ProShares Bitcoin Strategy ETF is set to lead a slew of Bitcoin-linked exchange-traded funds (ETFs) hitting the market this week, assuming the US Securities and Exchange Commission (SEC) does not file an objection by Tuesday at midnight eastern time.
In addition to ProShares, which filed its prospectus with the SEC Monday, 21Shares and Invesco also have ETFs in the pipeline tracking Bitcoin futures. The SEC is expected to allow the ETFs to begin trading, numerous reports indicate, due to the less-volatile nature of the futures contracts compared to actual Bitcoin.
The anticipated clearance has pushed Bitcoin over $62,000 throughout last week. Bitcoin is currently trading at a shade over $60,000, as of mid-morning Monday.
SEC investor bulletin
Fueling the belief of a possbile clearance is a tweet from last week from the SEC’s Investor Education Twitter account warning, “Before investing in a fund that holds Bitcoin futures, make sure you carefully weigh the potential risks and benefits.”
The tweet included a link to the SEC investor bulletin issued on 10 June, titled Funds Trading in Bitcoin Futures.
The SEC bulletin warns that “Investors should understand that Bitcoin, including gaining exposure through the Bitcoin futures market, is a highly speculative investment. As such, investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.”
First ETF to trade on NYSE
The ProShares ETF will invest in cash-settled, front-month bitcoin futures and will target 25% of its total assets in the fund, the prospectus states. Alexander Ilyasov and James Linneman will be managing the portfolio. The Proshares ETF would be the first to trade over the NYSE.
Bitcoin futures are registered with the Commodity Futures Trading Commission and trade on the Chicago Mercantile Exchange. The value of Bitcoin futures is set by the CME CF Bitcoin Reference Rate.
Other ETFs in the pipeline
21Shares recently filed to offer ARK 21Shares Bitcoin ETF, according to records filed with the SEC. 21Shares will manage the fund, with ARK Investment acting as marketing manager. The ARK 21Shares ETF, which target the S&P Bitcoin Index, will trade over the Cboe Global Markets Exchange.
Invesco partnered with Galaxy Digital Holdings to offer a pair of cryptocurrency and blockchain-related ETFs, named Invesco Alerian Galaxy Crypto Economy ETF (SATO) and Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce (BLKC). Both ETFs trade over the Cboe Exchange.
The SATO and BLKC ETFs invest in crypto-related entities, such as miners, information technology and hedge funds invested in various cryptocurrencies. The ETFs, launched earlier this month at $25 per share, are currently trading at $26.96 for the SATO ETF and $25.55, invesco reports.