The New York Stock Exchange (NYSE) has become the latest to put forward a Bitcoin ETF-related proposal to the SEC. NYSE is planning on launching two funds to track Bitcoin futures. The ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF will be the two exchange-traded funds that would allow traders to bet on how the volatile cryptocurrency futures contracts will perform.
These funds would closely follow the movements of the current futures markets operating out of CME and CBOE. From there, the funds would invest their assets in benchmark futures contracts with the option of investing in contracts outside the benchmark. NYSE was quick to point out that the funds will not actually own Bitcoins, stopping just a step shy of an actual Bitcoin ETF:
“By being long Bitcoin Futures Contracts, the Fund seeks to benefit from daily increases in the price of the Bitcoin Futures Contracts. The Fund will not be benchmarked to the current price of Bitcoin and will not invest directly in Bitcoin. When the price of Bitcoin Futures Contracts held by the Fund declines, the Fund will lose value."
Adding further legitimacy
ETFs have been filed many times before, and each time they have been stopped at the SEC’s door. However, a lot has happened since those failed attempts, and the fact that futures have been launched, and the popular digital currency ahs hit new levels of acceptance, means that time may indeed be ripe for Bitcoin ETFs.
If NYSE successfully launches their futures-tracking ETFs, would be further legitimacy added to the unregulated and highly volatile asset. It could also lead to the currency hitting another rally as was seen in the run up to the launch of the Bitcoin futures.
Win Thin, global head of emerging markets strategy at Brown Brothers Harriman, the custodian of the proposed ETFs has said:
"It's very hard for us, as currency analysts, to follow this. It represents further mainstreaming. Hopefully that what comes out of this: some more regulatory oversight. Beyond that, we don't have any calls on where it will go from here."
"I think it is going to enable finally the approval of Bitcoin ETFs, and other digital currency ETFs, which is game changing,"
Though the Winklevoss Twins and others have failed to earn the regulators’ approval for an ETF in the past, everything is different now. With the successful launch of Bitcoin futures on the CME and CBOE exchanges, the SEC can no longer complain about the lack of a regulated mechanism for price discovery. This was their key objection when rejected earlier ETF proposals. A Bitcoin ETF is seen as huge for the currency, as it would open up Bitcoin trading to traditional investors.