The US Securities and Exchange Commission has recently received applications from two companies seeking a green signal in favour of launching their latest Bitcoin Exchange-Traded Funds (ETFs). As per EDGAR, the real-time filings system, new applications have been received from REX Short Bitcoin Strategy ETF and REX Bitcoin Strategy ETF on the 8th of December and on Monday from the VanEck Vectors Bitcoin Strategy ETF.
Bitcoin won’t be held directly by any of these two companies. Bitcoin-linked derivatives and futures contracts shall form the base for the Bitcoin ETFs. In case any of these applications receive the approval of the SEC, it would become the first ever operating Bitcoin ETF in this world.
Importance of Bitcoin ETFs
ETF refers to an investment fund which tracks an underlying asset, index or basket of assets and also trades like a common stock by itself. Trading and investment opportunities of the ETF funds shall cater to market players who do not wish to directly deal with the transacting and storing of bitcoins. And for the traditional ones, Bitcoin ETF would provide the perfect solution since it would be the responsibility of the ETF operating entity and not the investor to look after the security and ownership of the underlying cryptocurrency.
Landscape Of Bitcoin ETFs
In spite of receiving a large number of Bitcoin ETF applications, the SEC has not yet approved any. The unregulated nature of cryptocurrencies can be sighted as one of the biggest reasons behind the same. The application submitted by Winklevoss twins’ earlier this year on Bitcoin ETF COIN was rejected by the SEC for similar reasons.
VanEck had previously filed for Bitcoin ETFs back in September. That application was also rejected by SEC on the ground that Bitcoin futures were not available at the time when VanEck was planning to operate their funding program.
However, bitcoin-based futures have been made available presently. 10th December marked the launch of Bitcoin futures by CBOE whereas CME is planning to proceed in the same footsteps on 18th December. Various financial analysts feel that once futures trading is introduced, new Bitcoin ETFs shall find it easier to enter into the radar.
Dave Chapman the Managing Director of Octagon Strategy, revealed in an interview conducted by CNBC that,
“As a result of the SEC approving both the futures on CBOE and CME, and in NASDAQ next year, I will go happily on the record in betting that we will see an ETF for Bitcoin approved in 2018. That’s a no-brainer.”