ProShares is gearing up to roll out an exchange-traded fund (ETF) based on Bitcoin (BTC/USD) futures tomorrow. The company disclosed this news earlier today, noting that the US Securities Exchange Commission (SEC) approved its Bitcoin Strategy ETF on Friday. This has become the first crypto-linked ETF to launch in the US.
However, it is worth noting that the ETF is linked to BTC futures contracts that trade on the Chicago Mercantile Exchange (CME), not actual BTC.
Commenting on this development, NYSE’s head of exchange-traded products, Douglas Yones, said,
This is an exciting step but not the last.
Yones added that he believes the SEC will approve a range of crypto-linked ETFs over time. He further noted that this milestone shows the crypto sector’s legitimacy, with the other big win for the industry being Coinbase going public earlier this year.
Notably, other companies waiting for the SEC to decide the fate of their applications for BTC futures ETFs before the end of the year. These are VanEck, Invesco, Valkyrie, and Galaxy Digital.
Mixed emotions in the crypto space
Echoing, Yones sentiments, Michael Sapir, the CEO of ProShares, said this achievement would make 2021 a memorable year in the crypto space. According to him, people are curious about crypto but are hesitant to invest through unregulated exchanges.
With the ProShares Bitcoin Strategy ETF, Sapir believes such investors will get convenient access to Bitcoin in a wrapper that has market integrity.
Sapir further pointed out that the crypto space has been trying to launch BTC ETFs for over a decade with no luck. While the ProShares Bitcoin Strategy ETF is not based on BTC’s spot market, he believes CME offers the most accurate reflection of the BTC market.
As such, Sapir concluded that the ProShares ETF is effectively a BTC ETF in as much as it is tied to BTC futures.
While Sapir seems contented with the BTC futures ETF, some in the crypto space feel different about the SEC’s decision to approve a BTC futures ETF but reject ETFs based on physical BTC. An example is Grayscale Investments’ CEO, Michael Sonnenshein, who recently said,
A futures is a derivative of the spot market, so if you are comfortable with futures, why wouldn’t you be comfortable with the spot market?
This news comes after SEC’s Chair, Gary Gensler, noted that ETFs based on BTC futures are more likely to get approval than BTC-based ETFs. According to him, such ETFs would have to comply with the Investments Company Act of 1940, which offers significant investor protections.
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