NYSE Joins the Race for the First Bitcoin ETF, Files Application With SEC
As Bitcoin makes further penetration into the mainstream financial market, big institutions are now releasing several new investment products around Bitcoins. Recently, Bitcoin Futures Contracts have been launched by the two major U.S. exchanges - CBOE and CME Group and even other exchanges are planning for similar contracts to be released next year in 2018.
The arrival of Bitcoin Futures Contracts has opened up the doors for another product called as the Exchange Traded Funds as many organizations are already gearing up for it. The latest to join the race, is New York Stock Exchange (NYSE) who has filed a proposal with the Securities and Exchange Commission (SEC) to allow the exchange to list two Bitcoin ETFs - the ProShares Bitcoin ETF and the ProShares Short ETF, on the NYSE Arca trading platform.
As per the latest public records dated December 19th, Intercontinental Exchange (IEC) - the parent company of NYSE Arca, has filed a request to list the Bitcoin Exchange Traded Funds (ETFs). ProShares initially filed for Bitcoin ETF back in September 2017 this year, however, the SEC declined to review the application as Bitcoin Futures did not exist during that time. Now as Bitcoin Futures are already live, ProShares has filed for Bitcoin ETF again in addition to two more blockchain related funds.
These funds will closely follow the movements of the existing futures market operated by CBOE and CME. The funds will further invest in benchmark futures contracts with the option of investing in other contracts that are outside the benchmark. NYSE made it clear that the funds will not own Bitcoins. “By being long Bitcoin Futures Contracts, the Fund seeks to benefit from daily increases in the price of the Bitcoin Futures Contracts. The Fund will not be benchmarked to the current price of Bitcoin and will not invest directly in Bitcoin. When the price of Bitcoin Futures Contracts held by the Fund declines, the Fund will lose value.”
This is not for the first time that Bitcoin ETFs are being filed. However, all the previous filings were rejected by the SEC as there was no existence of Bitcoin futures contracts. With Bitcoin futures now going live, it has increased the changes for accepting Bitcoin ETFs as well.
The arrival of the futures-tracking ETFs by NYSE will bring in more legitimacy in the highly volatile and unregulated Bitcoin market. This possibly means that any positive indication by the SEC could make Bitcoin rally further ahead to make new record highs.
A few analysts have expressed their opinion in this regard. Win Thin, global head of emerging markets strategy at Brown Brothers Harriman said “It's very hard for us, as currency analysts, to follow this. It represents further mainstreaming. Hopefully that what comes out of this: some more regulatory oversight. Beyond that, we don't have any calls on where it will go from here.”
Founder and CEO of Digital Currency Group, Barry Silbert said: “I think it is going to enable finally the approval of Bitcoin ETFs, and other digital currency ETFs, which is game-changing.”