A Bitcoin exchange-traded fund (ETF) issued by ProShares has officially launched on the New York Stock Exchange.
After nearly half a decade of failed attempts from a multitude of asset managers, the ProShares ETF was finally approved by the US Securities and Exchange Commission (SEC) last week. It will trade as PROSHARES BITCOIN STRATEGY ETF under the ticker BITO.
“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,”
– ProShares CEO Michael L. Sapir
The move signals a change of heart from the SEC, which until now has been unwilling to grant any crypto-based ETF licenses. It also suggests a maturing crypto industry that regulators can no longer ignore.
An ET what?
An ETF is a type of financial product designed to give stock market investors exposure to an underlying asset without buying the physical asset itself. For the cryptocurrency industry, this is particularly useful because of how hard it is for non-technical users to get involved. Traditional brokers have long wanted to get exposure to Bitcoin but lacked either the ability or enthusiasm to trade within the largely unregulated cryptocurrency market.
It’s worth noting, however, that the ProShares Bitcoin ETF is a futures-based ETF, which tracks BTC cash-settled futures contracts rather than the asset itself. The SEC considers futures products safer for investors because they trade on the Chicago Mercantile Exchange (CME), which is regulated by the Commodity Futures Trading Commission (CFTC).
Although largely hailed as a positive event by traditional investors, some crypto-purists don’t share the same enthusiasm. Many cite the massive crash and 4-year-long bear market that followed the CBOE Futures product launched in late 2017 as a bad omen for a Bitcoin ETF. With Bitcoin now only a few percentage points away from a new all-time high (ATH), the timing of the ETF launch is particularly ominous.
Several other Bitcoin Futures ETFs are in the pipeline, including one by Valkyrie using the meme-inspired ticker BTFD. Another by fund manager Invesco has been abandoned in favor of pursuing a spot Bitcoin ETF.