According to sources familiar with the subject, the Securities and Exchange Commission is likely to approve the first U.S. Bitcoin futures exchange-traded fund.
The FDA is unlikely to prevent the items from trading next week, said the persons who declined to identified. Unlike prior Bitcoin ETF applications, ProShares and Invesco Ltd.’s plans are based on futures contracts and submitted under mutual fund rules that give “substantial investor safeguards,” according to SEC Chairman Gary Gensler.
An SEC representative and a ProShares executive declined to comment.
While Bitcoin neared $60,000, futures for crypto-linked stocks rose in US premarket trading. The largest cryptocurrency market cap has risen nearly 90% in three months, approaching the previous year’s high of $64,869.
Barring a last-minute reversal, the fund debut will cap a nearly decade-long ETF industry push. Advocates have sought approval to indicate widespread acceptance of cryptocurrencies since Cameron and Tyler Winklevoss, the twins famous for founding Facebook Inc., filed the first Bitcoin ETF application in 2013.
Issuers have been trying for years to secure approval for various alternative arrangements, with varying degrees of success. There have been suggestions for funds to hold Bitcoin in a digital vault or utilize leverage to boost returns. Others wanted to reduce Bitcoin’s famed volatility, a source of SEC disagreement.
Crypto industry is risky for investors?
The SEC has already stated that the crypto industry is risky for investors. The SEC was concerned about price manipulation, lack of liquidity, and the volatility of Bitcoin for ordinary investors. Bitcoin’s last three full-year results were a 74% loss, a 95% gain, and a 305% gain. The SEC also questioned whether funds would have sufficient information to value bitcoins or comparable items. Questions have raised about proving ownership of coins and the possibility of hackers.
When Gensler took over the agency, many crypto supporters rejoiced. They mentioned his earlier involvement in crypto — he taught “Blockchain and Money” at MIT’s Sloan School of Management. This is the “Wild West” for the chairman, who has recently called for more strong market oversight.
In August, Gensler indicated he preferred funds based on CME-traded Bitcoin futures registered under a 1940s statute. He reaffirmed it late last month.
This has fueled a rush of futures-backed registrations and a sense of impending acceptance among issuers. The anticipation has spurred a meteoric rise in Bitcoin’s price, which has than doubled since late July’s low of $30,000.
Four futures-backed Bitcoin ETFs might start trading on US exchanges this month, with VanEck and Valkyrie’s applications due soon. Meanwhile, scores of bitcoin ETPs have popped up in Canada and Europe. Valkyrie remained silent.