Since yesterday, there have been several rumours that the SEC is ready to approve the first ETF on Bitcoin futures.
Summary
SEC: investment risks and benefits
It was the SEC itself that started the rumours with a tweet about BTC futures published by the official account of the Office of Investor Education and Advocacy.
Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits.
Check out our Investor Bulletin to learn more: https://t.co/AZbrkpfn8F
— SEC Investor Ed (@SEC_Investor_Ed) October 14, 2021
The tweet merely suggests that people should make sure to carefully weigh the potential risks and rewards before investing in a fund that holds Bitcoin futures contracts. Below is a link to an old bulletin on investor.gov dedicated specifically to funds using these contracts.
It is not the SEC, but the CFTC that oversees the futures market, so this “outing” by the SEC suggests that they are up to something.
Even the markets now seem to regard this as highly likely, with some considering it 75% likely.
These rumours were given much prominence last night with the publication of a Bloomberg article. This was followed within minutes by a small boom in the price of BTC from $57,200 to over $59,000.
Bloomberg cited “people familiar with the matter” as sources of the news that the SEC is now fully prepared to allow the first US exchange-traded fund of Bitcoin futures to begin trading.
Bitcoin Futures contracts and new moves by SEC to manage funds
These sources report that it would be unlikely that the regulator would prevent these ETFs from opening for trading next week, and have asked to remain anonymous.
These would be the ETFs of ProShares and Invesco, not based on BTC but on BTC futures contracts already approved in 2017 by the CFTC and traded at the CME.
The first application ever to reach the SEC for the issuance of an ETF on Bitcoin was from the Winklevoss twins, filed in 2013. Since then they have all been rejected because they did not provide sufficient levels of security.
The use of futures contracts, and not BTC tokens, would make the management of the fund less risky, so the SEC seems much more willing to accept them.
It is not strange that optimism is growing in the crypto markets, with several positive reactions to the tweet from the SEC.
Approval of a Bitcoin ETF and the SEC’s tweet
Many believe that the possible final news of the approval of an ETF on Bitcoin is bullish. Several users have pointed out that the SEC would be unlikely to issue such a tweet at this time if it were preparing to reject ProShares’ application.
Bloomberg’s senior ETF analyst Eric Balchunas also pointed out that Valkyrie just updated its bitcoin futures ETF prospectus. This typically only happens when a new launch is about to take place, adding the ticker $BTF.
There are those who argue that things could be different, because the SEC had published the same thing in June. However, Balchunas pointed out that the last time the SEC published such a tweet was on July 26. This was the day before ProFund’s Bitcoin strategy mutual fund “went effective” and two days before its launch.
