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Bitcoin broke into the consciousness of the general public in 2017. In March of that year, the price surpassed its then-all-time-high of USD 1,342. By December 17, 2017, the price was USD 19,783, up 1,824% from January 1, 2017.

About a year later, on December 7, 2018, the price had dropped to below USD 3,300, a 76% drop from the prior December. But by then, many investors (especially younger ones) were seemingly hooked. And, over the past year, the upside volatility has returned. On July 27, 2020, the price for Bitcoin had recovered the value lost in the COVID-19-related crash and was selling at USD 10,944. It hit a new all-time high above USD 64,000 on April 14, 2021.

But purchasing Bitcoin directly is not as easy as purchasing stocks. It requires establishing an account with an exchange, many of which charge relatively high commissions on cryptocurrency purchases. It is also necessary for a person to decide what kind of wallet to use to store their Bitcoin. And, there is that pesky problem of passwords. There is no “forgot password” option for cryptocurrency wallets. If one forgets their password, the Bitcoin is lost. By some estimates, about 20% of Bitcoin – valued at hundreds of billions of dollars – has been lost due to lost wallets or forgotten passwords. Thus, the idea of using a Bitcoin exchange-traded fund (ETF), which will greatly simplify the process of investing in Bitcoin.

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Article first published in the New York Law Journal, April, 20 2021.

Author

David Zaslowsky chairs the Litigation Department of Baker McKenzie's New York office, and practices in the area of general commercial litigation and arbitration. He is the editor of the Firm's blockchain blog and co-editor of the Firm's International Litigation & Arbitration Newsletter. David has a degree in computer science and has worked on numerous technical-related disputes. He has also worked on many cases involving issues of international litigation, including matters related to the Foreign Sovereign Immunities Act, enforcement of foreign arbitral awards, the Alien Tort Claims Act, forum non conveniens, obtaining discovery in aid of foreign proceedings under 28 U.S.C. Section 1782, and foreign attachments. David has been included for a number of years in the Chambers USA Guide and Chambers Global Guide for his expertise in International Arbitration.

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