What are Bitcoin ETFs and why they are considered safer than investing in cryptocurrencies 

 Australia became the newest country to launch a Bitcoin ETF after the regulators finalised their approvals. This move has brought back Bitcoin ETFs into the limelight because many consider them to be low-risk alternatives to cryptocurrencies. 

Bitcoin ETF is an exchange-traded fund that tracks the price of the most popular cryptocurrency and allows investors to purchase and sell the security on a stock exchange throughout the day. 

They allow investors to gain exposure to Bitcoin through traditional stock markets instead of having to buy or sell the digital asset on a cryptocurrency exchange. 

Moreover, ETFs are regulated financial vehicles, that is they are approved by regulatory authorities, which gives investors a sense of security before investing in them. 

Furthermore, unlike crypto markets, stock markets are far more liquid, which makes buying a Bitcoin ETF more preferable option than investing in the cryptocurrency itself. 

However, investing in a Bitcoin ETF rather than directly owning it directly has a number of drawbacks as well. 

The Australian regulator also plans on approving another crypto ETF next month.  US SEC had also given its nod to a Bitcoin ETF a few months ago. But the road to regulatory approval is not so easy. Incidentally, ace inventors Cathie Woods and the Winklekovs brothers’ request to launch Bitcoin ETFs was rejected by the US SEC. 

The biggest issue is the fact that ETFs can only be bought and sold during market hours, but cryptocurrency exchanges are open 24 hours a day. This means that if the price of Bitcoin decreases dramatically, investors would not have an option to sell their holdings. 

Also, while owning the cryptocurrency Bitcoin is free, ETFs charge an administrative fee. And, investors must go through know-your-customer (KYC) checks to buy ETFs, which is not the case when people invest in Bitcoin.  It can be anonymously bought on peer-to-peer exchanges as well. 

Lastly, investors themselves have custody of their assets while investing in cryptocurrency. But the custodians are third parties when it comes to Bitcoin ETFs.