Which Bitcoin ETF is the SEC Likely to Approve First?

Exchange-traded funds (ETFs) are pools of crypto-related assets that are offered on traditional exchanges. Bitcoin ETFs comprise BTC or Bitcoin price-related assets. The ETFs are purposed to give access to investors who are willing to invest in actual cryptocurrencies without owning them.

Instead of the cryptocurrency exchange, Bitcoin ETFs are normally traded on the traditional exchange. SEC is set to approve the Bitcoin Futures ETF, a new Bitcoin-linked fund. The approval will mark a huge milestone that bitcoin experts have long-awaited. BITO, the Bitcoin-linked fund, lets investors invest in BTC without actually purchasing the asset on a cryptocurrency exchange.

Bitcoin ETF

Considering the high number of companies that have applied for a Bitcoin ETF to the Security and Exchange Commission, the regulator is more likely to approve Bitcoin futures ETFs. It's filed under mutual fund regulation that exists for the crypto asset. The ETFs were proposed by Valkyrie and ProShares. Gary Gensler, the SEC’s Chairman, thinks the ETF offers significant protection to investors.

ProShares Bitcoin Strategy ETF

The ProShares Bitcoin Strategy ETF under the ticker BITO has over $1.2 billion in assets under management. Hitting the New York Stock Exchange last year on October 19th, the Bitcoin-linked fund became the quickest ETF to grow over $1 billion in assets. 

It was among the first ETFs launched in October in the U.S that provided investor exposure to the Bitcoin futures and is priced at $24.9. It is regulated by the Commodity Futures Trading Commission and has an expense ratio of 0.95%. However, despite no approval efforts by the SEC, Canada and Europe have approached and greenlighted several cryptos and Bitcoin ETFs.

Valkyrie Bitcoin Strategy ETF

Under the ticker BTF, the Valkyrie Bitcoin Strategy was launched less than a week after BITO’s debut in the market. However, just like BITO, BTF doesn’t directly invest in bitcoin and the Commodity Futures Trading Commission is in charge of regulating the trades. 

Valkyrie is an asset manager located in Tennessee that has vast experience in digital and traditional asset management. It already offers trusts for cryptos including Polkadot, Bitcoin, and Algorand. BTF is priced at $15.49 with an expense ratio of 0.95. Its asset management clocks over $47.9 million.

Speculations on BTC ETFs to be Approved by SEC

The SEC has long disapproved of ETFs since 2016, during the first ETF launching attempt. Regardless of the SEC’s recent rejections of proposed ETFs by various companies, BITO is likely to be the first approved. 

According to CFRA Research last year’s report, Valkyrie Bitcoin Strategy ETF might not get approval for another 2 years. Judging from the possibility of criminal activities and fraud happening, cryptocurrency stability is part of the reasons why the SEC is reluctant to approve these ETFs.

Bitcoin still being at its early development stages, the asset lacks substantial historical records that track performances that investors can use for future references. As such, expert traders encourage new investors to only stake what they are comfortable losing. Considering Bitcoin’s high volatility, BITO and other ETFs are also subject to market surges upwards and downwards. 

If you are an investor with an interest in Bitcoin investment without actually owning the asset, BITO makes it extremely easier. The ETF broadens exposure to Bitcoin that includes a wider range of investors that have brokerage accounts. The ETF is for investors who are comfortable purchasing ETFs and stocks. It favors investors without the desire to learn and the hassle of creating crypto service provider accounts and making BTC wallets.

Bitcoin futures differ from Bitcoin. The difference comes in where Bitcoin futures aren't directly linked to the actual digital BTC assets. Here, buying and selling of the assets are at an agreed-upon price that is irrespective of the actual asset’s price. Investors trade at a premium or at a discount. 

The major idea of the trades in Bitcoin's future is that investors predict the worth of their shares will be higher in the future to make a profit. However, you should note that the ETF prices are different from the actual asset prices in the crypto market.

Will BTC ETFs See the Light of Day?

Regardless of the issues still waiting to be addressed in the cryptocurrency framework, ETFs pose a chance for adoption benefiting investors more than ever. Most countries like Canada, Brazil, Australia, and other European countries have already approved bitcoin exchange-trading funds. 

Keeping that in mind, the SEC seems to be lagging behind the fast-growing ETF adoption. In any case, an approved bitcoin ETF would honor investor protection and maintain an efficient and orderly market. Furthermore, a bitcoin ETF would assist in decreasing premium volatility. Competition would also lower management fees, improving and strengthening confidence in investing security for investors.