A bitcoin-based exchange-traded fund (ETF) has made it onto the New York Stock Exchange (NYSE). Released by a company called Pro Shares, this product became the target of many crypto-related news headlines in recent weeks, and it has caused many people to see the digital currency space in a whole new light: one of legitimacy and precedence. A Physical Bitcoin ETF Is Needed for the Space to Grow Sadly, this and other recently greenlit ETF products are based on bitcoin futures technology. The day when an ETF based on bitcoin spot trading is not likely to arrive until next year, according to analysts. The ETFs that have been released as of late are based purely on futures technology. While they are considered revolutionary in many ways, many are convinced that the crypto
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A bitcoin-based exchange-traded fund (ETF) has made it onto the New York Stock Exchange (NYSE). Released by a company called Pro Shares, this product became the target of many crypto-related news headlines in recent weeks, and it has caused many people to see the digital currency space in a whole new light: one of legitimacy and precedence.
A Physical Bitcoin ETF Is Needed for the Space to Grow
Sadly, this and other recently greenlit ETF products are based on bitcoin futures technology. The day when an ETF based on bitcoin spot trading is not likely to arrive until next year, according to analysts.
The ETFs that have been released as of late are based purely on futures technology. While they are considered revolutionary in many ways, many are convinced that the crypto space cannot be all it can be without ETFs based on actual, physical bitcoins, and these products have had a rough go with organizations such as the Securities and Exchange Commission (SEC).
Applications for such products have been making their way onto SEC desks for some time. Ever since 2017, companies like Van Eck and Bitwise have worked extremely hard to get bitcoin-based ETFs approved by the organization, but each time, the applications have been tossed ungraciously to the side. Many of these firms have even pulled the plugs on their own applications, claiming that the SEC is not ready to offer such approval.
In any case, now that futures-based ETFs are beginning to make their way into the market, some are hopeful that the SEC and similar organizations will start to become more open minded. Anne Paglia – head of ETFs and indexed strategies at Invesco – stated in an interview recently:
I hope that 2022 is going to be the year for that product. I wasn’t surprised that the SEC rejected the application last week. Issues like price manipulation and fraud have not been addressed yet. I do think that some more regulation is something that the SEC is expecting before approving the next application, but I’m counting on 2022 as the year for a pure-play ETF.
While she is hopeful next year will produce long-awaited results, she also acknowledges that this could be “wishful thinking.”
Maybe Things Won’t Happen Quickly…
By contrast, Dave Nadig of ETF Trends thinks it could be a while before regulation reaches a level that the SEC is comfortable with. Until that happens, fans shouldn’t get their hopes up for a physical bitcoin ETF. He stated:
Until we get clear regulation of the underlying coin markets themselves for U.S. investors, I just don’t think we’re going to cross that hurdle. I think a real solid physical bitcoin ETF is probably at least a year off at this point.
He also stated that traders need to remain cautious when engaged in trading current futures ETFs.