The first Bitcoin-linked ETF begins trading on the New York Stock Exchange


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The first Bitcoin-linked exchange traded fund has been launched in the US and marks a new milestone in the cryptocurrency’s ongoing journey towards the financial mass market.

ProShares, an investment management firm, is launching ProShares Bitcoin Strategy ETF, which will be listed on the New York Stock Exchange under the ticker BITO from Tuesday. Although it offers retail investors a new channel for exposing cryptocurrencies – and a channel that may seem less risky than to buy it directly – It is more of an evolutionary step than a revolutionary one. In short, you can not buy Bitcoin at your stockbroker yet.

“BITO will open up exposure for Bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not want to go through the hassle and learning curve of establishing another account with a cryptocurrency provider. “ProShares CEO Michael L. Sapir said in a statement Monday.

Although the regulatory environment for Bitcoin and cryptocurrency remains unclear, the Securities and Exchange Commission’s approval of ProShares’ ETF shines some light on how it thinks. Below, we outline the details of the new ETF, what it means for investors, and what it suggests about crypto’s relationship to conventional financial markets.

Does buying a stake in the ETF mean I buy Bitcoin?

No. You buy a stake in an exchange traded fund, which is a fund that tracks another asset. In this case, the ETF actually tracks a futures contract – an agreement to buy or sell an asset in the future at a certain price – and the asset is Bitcoin.

“The new Bitcoin ETF will not have any actual Bitcoins, but will rather model the price of Bitcoin using futures contracts and other short-term financial instruments,” said Dr. Richard M. Smith, financial risk expert and author of The Risk Rituals Newsletter. “The SEC is not yet ready to approve an exchange-traded ETF that has actual Bitcoins.”

Can I buy a share of the ETF today – and how much does it cost?

Yes. ProShares said investors will be able to buy shares in ProShares Bitcoin Strategy ETF from Tuesday. Prior to the launch of the fund, the company said the ETF had net assets of $ 20 million and that equities would begin trading at $ 40.

Is cryptocurrency coming to Wall Street?

The SEC green light for this ETF marks an important, but modest, step for mainstream acceptance of Bitcoin as an asset class. It noted that the SEC and its chairman Gary Gensler are registered and say “we just do not have adequate investor protection in cryptocurrency, issuance, trading or lending.”

The price of Pink bitcoin higher than $ 60,000 over the weekend – just a few thousand left for its historic high in early April 2021, when Coinbase went public.

Still, experts believe there will be more confusion between crypto and institutional and retail investors, as well as more experiments embedding crypto in traditional financial instruments such as ETFs.

“The entire global economy is moving towards decentralization. The fact that the SEC raised no objections bodes well for future innovation in the field of cryptocurrency,” says Dr. Sarah Manski, Assistant Professor at George Mason University’s School of Business.

Is the SEC changing its position on cryptocurrency regulation?

The SEC has signaled its caution against cryptocurrency. Earlier this year, Coinbase’s crypto-lending program, Lend, was scrapped after the SEC threatened to sue. The launch of ProShares’ ETF may mark a turning point in how the SEC approaches the regulation of crypto-related securities.

“The US government must adopt a new set of regulatory policies that embrace the future and encourage innovation,” said Dr. Man. “I see members of Congress focusing more and more on these issues and consulting with blockchain experts on the best policies to promote economic growth and financial inclusion in an increasingly digital world.”

Apart from ProShares Bitcoin Strategy ETF, other Bitcoin related ETF applications, such as Valkyrie Bitcoin Fund, are currently under review.

“The launch of a Bitcoin ETF is only the latest chapter in an ongoing broad acceptance of the new economic opportunities this technology will provide,” said Dr. Smith.

Read next: China’s ban on cryptocurrency: What it means for Bitcoin, Coinbase and the United States

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