Gainers and Losers as SEC Finally Approves Bitcoin Futures ETF

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The US SEC has finally approved bitcoin futures exchange-traded funds (ETFs) for the cryptocurrency market on Friday. ProShares, the company that applied for a Bitcoin ETF could be the first to launch in the coming week. ProShares stated that its post-effective amended prospectus filing would launch on Monday, Oct. 18, with or without trading.

Series of filings and applications towards cryptocurrency investing began in 2013 when Gemini sought a Bitcoin ETF from the SEC. But the Agency rejected—or held—every application until last summer when it finally greenlighted the futures fund.

One of the possible perks of this approval is increased accessibility to everyday customers interested in Bitcoin—under regulation. Users of futures ETFs will have an alternative to the actual digital currency under the supervision of the government. Competing firms are expected to get approval from the SEC in a matter of days.

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What the SEC Approved

The Bitcoin futures ETF will give users shares connected to a pack of contracts to purchase Bitcoin in the future. While many persons would have wanted to trade BTC directly like shares, this is a little different. The new fund is not attached to the price of Bitcoin but is bound to a series of regulations on futures ETFs.

Here is the difference. When someone buys a traditional ETF, the worth of the shares is solely based on that of the involved commodity. The traditional ETF is very much like trading stocks of oil, gold, or cocoa.

Conversely, other factors than the underlying commodity’s worth—like backwardation and slippage—determine the price of a futures ETF.

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The chair of the SEC, Gary Gensler, feels that the regulation would better protect the interests of the public.

Approval of Bitcoin Future is Good News, but Not For All

One of the primary beneficiaries of this regulation is ProShares, the ice breaker for cryptocurrency ETFs. While other products would gain approval soon, it’s evident that liquidity is likely to flow towards the earlier birds. Other beneficiaries are expert crypto traders and wealthy clients who know how to engage the tacit waters of futures ETF.

On the flip side, retail investors who sought traditional ETFs like shares would not be so excited about the new stance. Instead, they found a high-profile investment offering that is not readily understandable to the lay trader.

The SEC does not seem like it will approve a pure BTC ETF anytime soon. But, it’s safe to admit that its decision on Bitcoin futures ETF is a win-win situation for everyone as it ensures secure access to bitcoin for investors. For instance, Bitcoin shot above $59,000 after news on the possibility of the regulation went public. It’s even gone up beyond that as at the time of writing. We expect to see subsequent approvals for futures ETF on other cryptocurrencies like Solana, Ethereum, and more.

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