US Securities and Exchange Commission Chair Gary Gensler reiterated that he is open to applications for Bitcoin (BTC), futures-backed Exchange Traded Funds ( ETFs), however, he did not comment on the possibility of a “physically-backed” ETF. Analysts seem to agree that a futures backed “paper bitcoin” ETF could still prove useful.
Speaking at an asset management conference hosted Wednesday by the Financial Times, the Chair of the SEC pointed out that a lot mutual funds invest in bitcoin futures trading on the Chicago Mercantile Exchange.
Gensler stated that “We have started to see filings pursuant to the Investment Company Act in regard to exchange-traded fonds (ETFs), seeking to invest CME-traded Bitcoin futures.”
“I look forward for the staff to review such filings.”
Gensler, in August’s first stated that he would be open to reviewing proposals for bitcoin ETFs.
According to the filings made so far with the SEC, five ETFs proposals seem to satisfy the requirement that investors in futures contracts and not “physical” bitcoin are allowed to invest.
- ProShares Bitcoin Strategy ETF
- Invesco Bitcoin Strategy ETF
- VanEck Bitcoin Strategy ETF
- Valkyrie Bitcoin Strategy ETF
- Galaxy Bitcoin Strategy ETF
ProShares’s proposal for ETFs was approved on October 18, while Galaxy’s proposal is expected to be approved on November 1.
Although not the top choice in crypto and bitcoin space for an ETF, analysts from Ecoinometrics said that “a bitcoin ETF that is based on futures” was better than nothing.
Ecoinometrics explained the differences between an ETF that is “physically” backed and one that is backed by futures contracts in a report. They stated that a futures-backed ETF, also known as “paper Bitcoin”, would not have “very significant impact” on actual bitcoin supply.
This ETF is still useful and could be very useful. The analysts pointed out that it simplifies a lot for institutional investors, particularly from a regulatory perspective. They also noted that it makes it easy to buy bitcoin as part of an existing portfolio.
The past has seen several fund managers express skepticism about a futures-backed Bitcoin ETF. For instance, Matthew Sigel, head digital assets research at VanEck, stated to Bloomberg that these products are more expensive than bitcoin and have a lower price.
Sigel stated that bitcoin futures-based funds were “inferior products” at the time.
BTC trades at USD43,241 at 14:31 UTC and is up by 2 percent per day. This reduces its weekly losses to less that 1%.