Bitcoin ETF is probably one of the most anticipated and desired investment vehicles that the crypto industry has ever seen since it has been in demand for nearly a decade now. Unfortunately, the regulators have never been quite satisfied with the ETF proposals that they received from various applying companies over the years, so they never approved them.
Requesting a Bitcoin ETF
Bitcoin ETF requests have been arriving at the US SEC ever since 2013, when Cameron and Tyler Winklevoss filed it, only to have their application rejected. Since then, there were many companies that filed their own Bitcoin ETF proposals, including some that do it almost on a regular basis, endlessly trying to please the SEC and comply with the regulator’s rules while simultaneously fixing any and all issues that the regulator finds with each new application.
One example is VanEck, which has filed its own ETF proposal time and time again, but unfortunately, it was never good enough for the regulators.
The SEC started seeing a major wave in Bitcoin ETF proposals in 2017, 2018, and every year since. At one point, it had over a dozen of them waiting to be reviewed. Unfortunately, just like all the others, these did not satisfy the regulator’s high criteria under the former SEC chair, Jay Clayton.
For a time, many believed that the fact that Gary Gensler taking over the position of SEC Chairman will change things for the crypto industry. After all, Gensler worked as an MIT professor, and he was teaching a crypto course, so he was certainly more familiar with the crypto industry than his predecessor within the Securities and Exchange Commission.
However, the SEC kept rejecting the Bitcoin ETF proposals even under his guidance, confirming that he may be more familiar with crypto, but that he won’t let anything pass the SEC’s watchful eye.
He did say on one occasion that he doesn’t see Bitcoin ETF arriving in the near future. But, in August, he said that policymakers might be more open to an ETF if it were based around futures, rather than cryptos themselves.
That was all that Bitcoin ETF seekers needed to hear, and before long, a Bitcoin Futures ETF proposal emerged for the SEC to review, and to everyone’s surprise — it actually got approved.
Bitcoin futures ETF: What do you need to know?
After gaining its unexpected approval, the first Bitcoin futures ETF is scheduled to launch on the New York Stock Exchange (NYSE) today, Tuesday, October 19th. It goes without saying that this is a huge milestone for the crypto industry, and it is only a matter of time before new ETFs of this kind start arriving, as well.
Many have called this ETF a major disruption, noting that the investors are extremely excited about it. And that much is true. Bitcoin price has gone up by nearly 10% after the ETF was approved, allowing Bitcoin to finally go back above $60,000 per coin. In fact, Bitcoin nearly managed to touch $63,000 only a few hours ago, but it corrected slightly since then, currently sitting at $62,103.
And, while this still isn’t exactly what the crypto industry wanted — an ETF with direct exposure to Bitcoin — it does offer a new choice for any company that might be interested in going crypto but doesn’t want to risk getting involved with unregulated assets. Doing so is a risk for the firm, its shareholders, and it could potentially annoy the SEC, which is not something that any business wishes to do.
But, with the Bitcoin futures ETF now available, there are a few things that investors should be aware of before going for it. For example, it is worth noting that the Fund may have a very high correlation with Bitcoin, but it will not mirror its value. The reason for this is that this ETF focuses on Bitcoin futures contracts and not Bitcoin coins.
Another thing to note is that it costs more to own funds than individual assets, although some may be willing to pay this extra price for the institutional level liquidity that ETFs enjoy, alongside custody and execution. Especially when owning assets requires investors to manage said assets themselves.
There are also those who see cryptos as speculative assets only and claim that prices of their futures contracts are too unpredictable, as Bitcoin is still extremely unstable and volatile.
Will the SEC ever approve a Bitcoin ETF?
So, with Bitcoin futures ETF finally out starting today, what does this mean for the future? Will Bitcoin ETF ever see the light of day?
The simple and short answer is that nobody knows. The SEC will probably use Bitcoin futures ETF as a test to see whether or not there is demand for exposure to Bitcoin futures and use that as a reference for the future. However, until Bitcoin is properly regulated, chances are that Bitcoin ETF will not be approved.
Meanwhile, regulating Bitcoin is not easy, given that many policymakers are unfamiliar with cryptocurrencies, as well as the fact that it is extremely volatile. The fact that Bitcoin is transitioning from a digital currency to a digital store of value is also not helping matters, since many now see it as the future version of gold.
In the end, Bitcoin ETF will most likely arrive someday. However, when that day might arrive is highly speculative, and it might happen next year, or at some point in the next 10 years, or maybe not even then. One thing is certain, however — the demand for it, and for Bitcoin itself, is definitely there, and it is growing rapidly.
So, whether or not the ETF arrives in the near future, Bitcoin still remains more than a profitable investment opportunity. A highly unstable one, of course, but still very beneficial for those who understand its market and know how to avoid losses caused by volatility.