By
Steve Muchoki
April 16th, 2024
The U.S. SEC is set to approve or deny the two ProShares Bitcoin ETFs filed in 2017 on 23 August. If approved, the ETF’s performance would be tracked on popular exchanges like the Cboe and CME.
Less than a month passed after the Securities and Exchange Commission (SEC) delayed its decision on the prospect of a bitcoin Exchange Traded Fund (ETF), and now the US’ regulatory agency is to determine the future of the two ProShares Bitcoin ETFs. The deadline for their approval or disapproval is August 23.
The ProShares ETFs were originally proposed in September 2017. In accordance with the filing submitted by the fund, ProShares intended to reach the maximum aggregate offering price of $1 million by trading ETFs for $25 per share. If approved, the ETF’s performance would be tracked on popular exchanges like the Cboe and CME.
While not being connected to actual Bitcoin holdings, the ProShares Bitcoin ETF would derive its value from Bitcoin futures contracts and their performance on the aforementioned exchanges. However, at the time it was noted that the futures market was young and “there can be no assurance that an active trading market for bitcoin futures contracts will develop or be maintained.”
ProShares is a UK-based division of ProFunds Group that manages various investment funds with combined assets under management of more than $30 billion. ProShares has been at the forefront of the ETF revolution since 2006, offering now one of the largest lineups of ETFs.
The company is the leader in strategies such as dividend growth, alternative and geared (leveraged and inverse). ProShares continues to innovate with products that provide strategic and tactical opportunities for investors to manage risk and enhance returns.
As American attorney Jake Chervinsky explained, the ETFs are very important.
2/ These ETFs are important: they're the first ones that the SEC will approve or deny in 2018 & will set the stage for others in coming months.
Of course, nobody knows what the SEC will decide, but we can use their recent statements to figure out what factors they'll consider.
— Jake Chervinsky (@jchervinsky) August 17, 2018
The SEC’s decision on August 23 will be final. If approved, the ETFs would give many traditional investors the ability to invest into the cryptocurrency market through Bitcoin futures contracts.
The ProShares ETFs are not all the ETFs to be approved by SEC. Last month, the Winklevoss Bitcoin ETF (a product based on “physical” bitcoins), was denied appeal by the SEC Commissioners, and a decision was postponed to 30 September 2018.
However, ProShares Bitcoin ETFs have a significant advantage of the over the Winklevoss Bitcoin ETF, as the use the well-respected SEC-regulated CME and Cboe futures exchanges rather than the unregulated and relatively new Gemini digit asset exchange. SEC Chairman Hester Peirce, who voted in favor of the Winklevoss Bitcoin ETF last month, said:
“I am concerned that the Commission’s approach undermines investor protection by precluding greater institutionalization of the bitcoin market.More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order. More generally, the Commission’s interpretation and application of the statutory standard sends a strong signal that innovation is unwelcome in our markets, a signal that may have effects far beyond the fate of bitcoin ETPs.”
Another blockchain company VanEck, partnering with SolidX, has their joint ETF decision postponed to next month as well. “While one cannot rule out manipulation in the underlying spot market, we believe that, due to the diversified ownership and volume of trading, the market does not have major, structural vulnerabilities,” VanEck said. “The Commission’s increased enforcement and regulatory actions can reduce the number of bad actors in a basically sound market. A regulated fund is a natural extension of this.”
Many crypto investors are obsessed with what happens with the VanEck-SolidX Bitcoin ETF. Although approval of the ProShares Bitcoin ETFs does not dramatically increase the chance of eventual success for the VanEck-SolidX Bitcoin ETF, it could indicate a softening of the negative stance shown by the SEC, and is likely to be seen as “good news” by the crypto markets.