In the past week, the United States Securities and Exchange Commission has received two applications for bitcoin-related exchange-traded funds.
According to EDGAR, the SEC’s public filing system, the two ETF applications were filed on December 8th and December 11th. The first application, the REX Bitcoin Strategy ETF and REX Short Bitcoin Strategy ETF, was filed by Connecticut-based REX, while the second, the VanEck Vector Bitcoin Strategy ETF, was filed by New York-based VanEck.
Neither of the firms would actually hold bitcoin for its clients. Instead, the funds will manage futures contracts, short positions, and other derivatives for their investors, and this will allow them to profit based on bitcoin’s price movement.
Bitcoin Futures Prompts SEC to Reconsider ETFs
Not so long ago, the SEC wouldn’t even consider registering ETFs for bitcoin. Back in October, it rejected a proposal by the Winklevoss twins for the first ever bitcoin ETF. The SEC drafted a public notice to defend their rationale:
the Commission believes that the significant markets for bitcoin are unregulated. Therefore, as the Exchange has not entered into, and would currently be unable to enter into, the type of surveillance-sharing agreement that has been in place with respect to all previously approved commodity-trust ETPs—agreements that help address concerns about the potential for fraudulent or manipulative acts and practices in this market.”
Back in October, the SEC also requested that REX ETF withdraw its two original applications for bitcoin ETFs. REX President J. Garrett Stevens explained the SEC’s reasoning in a public letter noting that:
the Staff expressed the view that it is the Commission’s policy not to review a registration statement for a fund where the underlying instruments in which the fund intends to primarily invest are not yet available.”
As of December 10th, however, the Cboe now lists bitcoin futures, and analysts believe that the SEC’s approval of the two ETFs amidst this futures’ launch is no coincidence. As more exchanges begin listing bitcoin futures, many expect the SEC to receive and approve more ETF filings.