The Securities and Exchange Commission (SEC) has given the green light for the first Bitcoin (BTC) exchange traded fund (ETF) in the United States. Note that the ETF is based on Bitcoin futures contracts and not the cash market.
The first Bitcoin ETF in the United States
It’s finally here. After more than 8 years of advocacy from the crypto industry, the Securities and Exchange Commission (SEC) has given the green light to a Bitcoin (BTC) exchange traded fund (ETF).
These funds, more commonly known as Exchange Traded Funds, are index funds whose units can be sold or bought directly on the stock market. An ETF offers investors the opportunity to access the BTC market through a traditional brokerage account, without the potential technical barriers to entry or risks associated with holding or transferring BTC directly.
ProShares’ ETF, based on Bitcoin futures, is expected to be listed as early as Monday if no last-minute regulatory intervention occurs.
The company has filed an amended prospectus indicating its intention to launch the fund on October 18 under the ticker BITO. The validation of a Bitcoin-based ETF in the U.S. had been expected for several years by industry players.
An ETF based on futures contracts
The U.S. regulator has authorized the creation of a Bitcoin ETF, however, it is not a fund indexed to the price of Bitcoin, as most players had hoped. Instead, the agency has authorized an ETF on BTC futures contracts.
This means that the new fund, proposed by ProShares, will not give guaranteed shares, but shares linked to a set of contracts to buy Bitcoin in the future.
SEC Chairman Gary Gensler said he believes futures products offer better protection for investors because of the laws governing them.
Other ETF applications, this time based on the spot market, are under consideration by the SEC. The regulator recently postponed its decision for management company VanEck’s Bitcoin ETF until November 14. In its previous rejections, the SEC has always cited concerns about manipulation in the Bitcoin spot market.