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  • Writer's picturelmisthos

SEC approves Bitcoin synthetic ETF

Updated: May 3

The Securities and Exchanges Commission (SEC) has granted approval for the operation of a Bitcoin-linked Exchange-Traded Fund (ETF). The landmark ETF from ProShares will debut on the New York Stock Exchange (NYSE) this week under the ticker 'BITO' following a 75 day review by the SEC.

The news comes after a significant year for crypto ETFs with Brazil and Canada both boasting the launch of their own ETFs in March and February respectively.

The new ETF will hold bitcoin futures contracts rather than the cryptocurrency itself, meaning it is what's known as a synthetic fund. The ETF is a significant regulatory feat for the crypto industry, which has had to deal with recent comments made by SEC chair Gary Gensler, who likened crypto to poker chips last month.

In a statement, ProShares CEO Michael Sapir said:

BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs

Many have been seeking permission from the SEC to launch a Bitcoin ETF in the United States, many applications were delayed or denied while others remain pending. ProShares gained approval despite the SEC's view that there are too many bitcoin-related risks for consumers.

These stated risks, such as volatility and the potential for market manipulation, may underpin why the SEC has rejected every application for "spot" or physical bitcoin ETFs which would allow consumers to purchase a fund which holds bitcoin itself, rather than holding only derivatives priced with reference to bitcoin.

The Greyscale Bitcoin Trust has also indicated that it plans to apply to become an ETF and that it believes an Ethereum ETF is likely in the works as well.


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