By Mark DeCambre
ProShares looked set to offer the first bitcoin exchange-traded fund, marking a major milestone in the crypto sector as digital assets gain greater mainstream adoption.
The fund provider submitted an amended filing with the Securities and Exchange Commission on Friday for a bitcoin futures ETF that set the table for a launch soon, said Todd Rosenbluth, head of ETF and mutual fund research at CFRA, in a phone interview.
A call to representatives for ProShares weren't immediately returned.
The filing for the Bitcoin Strategy ETF points to a rollout of the fund on Tuesday. The new ETF would end a yearslong push for a approval of a bitcoin ETF that started back in 2013 and has seen scores of applications rejected by the SEC.
Anticipation had been building for a bitcoin futures ETF after SEC Chairman Gary Gensler earlier this year said he supported such a structure, which he argues offers more investor protections than an ETF that is tied directly to physical bitcoin.
Bitcoin has seen its price surge in anticipation of the ETF, with the value of the world's No. 1 crypto above $61,000 up 7.1%, in anticipation of a bitcoin ETF.
Some bitcoin professionals have made the case that using futures contracts for an ETF, rather than using bitcoin directly, confers additional costs to the end user, which could be mitigated by using the spot market. Futures are derivatives that are designed to allow investors to gain exposure to a commodity without owning it outright. However, futures contracts roll monthly, or expire, and must be repurchased, which can add to costs in administering the fund, which, in turn, are passed on to end users.
The ticker symbol for the ProShares offering is set to be "BITO" and the fund carries and expense ratio of 0.95%, which means that it will cost $9.50 annually for every $1,000 invested.
On top of the costs, futures don't always track the underlying asset accurately.
There are likely to be more approvals on the way, with fund providers Valkyrie Investments, Invesco and VanEck also likely to see futures-pegged funds greenlighted by the SEC.
On Thursday, a retweet from the SEC's office on education, referencing a link to a June bulletin, where it wrote that "investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment," was seen as a hint that an ETF was imminent.
(END) Dow Jones Newswires
10-18-21 0752ETCopyright (c) 2021 Dow Jones & Company, Inc.