“At least four asset managers have filed for ETFs that invest in bitcoin futures after Securities and Exchange Commission chair Gary Gensler earlier this month indicated that he could approve such funds. But investors may not want them in lieu of physically backed bitcoin ETFs, analysts have said.”
According to Investopedia, “A bitcoin ETF mimics the price of the digital currency, allowing investors to buy into the ETF without trading bitcoin itself.” However, who‘s interested in ETFs when bitcoin, the asset, is widely available？ Some investors or groups simply can’t invest in bitcoin because their own internal rules won‘t allow them to. They can’t purchase bitcoin through a brokerage account. No financial institution backs it, so no one protects them. And, of course, theres the feared volatility.
“A Bitcoin ETF could help get around those restrictions since the format is more widely accepted. ”There are all sorts of custody and regulatory hurdles for big financial institutions to jump through,“ said Ross Mayfield, investment strategy analyst at Robert W. Baird & Co. ”If it were offered in an ETF, it clears a lot of that up for financial institutions.
However, it appears that the SEC wont approve one any time soon. Why would they approve a Bitcoin Futures ETF instead？ Bloomberg continues:
“For the SECs purposes, Bitcoin futures also offer an additional level of security because they are governed by the Chicago Mercantile Exchange and require investors to put down cash on margin to trade, as a form of collateral.”
While some companies cant wait for the Bitcoin Futures ETF to be available, others are less enthusiastic. One of those is Michael Sonnenshein, CEO of Grayscale Investments. His company is one of the many that applied for a Bitcoin ETF and are still waiting for approval. In a recent CNBC interview, he said:
“It would be shortsighted of the SEC to allow a futures-based product into the market before a spot product,” Sonnenshein told CNBCs “Squawk Box” on Tuesday. “They really should be allowing both products into the market at the same time and let investors choose which way they want.”
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Of course, he‘s heavily invested in this outcome. His company’s Grayscale Bitcoin Trust is incredibly successful, but if they manage to turn it into an ETF, it might go parabolic. However, he‘s not the only one that thinks that way. In the Bloomberg article, another expert elaborated on the Bitcoin Futures ETF ’s limitations:
“With futures-based products, you introduced additional cost, more complexity, you have futures contracts that have to be rolled,” said the ETF store‘s Geraci. “It’s just a sub-optimal option for investors.”