Wall St could get 4 Bitcoin futures ETFs by month-end

New York

AFTER years of waiting for a US Bitcoin exchange-traded fund (ETF), the crypto community may finally get as many as 4 products in a matter of weeks.

This month, the Securities and Exchange Commission (SEC) once again has to approve, reject or delay a set of applications for ETFs based on the largest digital currency. This time, they all follow a format that SEC chair Gary Gensler has indicated could be received favourably by the regulator. They will hold Bitcoin futures rather than the digital asset itself, and are filed under the Investment Company Act of 1940 - a route that offers higher investor protection.

It is raising hopes in the US$6.7 trillion US ETF industry and beyond that after years of delays, the world's largest market may finally be ready to join the party. In that time, dozens of cryptocurrency exchange-traded products have already launched in Canada and across Europe.

"We are pretty bullish on approval here," said James Seyffart, an ETF analysts with Bloomberg Intelligence. "We just can't see Gensler and the SEC going out of their way to state positive comments about a 1940-act Bitcoin futures ETF at the end of September, and then denying all of them less than a month later."

In a move that further raised hopes among crypto advocates, the regulator asked two issuers to withdraw their Ethereum-futures ETF filings over the US summer, but made no such demands on similar Bitcoin-based applications.

Last week, it also approved the Volt Crypto Industry Revolution and Tech ETF. The actively managed product plans to invest a majority of its assets into companies "with exposure to Bitcoin and its supporting infrastructure" said its prospectus. It is one of a number of efforts to at least provide investors with indirect access to cryptocurrencies.

"Given that ETF issuers have been tirelessly pursuing Bitcoin ETFs for over 8 years now, it seems somewhat disingenuous for the SEC to encourage more filings at this point only to disapprove them," said Nate Geraci, president of advisory firm the ETF Store. "Approving futures-based Bitcoin ETFs seems like an easy way for the SEC and chair Gensler to get a 'win' in terms of appearing forward-thinking on crypto."

As long as the SEC does not discriminate between the different filings and follows the usual process, a product from ProShares could be first to get the regulator's blessing after the company was first to make the appropriate futures-based filing, said Bloomberg Intelligence's Seyffart.

Valkyrie Investments, a smaller upstart issuer, also holds a good chance, he said. Its filing was a week behind ProShares', but the proposed ETF would hold only Bitcoin futures. In contrast, the ProShares application includes clauses that would grant its fund the ability to hold Bitcoin-related instruments. BLOOMBERG