The US Securities and Exchange Commission (SEC) has accepted ProShares’ approval to the first Bitcoin ETF. ProShares is a specialist exchange-traded product (ETPs) provider based in the United States.
According to the updated prospectus submitted on the 15th of October, the approval's effective date is set for the 18th of October, bringing the first Bitcoin ETF formally sanctioned by the SEC one step closer to reality.
The ETF offered by ProShares is linked to Bitcoin futures contracts, but not to actual Bitcoin prices. The clearance marks a turning point in the crypto and blockchain industries.
The Commission, which has either mostly delayed or disregarded the deluge of applications for a Bitcoin ETF that began in a wave over four years ago, appears to have eased its iron hold on crypto and the regulatory constraints that come with it.
Exchange-traded funds or ETFs are financial instruments that follow the price of assets, commodities, and stocks. In this case of Bitcoin, it will be treated similarly to a regular asset.
ETFs can be purchased, sold, or exchanged during regular market hours, and they can be integrated as a proportion of other financial products, such as retirement funds, insurance, or even traditional savings plans.
While the ProShares Bitcoin ETF is not directly linked to actual Bitcoin values as they move through various vectors of market volatility, it has a better chance of approval by the SEC because it is a futures-backed ETF.
“A rise in Bitcoin prices may not result in a similar increase in the value of fundholding positions in Bitcoin futures contracts. This is in part because funds that trade commodity futures contracts may not have direct exposure to the contracts’ underlying assets. Futures contract prices can vary by delivery months and differ from the underlying commodity’s spot price. Futures contracts also expire periodically, resulting in fluctuations of portfolio exposure as expiring futures positions are typically rolled into new contracts,” the SEC stated in an Investor Bulletin it shared, hinting to the approval of the ProShares ETF before its official announcement.
At the time of publication, companies on the ETF clearance queue included Mike Novogratz’s Galaxy Digital and Cathie Wood’s ARK Invest.
The SEC has approved two more Bitcoin Futures ETFs, including the now-NASDAQ-certified Valkyrie ETF, as well as offers from Invesco and VanEck, among others, on its approval queue.