U.S. Securities and Exchange Commission Chair Gary Gensler testifies in front of a Senate Banking, Housing and Urban Affairs Committee oversight hearing regarding the SEC on Capitol Hill, Washington, U.S.A, September 14, 2021.
According to an insider, the Securities and Exchange Commission will allow the first U.S. Bitcoin futures exchange-traded funds (BTC) to trade next week. This is a significant victory for a cryptocurrency sector that has been seeking permissions from Wall Street's top regulator since long.
The person stated that the SEC wasn't likely to block ProShares and Invesco's ETFs. They are based upon futures contracts and were filed in accordance with mutual fund guidelines, which Gary Gensler believes offer investors substantial protection.
Because the discussions are confidential, the person who is familiar with the SEC decision-making process asked not to be identified.
CNBC reached out to the SEC spokesperson for clarification but he did not respond. Emails seeking comment were not answered by representatives from Invesco or ProShares.
Bitcoin traded at $60,000 on Friday. This was its highest level since April 17th. Its rise is due to speculation that the SEC would approve ETFs. The world's most valuable cryptocurrency in terms of market value has increased by nearly 40% in October and is close to its record high of $64,869 earlier this year.
The fund launch marks the end of a long-running struggle by the nearly $7 trillion ETF industry for the approval of the SEC to sanction and research an ETF that is related to popular cryptocurrency.
The Invesco and ProShares funds offer investors an indirect way to invest in Bitcoin. ETFs are based upon bitcoin futures that trade on the Chicago Mercantile Exchange. Bloomberg News reported first that the SEC would allow bitcoin futures ETFs trading.
Others are also eager to see an ETF that is pure-play and backed by real bitcoins. However, a decision on these funds is unlikely for several months. These direct funds, according to investors, avoid the high costs of rolling into futures contracts that don't accurately track bitcoin spot price.
For much of the last decade, the SEC argued that ETFs and other crypto funds were too risky to approve because of volatility and fraud. Gensler, who taught courses on cryptocurrency at the Massachusetts Institute of Technology before joining the SEC, expressed concern that bad actors might exert significant pressure on asset prices or limit their liquidity.
