The long-awaited Bitcoin ETF was given the green light after several failed attempts. Recently, Nasdaq and Brazilian fund manager of Hashdex, a cryptocurrency exchange-traded fund (ETF), was approved to trade on the Bermuda Stock Exchange. Last week, The ETF was approved by the Bermuda Stock Exchange.

Hashdex says the new cryptocurrency investment product tracks the Nasdaq Crypto Index. So far, the launch date is yet to be set. But many predict that the ETF will be available by the end of this year. While commenting on the news, the Nasdaq spokesperson stated:

“The ETF will be available for public trading on BSX once the Nasdaq Crypto Index [NCI] is officially launched. We can’t confirm any dates at this moment. However, it shouldn’t take long. We need the NCI launch first.”

The spokesperson emphasized that Nasdaq will give more details about the index methodology once it is launched.

According to the BSX exchange website, “Hashdex Nasdaq Crypto Index ETF Class E Shares” is listed as “private placement,” with Hashdex Nasdaq Crypto Index ETF as the issuer on September 18. The 3 million Class E shares will be issued for trade on the platform. The website reads:

“Investment objective is to provide investment results that minimize the tracking difference of the performance of the Nasdaq Crypto Index … on a 12-month window.”

Hashdex chose to apply with BSX due to Bermuda’s crypto-friendly regulations. Notably, the upcoming ETF will not be available to American investors. This means it does not need the U.S. Securities and Exchange Commission (SEC) approval.

The Road to Bitcoin ETF Approval

The road to Bitcoin ETF approval has been long and filled with questions when will authorities approve Bitcoin ETF’s.

On June 30, 2016, the Bats BZX Exchange filed a proposed rule that hoped to change the Securities and Exchange Commission (SEC) rule on ETF. Through the proposal, the exchange sought to list and trade shares of the Winklevoss Bitcoin Trust. After long debates, the SEC rejected the proposal and issued a statement explaining its reason. The statement read in part:

“Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated. Therefore, as the Exchange has not entered into, and would currently be unable to enter into, the type of surveillance-sharing agreement that has been in place with respect to all previously approved commodity-trust ETPs agreements that help address concerns about the potential for fraudulent or manipulative acts and practices in this market — the Commission does not find the proposed rule change to be consistent with the Exchange Act.”

A few weeks later, the authority also rejected a similar request by NYSE Arca.

In 2017, SEC rejected an application by the Winklevoss twins for a Bitcoin ETF called the Winklevoss Bitcoin Trust. The SEC rejected the application with claims that the “underlying Bitcoin market was still too manipulable, volatile, and resistant to surveillance.” The authority also rejected an EFT by Grayscale Investment.

As the year ended, it became clear to many that SEC has strong views against Bitcoin EFTs. In 2018, the SEC rejected the second-time Winklevoss Bitcoin Trust proposed for listing by the Bats BZX Exchange. Yet, this time around, the authority gave a disclaimer stating:

“Although the Commission is disapproving this proposed rule change, the Commission emphasizes that its disapproval does not rest on an evaluation of whether bitcoin or blockchain technology more generally, has utility or value as an innovation or an investment.”

Notably, a few voices, the public, and members of the Commission began warming up to Bitcoin ETF. One Hester Peirce dissented from the decision. At the time, she was a commissioner at the SEC. She stated:

“The disapproval order focuses on the characteristics of the spot market for bitcoin, rather than on the ability of BZX — pursuant to its own rules — to surveil trading of and to deter manipulation in the ETP shares listed and traded on BZX.”

Reportedly, in August 2018, the Commission rejected nine applications. Then came 2019, and many began seeing the light at the end of the tunnel.

Despite constant dismissal from the Commission, many hoped for a turnaround in the coming days. Robert J. Jackson Jr., a commissioner with the SEC, went on record to state that he expected the Commission to license a Bitcoin ETF soon.

The Commodities and Futures Trading Commission (CFTC) also criticized the SEC for rejecting previous ETFs. While there is still much to be done before SEC approves any ETF in the U.S., some remain hopeful. Former Goldman Sachs executive and fund manager Raoul Pal predicted that the launch of Bitcoin ETF in the U.S. was also imminent, stating:

“I’m going to give you the biggest front-running opportunity of your life: they will get an ETF across the line. There will be billions of dollars that pour into it. Every pension plan will allocate some money to it. Every family office will allocate some money to it. And the more the price goes up, the more they will allocate.”