The debut of the first crypto futures ETF would signify recognition of cryptocurrencies by the SEC.
The first US Bitcoin ETF is set to debut tomorrow, Tuesday . The ProShares Bitcoin Strategy ETF, which will give exposure to the most famous crypto futures contracts but not to the spot market, will trade under the ticker “BITO”. The debut would end with a recognition of crypto from the SEC, the US stock market regulator, which in the year rejected several requests of this type.
In this way, Bitcoin is once again close to US$62,000 , a mark it had touched last Thursday and then remained between US$60,000 and US$61,000. Shortly before local noon, the price of the most popular cryptocurrency reaches a mark of US $ 61,909.04, rising 1.50% .
The US securities regulator does not need to take any formal action to approve the applications, but tomorrow is the deadline for the regulator to reject it or let it go forward.
Under federal law, applications can become effective if the SEC misses a required deadline without requesting changes or ordering the would-be issuer to withdraw the filing. Bloomberg mentioned applications from ProShares and Invesco as two proposals that could be launched under this law.
The SEC is currently reviewing around 40 Bitcoin ETF applications. According to the international agency Bloomberg, the regulator is expected to approve at least some of them , clearing the way for cryptocurrency-based instruments to begin trading on the US regulated market.
“The creation of a Bitcoin futures ETF is a milestone in the history of cryptocurrencies,” Matías Bari, CEO of SatoshiTango, tells Clarín. The fact “confirms” that this is here to stay, says Bari, who warns “as happened with Coibase and its listing on the stock market, for example.”
“Bitcoin and crypto are beginning to be institutionally endorsed on several fronts ,” says Bari. “But also, in technical and financial terms, what it allows is that companies, funds or institutions that are currently not allowed to buy cryptocurrencies due to their statute, will now be able to invest in the futures ETF,” he concludes.
According to the technical analyst of financial markets and creator of the Sé Diferente academy, “it will give the possibility of investing within the regulated market and without the need to have cryptocurrencies directly in a wallet.” In that sense, “it will increase the volume of negotiation considerably”.
The expectation was growing after Gary Gensler, chairman of the SEC, said earlier this year that he supported this type of product, which according to him offers more protections for investors than an ETF that is linked directly to physical bitcoin.
As the debut date approached, Bitcoin rose in price to reach $62,000 this morning, although it is now back in the $60,000 range it closed with last week.
Barring a last-minute setback, the launch of the Proshares fund will be the culmination of a nearly decade-long campaign by the ETF industry . Exchange traded funds, hence the acronym ETF, are multi-product associated investment funds that are unmanaged and publicly traded . In addition, they are cheaper than managed funds -which charge fees for the service- and allow individual investors to distribute their placements in different instruments through a single investment.
“Crypto ETFs are inevitable. A product like this will eventually become a reality as there is a demand for it,” said Chris Kline, COO and co-founder of Bitcoin IRA.
“It seems clear that some version of a crypto ETF will be approved by regulators soon, probably on Monday,” Kline stated. He added: “As regulators become more familiar with the space, the SEC is beginning to understand how these assets are stored, secured and reconciled so that they make sense in traditional finance.”
Last Thursday, a retweet from the SEC's education office, referencing a link to a bulletin from June, where it wrote that “investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market , is a highly speculative investment” , spread like wildfire the rumor that the approval of an ETF was imminent.
Proponents of Bitcoin ETFs have sought approval as a confirmation of mainstream acceptance of cryptocurrencies ever since Cameron and Tyler Winklevoss, the twins best known for their role in Facebook history, submitted the first application for a Bitcoin ETF in 2013 , reported Bloomberg.
What is an ETF
An ETF is like a common investment fund but traded as if it were a share and “this ETF can have different objectives. It can replicate a commodity, there is the gold ETF, for example; it can replicate a stock index, such as the S&P 500 ETF. Or it can replicate a portfolio of a specific sector of company assets or the economy, such as the technological or industrial sector,” Diego Martínez Burzaco, head of Research and Strategy at Inviu, explained to Clarín.
In other words, the ETF “provides access to invest in traditional financial assets, commodities or asset portfolios through a single instrument ,” summarized Burzaco.
In the case of the Bitcoin ETF, which is going to debut “what it is going to try to do is replicate the price” of the cryptocurrency through instruments related to the cryptoactive, said Burzaco, who warned that “it will be interesting because Surely there is going to be a lot of demand for those who want to get exposure to crypto through a regulated instrument like the ETF listed on Wall Street.”
Finally, the analyst explained that “ETFs are an instrument that has revolutionized investments in the last 15 years because they give easy access to portfolios, sectors or stock indices to a retail or medium-sized investor, in terms of costs” .
“ETFs (Exchange Traded Funds) are listed funds that are traded on the stock exchange, according to the literal translation,” detailed analyst Mauro Cognetta. “They are common investment funds, because they group together certain assets that follow a logic. And the difference between the funds that we know in Argentina and these, is that those over there are traded as if they were shares . They are bought and sold,” he explained. Cognetta. And he added: “On the other hand, the open investment funds here in Argentina are subscribed and rescued.”
The analyst stressed that the difference between one and the other is that when one subscribes, they do so at an unknown price. “You subscribe, but you don't know at what price you do it. It will be at the closing price. The next day, you find out at what price you entered. In the same way when you redeem. “On the other hand, in ETFs you buy and sell on the spot, and you know at what price you do the operation” , he indicated.