First Bitcoin Linked ETF Starts Trading on New York Stock Exchange

The first Bitcoin-linked exchange-traded fund was launched in the United States, marking a new step in the continued journey of cryptocurrency to the mass financial market.

ProShares, an investment management firm, is launching the ProShares Bitcoin Strategy ETF, which will be listed on the New York Stock Exchange under the ticker BITO from Tuesday. While it offers retail investors a new channel of exposure to cryptocurrency – and one that may seem less risky than buy it directly – it is more an evolutionary step than a revolutionary one. In short, you cannot buy Bitcoin from your stock broker yet.

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

While the regulatory environment for Bitcoin and cryptocurrency remains murky, the Securities and Exchange Commission approval of ProShares’ ETF shines a light on its thinking. Below, we outline the details of the new ETF, what it means for investors, and what it suggests about crypto’s relationship with mainstream financial markets.

Does buying a share of the ETF mean that I am buying Bitcoin?

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

“The new Bitcoin ETF will not contain any real Bitcoin but instead will model the price of Bitcoin using futures and other short-term financial instruments,” said Dr Richard M. Smith, expert in financial risk and author of The Risk Rituals newsletter. “The SEC is not yet ready to approve an exchange-traded ETF that holds real Bitcoin.”

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

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

Is Cryptocurrency Coming to Wall Street?

The The SEC gives the green light to this ETF marks an important, albeit modest, step in the general acceptance of Bitcoin as an asset class. That said, the SEC and its chairman Gary Gensler is registeredsaying “we just don’t have enough investor protection in crypto finance, issuance, trading or lending.”

The price of Pink bitcoin over $ 60,000 over the weekend – a few thousand less than its historic peak early April 2021, when Coinbase has gone public.

Still, experts believe there will be more mix between crypto and institutional and retail investors, as well as more experimentation integrating crypto into traditional financial instruments like ETFs.

“The whole world economy is moving towards decentralization. The fact that the SEC has raised no objections bodes well for future innovation in the cryptocurrency space,” said Dr Sarah Manski, assistant professor in the School of Business at George Mason University.

Is the SEC changing its stance on cryptocurrency regulation?

The SEC has signaled its distrust of cryptocurrency. Earlier this year, Coinbase’s crypto-lending program Lend was scrapped after the SEC threatened to sue. The launch of the ProShares ETF could 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. Manski. “I see members of Congress increasingly focusing on these issues and consulting with blockchain experts on the best policies to encourage economic growth and financial inclusion in an increasingly digital world.”

Besides ProShares Bitcoin Strategy ETF, other Bitcoin related ETF applications, such as Bitcoin Valkyrie Fund, are currently under study.

“The launch of a Bitcoin ETF is just the latest chapter in a continued broad acceptance of the new economic opportunities this technology will offer,” said Dr Smith.

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