Bitcoin ETF may finally trade next week. Cryptocurrency enthusiasts and members of the exchange-traded fund industry are bracing. For the debut of the world’s first bitcoin futures ETF on Tuesday. When the ProShares Bitcoin Strategy ETF is set to begin trading on the New York Stock Exchange. The ProShares Bitcoin Strategy ETF is expected to trade at a price of $5.50 per share.
But there is a catch: the ETF will not become operational until the Securities and Exchange Commission. Objects to the filing, which can happen up to midnight on Monday.
Despite the uncertainties, many people believe that the ETF will begin trading. As scheduled, despite the fact that the market is volatile.
A bitcoin futures ETF: a disappointment, or step in the right direction?
The ETF is based on the Chicago Mercantile Exchange’s bitcoin futures. Many in the bitcoin community would prefer a pure-play ETF backed by physical bitcoin. So this is a disappointment. They argue that the high cost of rolling into futures contracts means that the cryptocurrency’s spot price. Will not be accurately tracked, and that the SEC should approve a pure-play bitcoin ETFs.
“A futures contract is a derivative of the spot market, so why wouldn’t you be comfortable. With the spot market if you’re comfortable with futures?” Michael Sonnenshein, CEO of Grayscale Investments, stated. The Grayscale Bitcoin Trust is managed by Grayscale, a digital currency asset manager. Grayscale has stated that if regulatory approval is granted, it plans to turn GBTC into a bitcoin ETF.
Regardless, most bitcoin activists and the bitcoin ETFs community are split. Applaud it as a tiny but crucial step toward democratizing the crypto market.
“This is a crawl, walk, run market,” said Matthew Hougan, chief investment officer at Bitwise Asset Management. “The lowest step the SEC can take right now. Because it is a regulated market, is to start a bitcoin futures market.”
Because futures are a regulated market, SEC Chair Gary Gensler is more likely to authorize a bitcoin futures. ETF to begin trading than a pure-play bitcoin ETF.
Gensler and the SEC have a crypto problem, and a bitcoin futures ETF will help
Gensler wishes to foster financial innovation such as cryptocurrency. Yet, he lacks regulatory power over key areas such as cryptocurrency exchanges.
“Gensler aspires to be both inventive and balanced,” added Hougan. “He doesn’t want to put a stop to financial innovation [in the crypto space].” He wants to put a stop to fraud, shady characters, and illegal conduct. He wants to provide a legal basis for it.”
But, for the time being, he lacks a regulatory framework. Congress will almost certainly need to step in and create a wide regulatory framework for the entire crypto world. But the chances of that happening anytime soon are minimal.
However, the crypto industry is expanding at such a rapid pace that Gensler feels compelled to act. The SEC can only go so far in asserting regulatory authority without ruffling other agencies’ feathers.
As a result, the temporary solution is to allow the trading of a bitcoin futures ETF.
A bitcoin futures ETF allows the general public to participate without having to deal with all of the issues. That come with holding the virtual currency. First and foremost, you do not need to be concerned about custody. No one has complained about forgetting their exchange password. And no one has complained about someone owing bitcoin on an uncontrolled exchange. Who has had their cryptocurrency stolen by cybercriminals.
Can a futures market be manipulated?
One major argument for not approving a bitcoin ETF is market manipulation. A bitcoin futures ETF has also raised concerns about the spot market manipulating the futures market.
Hougan and his colleagues at Bitwise Asset Management claim this concern is unjustified.
“We found that the CME bitcoin futures market is the top source of price discovery globally,” Hougan said. “CME prices fluctuate before Coinbase, Kraken, and other offshore exchanges. The CME rules. The spot market does not follow the futures.”
Similarly, ETF Trends’ Nadig noted that futures have historically dominated commodity pricing. “Liquidity is in futures.”
Hougan has extended this logic. Bitwise applied for a bitcoin ETF on Thursday. They claim the market is mature enough for actual bitcoins, not futures.
Not your grandma’s bitcoin, Hougan asserted. “It’s an old market.”