Grayscale emerges to attack Bitcoin spot ETF

Not surprisingly, the Bitcoin futures ETF issued by ProShares, a well-known U.S. ETF provider, will soon be listed on the New York Stock Exchange. According to Coindesk, the SEC has approved the ETF in an internal meeting.

Since the first Bitcoin ETF listing application was rejected in 2013, the SEC has rejected more than a dozen related ETF applications. If the Bitcoin futures ETF is successfully listed, it will become a milestone event.

It should be noted that there is a big difference between the Bitcoin futures ETF and the spot ETF. The investment target of the former is not to invest directly in Bitcoin, but to provide exposure to the Bitcoin futures price of the Chicago Mercantile Exchange (CME). This means that the ETF holder does not directly hold Bitcoin spot, which is equivalent to only investing in a highly volatile price index.

Anthony Pompliano, co-founder of Morgan Creek, a digital asset management company, believes that it would be better to approve a Bitcoin spot ETF from the perspective of price tracking or fee structure.

According to CNBC, citing people familiar with the matter, Grayscale Investment, which has not made a major move for a long time , is planning to apply for the conversion of its Bitcoin Trust Fund (G BTC ) into a Bitcoin spot ETF fund. This will be Grayscale’s second application to list Bitcoin spot ETFs. Compared with trust funds that only allow high-net-worth qualified investors and professional institutions to participate, Bitcoin spot ETFs will greatly reduce the entry barrier, and retail investors can also enter the market through it. .

However, analysts believe that because Bitcoin has not yet been listed on traditional trading platforms such as Nasdaq, regulatory authorities have reason to worry about the risk of price manipulation and may not approve Bitcoin spot ETFs in a short period of time. In the opinion of some optimistic practitioners, the listing of Bitcoin futures ETF is still worthy of excitement, and it may become a springboard for Bitcoin “ontology” to enter the mainstream financial market.

U.S. securities market will list the first Bitcoin futures ETF

The listing of Bitcoin futures ETF on the US stock market is about to become a reality.

Last Friday, ProShares, a well-known US ETF provider, disclosed a revised Bitcoin futures ETF document, which showed that its Bitcoin futures ETF plans to be officially listed for trading on October 18, local time, but the specific listing date has yet to be officially announced Confirmed, it is not ruled out that it will be delayed for a few days.

ProShares’s letter Phi symbolizes the completion of the necessary procedures before listing. Subsequently, the New York Stock Exchange High Growth Board Market (NYSE Arca) confirmed the listing permission and announced that the Bitcoin futures ETF will be traded under the code “BITO” with a management fee of 0.95%.

According to the rules of the U.S. securities market, ETFs listed on the exchange also need to obtain permission from the U.S. Securities and Exchange Commission (SEC). As of October 18, the SEC has not given a written response. However, according to a Coindesk report on October 16, the five SEC committee members have approved the Bitcoin futures ETF after a meeting. According to a person familiar with the relevant regulatory framework, as long as the regulator has no complaints, the ETF will be allowed to trade.

In addition, on October 15th, the SEC Investor Education Office also tweeted a special reminder, “Before investing in funds holding bitcoin futures contracts, please make sure to carefully weigh the potential risks and benefits.” This news further It is confirmed that the SEC’s first approval of the listing of Bitcoin futures ETF is on the line.

Grayscale emerges to attack Bitcoin spot ETF

SEC Investor Education Department reminds Bitcoin futures ETF risks

Since the Bitcoin market has continued to grow, practitioners have been hoping to promote the listing of Bitcoin ETFs in the U.S. compliance market. In 2013, the Winklevoss brothers, founders of the Gemini exchange, submitted the Bitcoin ETF listing application to the SEC for the first time, but they were later rejected. In the following eight years, the SEC rejected more than ten Bitcoin ETF listing applications, making the process of entering the mainstream market of this Bitcoin financial instrument very upset.

After eight years of ups and downs, the Bitcoin futures ETF was finally approved, which will undoubtedly become a milestone for Bitcoin.

But what needs to be distinguished is that the Bitcoin futures ETF issued by ProShares this time is different from the Bitcoin (spot) ETF that people often say in the past.

