Former Executive at World Gold Council Is Developing a New Bitcoin ETF

October 25, 2019 / by Crypto.IQ

The former managing director at the World Gold Council and the SPDR Gold Shares’ portfolio manager is developing a new Bitcoin exchange-traded fund with Kryptoin Investment Advisors.

The firm based in the Cayman Islands has already filed the initial registration statement with the US SEC.

This new fund is being developed for a couple of years and would keep track of the CME CF Bitcoin Reference Rate for reflecting actual market value of Bitcoin. The management fees for the fund haven’t been disclosed in the filing, and it says that it’ll be processing creations and redemptions while the management fee will be accrued in Bitcoin only.

In his recent interview, the head of exchange-traded products at Kryptoin Jason Toussaint said:

“The benefits and challenges, when it comes to Bitcoin as an asset class, are similar to what they were when the Gold Council brought SPDR Gold Shares to the market. There was also a lot of learning the SEC had to go through to fully understand and gain a level of comfort with the underlined gold market.”

He is now the head of product development in the budding firm. Previously, Toussaint is known for managing SPDR Gold Shares (GLD), a top name in the world gold ETFs, as he was the CEO at World Gold Trust Services, a fully-owned subsidiary of the World Gold Council. The State Street Global Advisors now market that product.

If the SEC approves this new ETF of Kryptoin, it will get its shares listed on the NYSE Arca that trades stocks & options, in comparison to the New York Stock Exchange where large-cap stocks are traded for the most part.

However, the SEC-approved Exchange-Traded Funds have become more of a holy grail now, with not a single offering given the green signal by the SEC.

This year saw three different Bitcoin ETF proposals being filed one of which was denied, the other one was withdrawn, while the third one is pending as yet. Furthermore, Fundstrat’s Tom Lee has recently said that a Bitcoin ETF won’t be approved until the market size can bear the demand an ETF would generate. That would require a Bitcoin price of more than $150,000, he claimed.

How Things Will Shape Up

This new ETF of Kryptoin is only the beginning, with just an initial registration being filed. According to Toussaint, there are a couple of crucial aspects for getting the approval from the SEC – the information-sharing agreements and the understanding of the operation of underlying crypto markets for SEC.

Toussaint’s first gold ETF experience is reflecting the strategy they’re going to implement. He said that Bitcoin has seen resistance from regulatory bodies, just like the gold ETF, as non-publicly listed securities that fall under an ETF structure requiring exchanges, crypto and gold, for being more transparent with financial pricing, volume, as well as other transactional data.

They’re also closely monitoring the maturing BTC futures contracts hoping that more resilience will be shown by the markets towards manipulation.

Generally, with markets maturing, both in the case of spot and futures markets, the regulatory bodies tend to be positive about the Bitcoin ETF, he said while noting that this process might take longer than expected.

“This is not another S&P ETF. We are in this [process] for the long haul,” Toussant said. “Of course, we want to get it approved as soon as possible, but the firm is realistic, in terms of its expectations, given the recent comments through the Bitwise Bitcoin ETF order.”

Besides the underlying BTC asset, volatility is something the SEC is more cautious about in general.

CLS Investments portfolio manager, Kostya Etus, said:

“The challenge of launching a Bitcoin ETF comes full circle in trying to have regulators be comfortable enough with it to approve it for investment by that wider investor base. This was a huge hurdle for leveraged and inverse ETFs, but issuers overcame that eventually, and it’s just a matter of time before they overcome this one.”

Not disclosing more details about the legal process of the firm with the SEC, Donnie Kim – Kryptoin’s CEO – was of the view that advancements in various regulatory aspects can be taken positively for their specific case.

“The CFTC’s approvals for Bitcoin and Tether to be traded on the futures markets is a good sign for us to launch the bitcoin ETF,” Kim said.