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The Securities and Exchange Commission may soon approve the first Bitcoin exchange-traded fund (ETF) backed by derivatives of bitcoin futures contracts.
Bitcoin Futures ETF is Reportedly Imminent
The SEC is set to approve the first Bitcoin futures exchange-traded funds (ETFs), according to a Bloomberg report.
Citing sources close to the matter, the publication noted that the SEC could greenlight Bitcoin futures applications as soon as next week.
The SEC is currently processing multiple Bitcoin futures ETF applications, with a decision on four of them due this month. According to the report, the financial regulator has no objections to approving the applications. Applicants include ProShares (due to be announced Oct. 18), Invesco (due to be announced Oct. 19), VanEck (due to be announced Oct. 25), and Valkyrie (due to be announced Oct. 25).
ETFs are investment products that track the value of an underlying asset. For years, the SEC has had issues with physically-backed ETFs. It’s rejected several Bitcoin ETF applications citing investor protection concerns and a lack of regulatory oversight.
However, in August of this year, the SEC chair Gary Gensler said that he would favor allowing an ETF tied to cash-settled Bitcoin futures traded on a regulated exchange such as the Chicago Mercantile Exchange.
The funds tracking the Bitcoin futures market would be regulated under the Future Investment Company Act of 1940. According to Gensler, such ETFs are expected to have “significant investor protections” that overcome the agency’s initial concerns.
Gensler’s comment sparked optimism, leading many investment funds to file applications for a Bitcoin futures ETF. Most recently, Cathie Wood’s ARK Investment Management submitted an application in partnership with 21Shares earlier this week.
If approved, the first-ever Bitcoin-related ETF could be a watershed moment for the crypto sector, opening the gateway for many institutions to gain exposure to the asset class.
Amid the bullish sentiment fueled by ETF possibilities, Bitcoin has rallied 35% this month. It’s currently trading at around $59,400, just under 8% short of all-time high.