SEC to Allow the First Bitcoin ETF to Trade in the US, Urges Investors to be Careful when Investing in a Fund Holding BTC Futures
The Securities and Exchange Commission will finally allow the first US Bitcoin futures exchange-traded fund (ETF) to begin trading, reported Bloomberg, citing people familiar with the matter.
The regulator is reportedly not likely to block the ETF from starting to trade next week.
While the SEC rejected every single physically-backed Bitcoin ETF application since 2013, the proposal by ProShares, the first one among the nine such products filed whose SEC's deadline to reject or approve the issuer's futures-based filing expires on Monday, is based on futures contracts and filed under mutual fund rules that SEC Chairman Gary Gensler has hinted his support for because they provide “significant investor protections.”
Interestingly, on Thursday, SEC posted an Investor Bulletin on “Funds Trading in Bitcoin Futures” to educate the public about investing in a fund that holds Bitcoin futures contracts.
The US Securities and Exchange Commission’s Office of Investor Education and Advocacy said it “urge(s) investors considering a fund with exposure to the Bitcoin futures market to weigh carefully the potential risks and benefits of the investment,” while noting that Bitcoin is highly speculative.
Under the Investment Company Act of 1940, the funds are required to provide important investor protections.
However, it wasn’t the first time that the SEC urged people to carefully weigh the potential risks and benefits before investing in a fund that holds Bitcoin futures contracts. It was previously posted in June and July this year, as well.
Still, Bloomberg Intelligence’s Eric Balchunas has upped the chances of a Bitcoin ETF approval this month to 85%. “Common sense says prob very good sign,” he added.
As we reported, Valkyrie Investments also updated its futures-backed ETF prospectus with the ticker BTF this week, something that typically happens when an issuer is nearing launch.
“At the end of the day, really the strongest piece of evidence is Gensler's own words. He literally told them what to do.”
Meanwhile, there are some concerns around the demand for this product, with James Seyffart of Bloomberg saying,
“Don't think the futures ETF will be ALL that popular. Definitely get assets & some more bullish than others. But general consensus is demand won't be insane for this structure. especially compared to a spot ETF.”
For now, with the optimism in the crypto market and the $6.7 trillion US ETF industry sky-high, the price of Bitcoin has hit $60,000 for the first time since April 18.