The Securities and Exchange Commission (SEC) could soon allow the first American bitcoin futures exchange-traded funds (ETFs) to begin trading next week, CNBC reported.
The SEC isn’t likely to stop the ETFs proposed by ProShares and Invesco, according to the report, which cited unnamed sources.
These funds are based on futures contracts and were filed according to mutual fund guidelines that SEC Chairman Gary Gensler said provide substantial investor protection, the report stated.
Speculation that the SEC would approve the ETFs for trading helped bitcoin trade above $60,000 on Friday (Oct. 15), the highest the crypto has been since April. The launch of the fund would cap a yearslong effort by the ETF industry to convince the SEC to approve an ETF connected to bitcoin, according to the report.
The ProShares and Invesco funds offer only “indirect ways” to invest in bitcoin, with ETFs based on bitcoin futures already trading on the Chicago Mercantile Exchange. Investors are hopeful for a pure-play ETF that is backed by physical bitcoins, although it might be months before the SEC gives those its approval, the report stated.
The advantages of those direct funds, investors say, is that they avoid the cost of rolling into futures contracts, which don’t properly track bitcoin’s spot price, according to the report.
The SEC’s decision represents a change following years of the agency arguing that the volatility and fraud connected to crypto made ETFs too much of a risk, the report stated.
The news comes less than two weeks after the SEC approved an ETF for companies holding large amounts of bitcoin. The portfolio will include Tesla, PayPal and around 28 other companies.
The Volt Bitcoin Revolution ETF, managed by Volt Equity of San Francisco, will also include Twitter, which allows bitcoin tipping, and mining companies like Marathon, which also holds the currency in its corporate treasury.