A cryptocurrency exchange-traded fund is due to debut on the New York Stock Exchange, marking a watershed moment for the industry.
Bitcoin ETF on its way
Bitcoin has been on a tear in recent weeks, approaching record high prices above $60,000, as crypto aficionados brace for history. ProShares will debut a long-awaited exchange-traded fund tied to Bitcoin futures on the New York Stock Exchange tomorrow morning, according to the firm and the exchange. The ETF will provide investors with exposure to Bitcoin without requiring them to own the cryptocurrency themselves in a traditional brokerage account.
“This milestone will be remembered in 2021,” stated Michael Sapir, ProShares’ CEO. “Convenient access to Bitcoin in a wrapper that has market integrity,” he said, for investors who are interested in crypto but are apprehensive to interact with uncontrolled crypto exchanges. For nearly a decade, crypto entrepreneurs and traditional finance organizations have applied to the Securities and Exchange Commission (SEC) for authorization to start a Bitcoin E.T.F. in the United States, but their applications have been delayed or denied. Many of them are still pending.
Bitcoin Price: Source:coinmarketcap
A Bitcoin futures ETF falls short of what some purists desire: a vehicle that directly holds cryptocurrency. The S.E.C. chief, Gary Gensler, has hinted that the agency would allow crypto E.T.F.s based on futures — wagers on Bitcoin’s price swings rather than the underlying crypto itself — that trade on a well-regulated exchange. The S.E.C. will not announce approval for the ProShares ETF., which is based on Bitcoin futures traded on the Chicago Mercantile Exchange, but the firm’s final prospectus received no objections ahead of its effective deadline, and the N.Y.S.E. is preparing to open tomorrow.
According to Sapir, determining the true price of Bitcoin is difficult. There is no single, accurate market reference, and prices might differ by up to 5% amongst crypto exchanges. Many observers believe the Chicago exchange’s futures pricing are the most accurate indicator of Bitcoin market sentiment. Even though it is not tied to spot markets, the futures-linked fund is functionally a Bitcoin E.T.F. in Sapir’s opinion. (It also avoids difficulties such as cryptocurrency custody.)
The N.Y.S.E. ‘s head of exchange traded goods, Douglas Yones, told DealBook, “This is an exciting step but not the last.” He believes that a variety of crypto-linked ETFs will eventually be approved. The introduction of the E.T.F. tomorrow is another indicator of crypto’s mainstream credibility in a year marked by industry milestones such as the IPO of crypto exchange Coinbase. Cryptocurrency critics and regulators remain skeptical, but the digital asset boom of 2021 shows no signs of slowing down.
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