Following Canada’s approval of multiple Bitcoin ETFs, the first Bitcoin futures ETF in the United States will soon be listed.
According to the official website of Proshares, a U.S. exchange-traded product provider, disclosed on October 18, the company will launch the first U.S. ETF linked to Bitcoin on October 19 (New York Stock Exchange stock code: BITO). It is worth noting that this ETF mainly invests in Bitcoin futures and does not directly invest in Bitcoin.
ProShares CEO Michael L. Sapir said that BITO will provide investors who have a brokerage account and are willing to buy stocks and ETFs with access to Bitcoin ; These investors do not need to open accounts and encrypted wallets in cryptocurrency exchanges, or worry that cryptocurrency suppliers may be unregulated and face security risks.
According to a CNBC report on October 18, since 2017, at least 10 asset management companies have sought approval to launch a spot Bitcoin ETF, which provides investors with the opportunity to purchase Bitcoin itself. Tools that are not related to derivatives; at the time, they were all rejected by the US Securities and Exchange Commission (SEC) led by Jay Clayton, which insisted that spot Bitcoin ETFs were not resistant to market manipulation.
In a speech in August this year, the current SEC Chairman Gary Gensler stated that he would favor investment tools including futures; what followed was an application The craze for Bitcoin futures ETFs.
At the same time, in July this year, ProFunds, a subsidiary of ProShares, launched the first mutual fund linked to Bitcoin in the United States.
What is a Bitcoin futures ETF?
The full name of ETF is Exchange Traded Fund. The fund shares of the investors also need to buy back the fund shares held by them at any time at the request of investors.
Investing in futures-based ETFs is also different from direct investment in spot ETFs: futures contracts areAn agreement to buy and sell assets at agreed prices, so futures-based ETFs will track cash-settled futures contracts, rather than the price of the asset itself.
Hao Yi, a researcher at the Bank of China Research Institute, said that for investors, futures are more uncertain, with higher returns, and higher risks. Bitcoin can also be realized. The hedging has enriched the tools for traders to hedge risks.
Before the Bitcoin ETF, the Chicago Mercantile Exchange (CME) launched Bitcoin futures in 2017, and the Toronto Stock Exchange also has a Bitcoin closed-end fund Can be traded.
And the upcoming BITO will also track the price of Bitcoin futures traded on the Chicago Mercantile Exchange (CME), rather than Bitcoin itself; at the same time, these Futures are traded separately on regulated U.S. exchanges such as the Chicago Mercantile Exchange (CME).
Why should the US Bitcoin ETF be based on futures?
The SEC has stated that if the regulator does not understand the source and pricing process of Bitcoin, this will make investors more vulnerable to fraud and manipulation; due to the SEC Lack of jurisdiction over encrypted trading venues that are not registered as exchanges in the United States, so the regulator prefers futures-based ETFs.
Hu Jie, a professor at the Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University, told the news that from a regulatory perspective, ease of supervision is not the main reason for preferentially launching Bitcoin futures ETFs . Bitcoin spot trading in the United States also has very regulated trading platforms such as Coinbase. If the trading of these platforms is used as the basis, and then its ETF is built on it, the supervision will also be very complete.
Hu Jie also said that because futures have their own leverage, they are more volatile and riskier. However, the reason why the Bitcoin futures ETF was launched ahead of the spot ETF is because futures have a two-way nature: futures can be both long and short, allowing funds to flow in both directions, so that the market price will be long and short A relatively balanced state is formed; on the contrary, the Bitcoin spot short-selling mechanism is still incomplete, so the Bitcoin spot ETF will be a one-way market.
Sun Yang, a researcher at the Suning Institute of Finance, also told the news that for institutions, Bitcoin futures ETF may becomeHedge funds or asset management companies hedge their Bitcoin spot targets or other asset targets, or, bluntly, they also provide a more reasonable short-selling method for those who look down on Bitcoin for a long time.
“The liquidity of the spot market may not be able to meet the trading needs of funds and institutions. Because the number of bitcoins is limited, it may lead to spot ETFs The market situation has led to relatively large price differences when buying and selling.” Sun Yang said that because futures ETFs are based on futures contracts, they can get rid of the 21 million limit, thereby satisfying investment institutions for higher liquidity and more Demand for large transaction volume.
Hao Yi said that the US adopted Bitcoin futures ETF this time because of exchange-traded funds linked to futures and not directly linked to virtual assets, Bitcoin. Funds help stabilize the market because the futures market can provide investors with better protection.
According to the Wall Street Journal report on October 16, the SEC has not approved any ETF that directly holds Bitcoin or other cryptocurrencies; the regulator said it will not support it at this time Set up such an ETF.
According to a CNBC report on October 18, in October, the Bitcoin futures ETFs of ProShares, Valkyrie, Invesco and Van Eck were awaiting review. If the SEC does not intervene during this period, they will be allowed to continue the follow-up process and go public 75 days after submitting the application documents.
China has comprehensively upgraded its virtual currency rectification since September
In China, on September 24, the National Development and Reform Commission and other 11 departments issued the “Regarding the rectification of virtual currency “Notice of “Mining” Activities” (hereinafter referred to as “Notice”), it is strictly forbidden to add new virtual currency “mining” projects and speed up the orderly exit of existing projects. At the same time, virtual currency “mining” activities will also be officially classified as an obsolete industry. On the same day, the Central Bank and other 10 departments issued the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Hype”, clarifying that virtual currency-related business activities are illegal financial activities. At the same time, overseas virtual currency exchanges are also used to provide services to domestic residents of China through the Internet. Defined as illegal financial activities.
Since September, China’s virtual currency regulatory policies have been fully upgraded, and local governments such as Jiangsu and Zhejiang have begun to investigate virtual currency “mining” in their jurisdictions.At the same time, companies engaged in cryptocurrency transactions and other businesses have also begun to clear mainland Chinese users.