Google announced a revamp of its Finance product today, making it easier for casual investors to see, organize, and track their stock portfolios. The new interface has a nice new splash of color to better differentiate stocks, but there’s also some functional additions that will genuinely make a difference.
BlockFi is a wealth management platform that allows people to earn interest on and borrow crypto assets. Today, BlockFi received a Money Transmitter License from the state of Washington, making them the only regulated crypto lending service in the area.
There are tons of ways to lock up your crypto to earn interest in the decentralized finance space, but BlockFi is going about doing this in a centralized manner. Right now, BlockFi is offering up to 8.6% interst annually for locking up assets like Bitcoin, Ethereum and Gemini’s stablecoin, GUSD. These rates are competitive compared to DeFi options and users might feel comfortable that their operation is regulated and not experimental technology.
A Money Transmitter License is administered by FinCen and allows companies to be in the business of handling money. BlockFi has been capable of offering Washington citizens crypto backed loans since 2018, but they weren’t allowed to deposit crypto and earn interest.
Wherever there is demand for borrowing, there is opportunity for people to earn interest by lending cash or crypto and tons of projects are working hard to make passive interest accessible to everyone.
In a press release today, 3iQ announced approval for a closed-end Bitcoin fund on the Ontario Stock Exchange. This may seem like Canada regulators are a step ahead of Americans when it comes to accepting institutional investors, but the U.S. has a respectably similar investment option.
A closed-end fund trades shares, but the fund can’t buy them back . If an investor wants to sell their purchase from the closed-end fund, they have to do so on a secondary market.
These types of rules are almost identical to Grayscale’s open-ended grantor trust available right now in the U.S. Greyscale sells BTC in shares and does not buy back. The major differences are that Grayscale is over the counter (OTC) meaning that it isn’t traded on an exchange, and by being open-ended, they sometimes can create new shares for investors.
Both open-ended funds and closed-end funds are different than the Exchange-Traded Fund (ETF) that American regulators keep rejecting. Creation and redemption of ETFs are continuously possible, creating more incentive for price to stay close to the value of the asset.
So, 3iQ’s closed end Bitcoin fund lies somewhere between the Grayscale’s open-ended trust and the ETF that everyone wants. Purchasing the fund will be more accessible, but selling still will not be.
Closed-end funds also have a higher return on capital because they do not repurchase or create new shares, leaving them with more cash to pay in dividends. Still, dividends are usually paid once per year and someone interested in an ETF might not want to hold for that long. Another advantage for closed-end funds is that they trade intra-daily whereas open-ended funds like Grayscale are priced at the end of every day.
The ideal situation would be to have a Bitcoin ETF, closed-end and open-ended fund available for investors to choose from. Any progress made is a step in the right direction, but a single decision like this likely won’t cause Bitcoin to moon.