Bitcoin (BTC) has been on a bullish streak as the deadline for the US Securities Exchange Commission (SEC) to rule on two applications for exchange-traded funds (ETFs) tied to BTC futures inches closer. With rumors that the regulator might approve both applications doing rounds online, the largest cryptocurrency by market capitalization has gained 2.82% in 24 hours to trade at $59,344.33.
According to anonymous sources, the regulator will let the ProShares and Invesco ETFs start trading in the coming week. If the SEC indeed approves the ETFs, they will become the first BTC-tied investment vehicles in the US. However, they will not be the pure BTC ETFs that investors have been anticipating.
Nonetheless, their approval would mark the first step towards making BTC mainstream, seeing as they would expose retail traders to BTC’s market without necessarily holding the actual digital asset.
Additionally, the ETF would offer an unprecedented level of access to the flagship cryptocurrency, edging out the current options, which involve either purchasing COIN (Coinbase’s stock) or buying ETFs of tech companies that have invested in BTC.
Further fueling investor hopes that it might approve the BTC futures-backed ETFs, the SEC tweeted,
“Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits.”
Experts have varying sentiments
While BTC is rallying on the hopes of the SEC approving the ETFs, Todd Rosenbluth, the Senior Director of ETF and mutual fund research at CFRA, believes the SEC might delay its ruling. According to him, ETFs tied to BTC directly will take longer to enter the market than ETFs based on BTC futures.
Even so, Rosenbluth believes the SEC might postpone the approval of BTC futures ETFs to give a comprehensive ruling in 2022. He pointed out there is a timing issue that might prevent the regulator from approving some ETFs this year and some in the coming year.
Per the market analyst, the agency’s motive to do so would be to avoid giving any product a first-mover advantage over the rest.
“It’s possible — in fact, we think it’s likely — that we’re going to see a delay of a bitcoin futures ETF until 2022, until the regulatory environment is more clear.”
VanEck continues pushing for BTC ETFs
Per Jan van Eck, the CEO of VanEck, which also filed for a BTC futures ETF, the SEC is also concerned about potential discrepancies in the prices of BTC and BTC futures. This is because BTC futures can underperform by up 20% in a year during BTC rallies. With this in mind, Jan said the agency is trying to get some visibility into the underlying BTC market before approving BTC futures ETFs.
However, Jan believes that the SEC’s regulation of Robinhood and its de facto regulatory control over Coinbase helps increase the chances for BTC futures ETFs.
Apart from the VanEck BTC futures ETF, whose deadline is set for October 25, the SEC has to approve or reject the company’s application for an ETF based on physical BTC on November 14.