the United States.
‘HAIC Digital Asset Fund I’ by Hauck & Aufhäuser, and Kapilendo
Our first example is also the most recently announced, titled the ‘HAIC Digital Asset Fund I’. With an expected launch of January 1st, 2021, this fund is said to provide investors with passive investing in a group of crypto-based assets such as Bitcoin, Ethereum, and more.
With a minimum investment requirement of €200,000, and fees of 2.05%, this newly established fund is targeted towards institutional and high-net worth investors.
Holger Sepp, Hauck & Aufhäuser board member, states,
“We see that digital assets and cryptocurrencies are becoming increasingly attractive to institutional investors. With the launch of our first crypto fund, we have created together with Kapilendo an innovative investment vehicle that enables our customers a cost-effective and secure access to the new asset class Crypto, while complying with the established quality standards and high standards of Hauck & Aufhäuser.”
While Hauck & Aufhäuser will oversee management of the fund, custodial services will be provided by Kapilendo.
‘The Bitcoin Fund’ by 3iQ
Since its launch in April of 2020, ‘The Bitcoin Fund’ by 3iQ has grown in size and popularity at a staggering rate. This fund caught the attention of many, as it was one of the first of its kind to be listed on a national stock exchange – the Toronto Stock Exchange.
As of December 4th, 2020, The Bitcoin Fund boasts a Net Asset Value (NAV) or $400,245,240.58 CAD. The fund offers a 1.95% management fee, and provides investors with the ability to gain exposure to the long term appreciation of specifically Bitcoin, without the need for self-custody.
While 3iQ oversees management of the fund, custodial services are provided by Cidel Trust Company, and Gemini Trust Company.
Although the reasons for partaking in such a fund are various, 3iQ notes that, “Bitcoin has low correlation to some traditional asset classes, offering valuable portfolio diversification & risk reduction,”. Interestingly, this is a sentiment shared with various investment firms, as an increasing amount of companies are ‘waking up’ to the potential of digital assets.
With The Bitcoin Fund becoming an obvious success, 3iQ believes that there is enough investor appetite for similar offerings, based on alternative assets. As such, the company has recently announced that it was granted approval for the launch of ‘The Ether Fund’ on the Toronto Stock Exchange. As its name would suggest, this fund will provide investors with exposure to Ethereum, while eliminating the need for self-custody.
‘Bitcoin Trust’ by Grayscale
With a Bitcoin ETF remaining elusive in the United States, institutional investors continue to turn to the ‘Bitcoin Trust’. This offering by Grayscale is available as an over-the-counter (OTC) product, and provides investors with exposure to Bitcoin. Access to the trust is available to both accredited and institutional investors, with the latter showing a marked increase in interest throughout 2020.
For those looking for proof that Bitcoin is in high demand by institutional investors, look no further than the current premiums associated with Grayscale’s Bitcoin Trust. In recent days, participants in the fund have paid roughly 20-30% premiums vs buying Bitcoin directly. This premium of course is justified through the convenience and security provided through the fund, as it removes the need for self-custody.
Despite this premium, Grayscale’s Bitcoin Trust has grown to hold roughly $6.4 billion USD under management. The Bitcoin Trust requires a minimum $50,000 USD investment, and offers a 2% annual sponsor fee.
While the Bitcoin Trust is offered and managed by Grayscale Investments, custodial services are provided by Coinbase Custody Trust Company.