The race to launch the first bitcoin ETF has taken a new turn after last week’s comments by Securities and Exchange Commission (SEC) Chair Gary Gensler suggested that the regulator may favor one type of product over others.
Speaking to the Aspen Security Forum, Gensler hinted that the commission would be most likely to approve a bitcoin ETF based on futures contracts, rather than one that owned bitcoin directly.
“I anticipate that there will be filings with regard to exchange-traded funds under the Investment Company Act [’40 Act],” Gensler said. “When combined with the other federal securities laws, the ’40 Act provides significant investor protections.”
He added: “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.”
Bitcoin Futures Mutual Fund
Another hint of the SEC’s preference for a futures-based strategy was its approval of the first U.S. bitcoin mutual fund in late July.
In a conversation with ETF.com, Simeon Hyman, global investment strategist at ProFunds, the company behind the mutual fund, noted that futures-based products offer several layers of investor protection that the SEC appreciates.
He said that bitcoin futures are traded on the Chicago Mercantile Exchange, regulated by the Commodity Futures Trading Commission and settled with the backing of a centralized clearinghouse.
With the evidence growing that the SEC may finally be open to approving a U.S.-listed bitcoin ETF of some kind, issuers are jumping at the opportunity.
Teucrium Sitting Pretty
Since Gensler’s comments a little over a week ago, four new bitcoin futures filings have been added to the pipeline: the ProShares Bitcoin Strategy ETF, the Invesco Bitcoin Strategy ETF, the Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF.
Prior to these filings, only one of the dozen outstanding bitcoin ETF filings had been for a futures-based ETF, the Teucrium Bitcoin Futures Fund. Now almost a third of filings are for futures-based products.
As the ETF at the front of the line, the Teucrium fund is sitting pretty. The SEC has until Sept. 20 to approve the fund or delay its decision, according to Bloomberg analyst James Seyffart.
With a little over a month until that date, investors will be on the edge of their seats awaiting the decision.