Rumors are flying. The SEC could approve a Bitcoin Futures ETF before the year ends. It looks like the United States Security And Exchange Commission will not provide the consent to the legendary Bitcoin ETF right now…or ever, but a new option has a few companies salivating. What does this mean? And why a Bitcoin Futures ETF prior to one for the possession itself? That’s what we’re here to check out.
But first, why is the SEC hesitant about approving the Bitcoin ETF? Investopedia responds:
“The reason is that bitcoin, the largest cryptocurrency in the world by market capitalization, remains largely unregulated. Additionally, the Securities and Exchange Commission (SEC) is hesitant to allow an ETF focused on the new and largely untested cryptocurrency market to make its way to the public.”
If that’s true, what makes us believe that a Bitcoin Futures ETF is not just possible, however impending? Well, last month The SEC Chairman Gary Gensler informed the Aspen Security Forum:
“I anticipate that there will be filings with regard to exchange-traded funds (ETFs) under the Investment Company Act (’40 Act). When integrated with the other federal securities laws, the ’40 Act offers substantial financier securities.
Given these important protections, I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded Bitcoin futures.”
Is A Bitcoin Futures ETF What United States Investors Want?
Since Gary Gensler sent out such a clear signal, the monetary world reacted in unison.
“At least four asset managers have filed for ETFs that invest in bitcoin futures after Securities and Exchange Commission chair Gary Gensler earlier this month indicated that he could approve such funds. But investors may not want them in lieu of physically backed bitcoin ETFs, analysts have said.”
According to Investopedia, “A bitcoin ETF mimics the price of the digital currency, allowing investors to buy into the ETF without trading bitcoin itself.” However, who’s interested in ETFs when bitcoin, the possession, is extensively offered? Some investors or groups simply can’t invest in bitcoin because their own internal rules won’t allow them to. They can’t buy bitcoin through a brokerage account. No banks backs it, so nobody safeguards them. And, obviously, there’s the feared volatility.
Bloomberg explains how Bitcoin fixes this:
“A Bitcoin ETF could help get around those restrictions since the format is more widely accepted. “There are all sorts of custody and regulatory hurdles for big financial institutions to jump through,” stated Ross Mayfield, financial investment technique expert at Robert W. Baird & Co. “If it were offered in an ETF, it clears a lot of that up for financial institutions.”
However, it appears that the SEC won’t approve one any time soon. Why would they approve a Bitcoin Futures ETF rather? Bloomberg continues:
“For the SEC’s purposes, Bitcoin futures also offer an additional level of security because they are governed by the Chicago Mercantile Exchange and require investors to put down cash on margin to trade, as a form of collateral.”
Experts And Important Players Disagree
While some business can’t await the Bitcoin Futures ETF to be offered, others are less passionate. One of those is Michael Sonnenshein, CEO of Grayscale Investments. One of those is Michael Sonnenshein, CEO of Grayscale Investments. His company is one of the many that applied for a Bitcoin ETF and are still waiting for approval. In a recent CNBC interview, he said:
“It would be shortsighted of the SEC to allow a futures-based product into the market before a spot product,” Sonnenshein informed CNBC’s “Squawk Box” on Tuesday. “They really should be allowing both products into the market at the same time and let investors choose which way they want.”
Of course, he’s greatly purchased this result. His business’s Grayscale Bitcoin Trust is extremely effective, however if they handle to turn it into an ETF, it may go parabolic. However, he’s not the only one that thinks that way. In the Bloomberg article, another expert elaborated on the Bitcoin Futures ETF ‘s limitations:
“With futures-based products, you introduced additional cost, more complexity, you have futures contracts that have to be rolled,” stated the ETF shop’s Geraci. “It’s just a sub-optimal option for investors.”
In any case, the Bitcoin Futures ETF approval is just speculation. Gary Gensler stated he eagerly anticipated reading his personnel’s evaluation of the fillings, which is not an assurance by any stretch of the creativity.
