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SEC Gives Nod to Bitcoin Based ETF

The Exchange Traded Fund (ETF) tracks Bitcoin futures contracts. It may begin trading next week.

Finally, nearly a decade after receiving the first application for a Bitcoin ETF, the US Securities and Exchange Commission (SEC) has approved one.

The Bitcoin Strategy ETF launched by ProShares may launch next week. The company filed its prospectus dated October 15.

It indicates October 18 as the date for the proposed launch. The fund will trade on the NYSE Arca Exchange and charge a management fee of 0.95%.

This ETF will track futures contracts of Bitcoin rather than the price. So, its price will not be pegged to that of Bitcoin.

The approval opens floodgates for retail investors to put their money in Bitcoin-based security. Any person who wishes to invest in Bitcoin can now do so in an indirect and regulated way.  

Moreover, investors may not hold the actual cryptocurrency, which would save them from the price swings.

However, it does not mean the risks have been reduced substantially.

“All investments in funds involve risk of financial loss. This risk may be increased for positions in bitcoin futures contracts because of the high volatility of bitcoin and bitcoin futures (meaning prices can fluctuate widely),” the SEC wrote in a post in June.

It’s a first for the crypto industry in the US to have an ETF. As per reports, the SEC has rejected Bitcoin ETF applications in the past.

This time the application is for Bitcoin futures ETF. That’s why it was approved because the SEC believes that futures-based ETFs can provide better investor protection.

Upon the release of this news, the already bullish Bitcoin went up to nearly 63,000 USDT.

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