According to Guo Yatian, president of New York Tianjiao Fund Company, the ETF is a Bitcoin futures trading fund. Its investment target is not direct investment in Bitcoin, but in the futures price of Bitcoin. According to the information disclosure, it is the price collection based on the Bitcoin futures price of the Chicago Mercantile Exchange (CME).

Compared with Bitcoin spot ETFs, the financial attributes of futures ETFs are stronger. Investors buy the ETF for profit, not to resist inflation by holding it. In addition, a major feature of futures ETFs is that they have a delivery date and need to adjust positions frequently, which will also bring friction costs.

Transmit Grayscale and proceed to submit Bitcoin spot ETF applications

Although the Bitcoin futures ETF provides investors with an indirect exposure to the Bitcoin market, in the eyes of many crypto industry practitioners, this step is not in place. Because it does not directly buy Bitcoin, it is only equivalent to tracking a highly volatile price index.

Anthony Pompliano, co-founder of Morgan Creek, a digital asset management company, believes that it would be better to approve a bitcoin spot ETF from the perspective of price tracking or fee structure, but it is impossible for a beggar to be picky at the beginning. In Guo Yatian’s eyes, if the Bitcoin futures ETF is opened, more similar financial products will be approved.

Indeed, the trend of Bitcoin futures ETF will soon be transmitted to the market. Last Wednesday, Cathie Wood’s ARK fund, which is known as the “female stock god,” also submitted a Bitcoin futures ETF application to the SEC. According to the latest news, Grayscale , which has not made a big move for a long time, will also come out.

On October 17, CNBC quoted people familiar with the matter as reporting that Grayscale plans to apply for the conversion of its Bitcoin Trust Fund (GBTC) into a Bitcoin spot ETF fund this week. The source revealed that once the SEC approves the futures-based Bitcoin ETF, Grayscale intends to immediately submit an application to the SEC.

According to data from Ouke Cloud Chain, as of October 18, Grayscale Trust managed 647,500 bitcoins, valued at approximately US$38.683 billion, making it the largest bitcoin fund in the world.

Grayscale emerges to attack Bitcoin spot ETF

Grayscale manages 647,500 Bitcoins

In fact, the layout of Bitcoin in the form of a trust fund is not the original intention of Grayscale. As early as January 2017, Grayscale submitted a Bitcoin spot ETF listing application to the SEC. However, because the SEC believed that the Bitcoin market risk was extremely high, Grayscale withdrew the application in October of that year. Looking at it now, Grayscale always has expectations for this goal.

Bitcoin trust funds only allow high-net-worth qualified investors and professional institutions to participate. In comparison, the threshold for Bitcoin spot ETFs is much lower, and ordinary retail investors can also indirectly hold Bitcoin by buying Bitcoin ETFs. As a “giant whale” in the crypto asset industry, Grayscale undoubtedly hopes that more investors can enter the Bitcoin market through compliant channels. Once the Bitcoin spot ETF is approved, it also means that the US stock market officially recognizes Bitcoin as an investable financial asset, which will bring massive amounts of incremental funds to this market.

However, in the view of some analysts, the SEC’s first approval of Bitcoin futures ETFs rather than spot ETFs was intentional. At the Aspen Forum in August this year, SEC Chairman Gary Gensler stated, “I very much hope that my colleagues will review the ETF based on CME Bitcoin futures.” In his view, futures ETFs can provide investors with better protection.

This is mainly because Bitcoin itself has spot characteristics and requires a set of compliant custody and private key security management solutions; in addition, there is no complete and compliant secondary platform for buying and selling Bitcoin at a fair price in the market. Although trading platforms such as Coinbase and Binance provide bitcoin transactions, in the eyes of regulators, these platforms cannot avoid risks such as bitcoin price manipulation. In contrast, the supervision is more recognized in Nasdaq, CME and other traditional trading platforms that have complete pre- and post-market, market maker seats and clearing and settlement systems.

Based on this concern, analysts believe that the SEC may not approve the Bitcoin spot ETF in a short period of time unless Bitcoin can be the first to be listed on the traditional exchange market.

In any case, if Bitcoin futures ETF can be the first to be listed on the U.S. stock market, it is a big step taken by Bitcoin in the past 10 years. In the eyes of optimists among practitioners, Bitcoin futures ETF may become Bitcoin ” “Ontology” is a springboard to enter the mainstream financial market.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/grayscale-emerges-to-attack-bitcoin-spot-etf/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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