By
Temitope Olatunji
April 18th, 2024
NYSE Arca has recently filed a proposal with the SEC to list two Bitcoin Exchange Traded Funds (ETFs) on its platform.
Bitcoin’s growing popularity and meteoric rise this year, has pulled several financial institutions and retail investors to participate in the cryptocurrency mania. The arrival of the Bitcoin futures products by the CME and CBOE group is a testimony to the fact that financial institutions have seriously started considering Bitcoin as a mainstream digital currency.
The successful launch of Bitcoin Futures Contracts has given enough fuel to get Bitcoin-based Exchange Traded Funds (ETFs) into the market. Giving a further push to this, New York Stock Exchange (NYSE) has recently filed a proposal with the Securities and Exchange Commission (SEC) to list two Bitcoin ETFs on the NYSE Arca trading platform.
As per the official proposal filed on December 19th, Intercontinental Exchange (ICE), which owns the NYSE Arca, is planning to list two ETFs – the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF.
These two ETFs will allow the traders to bet on the volatility of the Bitcoin Futures Contracts. Note that this is not the first time that such a request for Bitcoin ETFs has been filed. ProShares had filed for ETF funds back in September this year, but SEC did not review the applications as Bitcoin futures contracts were not listed then. With Bitcoin futures contracts already going live since past two weeks, there remains a high probability for SEC to consider it and not turn its eye this time.
The two ETF funds will closely follow all the movements in the Bitcoin futures markets listed by CBOE and CME. The funds will also invest their assets in the benchmark futures contracts and will also have an option to invest in contract outside this benchmark. NYSE has made this clear that the funds will not track the actual Bitcoin prices nor will it hold Bitcoins in any case.
It says “The value of the Bitcoin Futures Contracts will be based on the expected value of bitcoin at a future point in time, specifically, the expiration date of such Bitcoin Futures Contracts. 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 the right time to file for ETFs as the Bitcoin futures are already live. Moreover, there has been an increased activity in different financial products registered connected to Bitcoin and the cryptocurrency market. Analysts believe that with NYSE getting its Bitcoin ETFs into the market based on futures tracking, it will add more legitimacy to the extremely volatile and unregulated cryptocurrency (read Bitcoin). Moreover, the arrival of ETFs can also push the cryptocurrency to surge to new record highs.
While commenting on this development, 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.”
In addition to ETFs, NYSE has also filed for two different blockchain-related funds.