Brief description of an ETF
An Exchange Traded Fund (ETF) is a fund or security that trades on a regulated stock exchange which basically tracks an asset such as an index, commodity, sector, cryptocurrency, bond, etc.
The ETF is traded all-through the day unlike mutual funds that is traded once daily, due to this the price of an ETF changes throughout the trading day.
The Bitcoin ETF journey
The Bitcoin ETF journey started in 2013 when the founders of Gemini, Tyler and Cameron Winklevoss filed for approval of a Bitcoin ETF. Also on June 30, 2016 Cboe Global Markets (CBOE) applied to the United States Securities and Exchange Commission (SEC) to list an exchange traded product that would provide exposure to Bitcoin in the United States.
All subsequent Bitcoin ETF submissions were either rejected, delayed decision on approval/rejection or withdrawn by the applicants until the ProShares Bitcoin futures ETF approval in October.
SEC approves a Bitcoin ETF
The United States Security and Exchange Commission (SEC) has followed in the footsteps of its European counterparts to approve a Bitcoin ETF. Although, Canada and Brazil have both approved a number of Bitcoin ETFs over the past few months but the U.S. SEC made the headlines recently when they approved the ProShares Bitcoin futures ETF.
This is the first ever Bitcoin or crypto related ETF to be approved in the United States. The ProShares ETF was listed on Tuesday 19th October on the NYSE Arca Exchange, trading under the ticker $BITO. This much talked about Bitcoin ETF will however not allow investors to buy or invest in Bitcoin but only allows tracking of cash-settled futures contracts relating to the number one cryptocurrency.
Bitcoin ETF expectations
The Bitcoin ETF news brought a lot of positivity and bullish trend to the BTC and crypto market as a whole pushing bitcoin to $67,000 marking its highest price ever. Additionally, the U.S. SEC approved a second Bitcoin futures based ETF according to a noticed published on Oct 20 on its official website. Valkyrie Bitcoin Strategy ETF began trading on Nasdaq on Oct 22, under the ticker $BTF.
It is reported that there are other three Bitcoin ETFs from ProShares, Invesco and VanEck all lined up for review by the SEC in October. Many crypto enthusiasts believe these ETFs approval will give the crypto market and Blockchain Industry in extension its much needed legitimacy, providing a platform for blockchain start-ups and Blockchain Technology to go mainstream.
Gary Gensler, U.S. SEC Chairman has shown support for futures based ETFs. In a recent interview with CNBC, He described the Bitcoin Futures ETFs as being more conducive to investors protection than a spot ETF. The second approved Bitcoin ETF is also futures based, many crypto enthusiasts are wondering when a Bitcoin Spot ETF will be approved by the U.S. SEC?