Gary Gensler, US Securities and Exchange (SEC), gave the strongest support the agency has shown for bitcoin exchange-traded funds (ETF) in what could be considered the strongest signal of support. However, crypto enthusiasts aren’t exactly thrilled.
The issue at the heart of the matter is how an approved fund would track. Gensler’s first major speech on cryptocurrency was open to the idea of an approved fund that tracks only bitcoin futures. These ETFs require investors to put down substantial amounts on margin in order to trade.
This would be different than a bitcoin-backed investment fund, which is what many crypto enthusiasts are hoping for.
Matthew Sigel, VanEck’s head of digital asset research, stated by telephone that he sees bitcoin futures-based funds to be inferior products. They have consistently underperformed bitcoin prices and bring additional complexity in terms of how they must managed. ETFs are more expensive than these products.
“They are substandard vehicles,” he said. His company has registered crypto-focused applications.
Although a number of companies have expressed interest in launching a crypto ETF, US regulators have not yet approved it.
According to Bloomberg Intelligence, nine people have applied for authorisation since 2020.
In the past, policy makers expressed concerns about price manipulation and fraud as well as worries about how a fund would handle bitcoin’s notorious volatility.
Gensler stated that he is interested in blockchain technology, or the technology underpinning digital asset, and sees potential value. However, he intends to take aggressive steps to protect investors.
Canada approved several bitcoin ETFs in Canada, the first ever to be launched at the beginning of the year.
“Investors want the best deal, and a quick glance north shows that the real deal is not only available, but also prospering,” said Nate Geraci (president of the ETF Store).
The majority of pending ETF applications were filed under the 1930s laws, which allow stock exchanges and product listings.
Bloomberg reported Gensler hinting at the possibility of a filing seeking approval under a 1940 law that governs mutual fund investing.
“The SEC appears to be pushing investors into lower-risk, less-liquid products in order to increase their bitcoin exposure. This is in contrast to the tried-and-true ETF wrapper which has provided millions of investors exposures to many assets. Many of these are more speculative than bitcoin. Bloomberg