Two exchange-traded fund (ETF) providers have filed with the U.S. Securities and Exchange Commission (SEC) to create Bitcoin ETF products that trade in cryptocurrency derivatives.
According to the SEC public filing system, the commission has received new applications for both REX Bitcoin Strategy ETF and REX Short Bitcoin Strategy ETF, as well as VanEck Vectors Bitcoin Strategy ETF.
The Connecticut-based REX filed its application on December 8 — two days before the first bitcoin futures contracts launched on CBOE — while the New York-based VanEck filed on December 11.
Neither firm intends to hold bitcoins directly; rather, the actively-managed funds will trade futures contracts and other derivatives products to enable investors to profit from the price movements of the flagship cryptocurrency.
A myriad of fund providers have filed to create Bitcoin ETFs, but thus far, the SEC has either denied or refused to review the applications. In the former case, the SEC denied applications that sought to trade bitcoin directly, citing the unregulated nature of bitcoin exchanges. In the latter case, the SEC stated that the commission could not review an application for a fund that would invest in non-existent products, namely, bitcoin derivatives.
However, now that CBOE has officially listed bitcoin futures and LedgerX has launched other derivatives products, many analysts expect that the SEC will begin approving ETFs that trade these products. Consequently, the futures launch is expected to trigger a flurry of new Bitcoin ETF filings.
The creation of the first Bitcoin ETF would be a historic moment for mainstream cryptocurrency adoption, as it would make bitcoin-linked investment products more easily accessible to retail investors who desire to invest in bitcoin through their brokerage and retirement accounts. It would also likely add more fuel to the bitcoin price’s record rampage as it heads into 2018.
However, it is not clear to what extent — if any — the market has already priced an ETF into the general upswing surrounding the futures launch. Consequently, it is possible that an SEC rejection could move the markets into bearish territory.
Last modified: May 20, 2020 9:16 PM