The U.S. Securities and Exchange Commission (SEC) has given its approval to the first ever Bitcoin ETF filed by ProShares, an American provider of specialized exchange-traded products (ETPs).
The shares will be listed on the New York Stock Exchange’s Arca starting Monday, under the ticker symbol BITO with 95 basis points.
According to the amended prospectus filed 15th of October, the approval’s effective date is slated for 18th of October, moving forward with the first Bitcoin ETF officially given the seal by the SEC. ProShares’ ETF is tied to Bitcoin futures contracts, but is not directly tied to current pricing for Bitcoin. The approval represents a watershed moment for the crypto and blockchain space.
The Commission, which has either largely delayed or ignored the slew of applications for a Bitcoin ETF which began in a wave over four years ago, appears to have loosened its iron grip on crypto and its requisite regulatory restrictions.
Exchange traded funds (ETFs) represent investment products that track the price of assets, commodities, or stocks. In the case of Bitcoin, it will be treated in the same way as a traditional asset. ETFs may be bought, sold, or traded off during the regular market hours and can be incorporated into other financial products, such as retirement funds, insurance, or even traditional savings plans, included as a percentage of those products’ packages.
While the ProShares Bitcoin ETF is not directly tied to actual Bitcoin prices as they move through several vectors of market volatility, as a futures-backed ETF, it has a higher chance of approval from the SEC. SEC Chair Gary Gensler has directed firms applying for a Bitcoin ETF to do away from a “pure” Bitcoin ETF that would instead closely follow Bitcoin’s actual pricing.
“A rise in Bitcoin prices may not result in a similar increase in the value of a fund holding positions in Bitcoin futures contracts. This is in part because funds that trade commodity futures contracts may not have direct exposure to the contracts’ underlying assets. Futures contract prices can vary by delivery months and differ from the underlying commodity’s spot price. Futures contracts also expire periodically, resulting in fluctuations of portfolio exposure as expiring futures positions are typically rolled into new contracts,” the SEC stated in an Investor Bulletin it shared, hinting to the approval of the ProShares ETF before its official announcement.
Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits. Check out our Investor Bulletin to learn more: https://t.co/AZbrkpfn8F
— SEC Investor Ed (@SEC_Investor_Ed) October 14, 2021
As of press time, firms on the ETF approval waitlist include Mike Novogratz's Galaxy Digital, Cathie Wood's ARK Invest. Two other Bitcoin futures ETFs are slated for approval from the SEC, with the now NASDAQ-certified Valkyrie ETF, as well as offerings from Invesco and VanEck, among others on the Commission’s approval waitlist.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.