US regulator ready to allow futures ETFs as bitcoin closes at record high

While discussing the decision, people who spoke on the condition of anonymity said that the regulator cannot stop the products from starting trading next week. Unlike bitcoin ETF applications, which were previously rejected by the regulator, ProShares and Invesco Ltd’s proposals are based on futures contracts and were filed under mutual fund regulations, which SEC Chairman Gary Gensler has said is “significant. Provide investor protection”.

An SEC spokesperson declined to comment, as did a ProShares official.

Bitcoin is above $60,000, its highest since April, while futures on crypto-linked stocks halted in US premarket trading. The largest cryptocurrency by market cap is up almost 90% in three months and is closing in on a record high of $64,869 earlier this year.

Barring last-minute reversals, the fund launch will be the culmination of a nearly decade-long campaign by the $6.7 trillion ETF industry. Advocates have sought approval to confirm mainstream acceptance of cryptocurrencies since Cameron and Tyler Winklevoss, known for their part in Facebook Inc.’s history, filed the first application for a bitcoin ETF in 2013. .

Approval has been beyond the grasp of issuers for years, who have tried to approve various structures for trading, amid myriad false signs of progress and outright disapproval. Over the years, there have been plans for funds that propose to hold bitcoin through a digital vault or that can use leverage to juice returns. Others sought to reduce bitcoin’s famous volatility, a major point of contention for the SEC.

The SEC has argued in the past that the crypto space is plagued by investor threats. The SEC had expressed concerns that prices could be rigged and liquidity could be insufficient, and that huge volatility in bitcoin prices could be too much for individual investors. Bitcoin’s last three full-year returns have lost 74%, followed by gains of 95% and 305%. Additionally, the SEC has questioned whether the funds will contain the information necessary to adequately value cryptocurrency or related products. Questions have also been raised about whether the coins held near the funds validate the ownership and risk of hackers.

Many crypto advocates were delighted when Gensler took over the leadership of the agency. He cited his previous interest in the crypto world – he once taught a class called “Blockchain and Money” at MIT’s Sloan School of Management. That it wants a more robust oversight of the markets.

The mood changed in August, when Gensler indicated he would favor the fund based on CME-traded bitcoin futures filed under a 1940 law. He reiterated that stance late last month.

This has led to a wave of futures-backed filings and unbridled optimism among issuers that approval may be imminent. Speculation has fueled a sharp rally in the price of bitcoin, which has essentially doubled since breaking below $30,000 in late July.

Four futures-backed bitcoin ETFs could begin trading on US exchanges this month, with VanEck and Valkyrie’s applications approaching the deadline. Meanwhile, dozens of cryptocurrency exchange-traded products have been launched in Canada and across Europe. Valkyrie declined to comment.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.