A precedent for the potential spot Bitcoin ETF approval has been created
The approval of another Bitcoin futures fund is nothing new for the cryptocurrency market, but with Teucrium Fund, we potentially saw the first ETF approval under the Securities Act of 1933. , which is the filling of spot ETPs, according to an SEC Order.
A decision on Teucrium’s funds should have been made back in January, when many funds were filing for registration of their own ETPs, but the regulator postponed the decision to April.
Approval of the new fund will put the SEC in a position where it needs to make stronger arguments and avoid rule violations at the next hearing on a Bitcoin ETP onsite since the commission has denied all requests for a such product in the past.
It is not yet clear if we will see a drastic increase in the number of spot-based Bitcoin ETPs in the upcoming weeks or months, but companies now have legal grounds for a discussion with the commission if it denies another application.
Why are cash-backed ETPs superior to derivative-backed products?
The main reason why investors tend to choose cash-backed products over derivatives is because of the additional loss they face when entering a fund that tracks the derivation of actual financial assets rather than its currency pair. cash market.
Once futures reach their expiration periods, the fund has no other choice but to purchase the next month’s products at a significant premium, which lies on the shoulders of regular investors. We should also add management fees and additional costs for managing the ETF, and then we will have the approximately 12% that investors lose annually by receiving indirect exposure via futures-based ETPs—which could have been avoided with a spot-backed Bitcoin fund.
