ProShares Bitcoin Strategy ETF (BITO), the first US listed bitcoin ETF has started trading today, making the world’s biggest cryptocurrency available in a tax-efficient wrapper to investors via any brokerage account. “2021 will be remembered for this milestone,” said Michael Sapir, the CEO of ProShares.

Another bitcoin ETF from Valkyrie Investments is expected to launch tomorrow. Similar products from other providers like VanEck and Ark are also expected later this year.

The Winklevoss brothers had filed their first application for a bitcoin ETF in 2013, when the cryptocurrency was trading below $100.  Since then, regulators have rejected applications filed by many ETF providers.  Bitcoin is now trading close to $64,000. It has surged over 40% this month in anticipation of the ETF approval.

Investors can now easily buy bitcoin on crypto exchanges like Coinbase (COIN), and on platforms such as PayPal (PYPL) and Square (SQ). Many would still prefer an ETF, so they don’t have to worry about custody issues. They can hold these ETFs in traditional investment accounts where they hold stocks and bonds.

In the absence of an ETF, investor used product like the Grayscale Bitcoin Trust (GBTC) that can trade at a significant discount or premium to their NAV. Bloomberg reported today that Grayscale Investments has filed to convert GBTC into an ETF.

Investors should remember that BITO does not hold the cryptocurrency directly but invests in futures. Futures based products are not as efficient as the physically backed products in general as derivatives add another layer of complexity. Due to rollover costs, these ETFs may not closely track the spot price of the cryptocurrency.

SEC Chairman Gary Gensler has expressed a preference for ETFs that hold bitcoin futures since unlike cryptocurrencies, futures trade on regulated exchanges.

Futures based products are not the perfect products investors were looking for. Nevertheless, it is a watershed moment for crypto investors and the ETF industry.  And I believe that investors will not have to wait too long for an ETF holding actual bitcoin directly.

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