With the US Securities and Exchange Commission (SEC) recently pushing back the decision to approve, or reject, Bitcoin ETF’s, there has been a lot of buzz in the cryptosphere.

But what are ETFs really, and how do they relate to cryptocurrencies?

Traditional ETFs

To understand what “Bitcoin ETFs” are, one has to understand what an ETF is first. It stands for “exchange-traded fund” which, as its name suggests, is a security or investment vehicle that can be traded in stock exchanges.

Much like a mutual fund, ETF’s are a “basket” of assets that are owned by several different entities the same way fractional ownership works for high-value assets like gold, resort real estate, and art. Because the stocks within the basket are collectively expensive, people can have fractional ownership of those stocks by owning shares of the ETF instead. There’s no minimum investment, which lowers the barriers to entry for each individual to engage in trading, enabling more people to participate easily. It’s easy, simple, and therefore severely attractive to many investors.

ETFs are also tax-efficient since ETFs (usually) only incur taxes when holders sell their shares for a profit. Another thing that makes ETFs attractive for investors is, unlike mutual funds, ETF’s can be traded, bought, and sold; at any time during the day. This helps put investors at ease. It saves them time and cuts down fees while allowing them to gain exposure to different assets without having to invest in those assets individually. ETFs are also a sign of regulatory approval, which helps increase investor confidence overall.

Industry giants drooling over crypto ETFs

Despite the United States SEC’s reluctance, cryptocurrency ETFs are already available in other places. Canada launched a crypto-ETF earlier this year, and other crypto-friendly countries around the world are pondering it; this and the fact that the US is also taking its time to put this into consideration is positive reinforcement that this will be a part of the future.

Apart from established companies like Nasdaq, Gemini, and Cboe, some start-up exchanges are also preparing for a world with crypto ETFs. Among those emerging companies is BitAsset, a Hong Kong-based exchange that is gearing up to take on industry giants in this highly lucrative sphere.

At the moment, BitAsset’s $30 million volume is small relative to the top exchanges; nonetheless, this is impressive for a new exchange. As we all know, in the cryptocurrency sphere a lot can happen in a short period of time. Industry giants can fall in a snap, and fledgling companies will be more than happy to take their place. With their pledge to deliver several trade services to their user base—ETFs included, BitAsset is a newcomer worth watching.

Cryptocurrency exchanges—big and small–are determined to get ETFs trading; most are readying themselves for when crypto ETF’s get approved to put themselves ahead of their competition.

So how do ETFs tie in with cryptocurrencies? And why is everyone going crazy about it?

Cryptocurrency ETF

Unfortunately, the volatility of cryptocurrencies has been an effective deterrent for investors. For merchants, some wallets offer a workaround against these fluctuations. These wallets allow merchants to easily flip between cryptocurrency and local fiat to protect their funds from the instability.

So why do we need a cryptocurrency ETF when people can easily buy and trade cryptocurrencies through exchanges?

Not all investors are adept in navigating the different processes involved in moving funds through cryptocurrency exchanges, and many “big” investors don’t have the time to get into it; they just want to put their money in and leave it to a fund manager to look after.

And for someone who wants to invest in cryptocurrencies but cannot commit the same amount of time and attention as day traders who do it as their occupation, there aren’t a lot of ways to protect their holdings from the erratic market fluctuations. This discourages a large portion of the population who would rather not take the risk of losing lots of money.

In short, cryptocurrency ETF’s will save both institutional and retail investors from a lot of headaches. As we know, the more money investors pour into the crypto market, the higher the value of the market will be, and this will benefit individuals who own shares of a crypto ETF because their holdings will increase.