On Wednesday Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), restated his support for cryptocurrency products linked to Bitcoin futures. He mentioned it in his remarks for the “Future of Asset Management North America Conference” hosted by the Financial Times.
In his remarks to the Aspen Security Forum in August, Gary Gensler stated that the SEC might be more favorably disposed towards ETFs that plan to hold Bitcoin futures contracts rather than products planning to directly hold the first cryptocurrency. Not long after the Chairman’s remarks, several issuers filed to launch crypto futures products with the regulator.
However, in line with the tradition of the recent years, the filings have been suspended. Gensler referred to the large number of filings and said, “We’ve started to see filings under the Investment Company Act with regard to exchange-traded funds (ETFs) seeking to invest in CME-traded bitcoin futures. When combined with other federal securities laws, the ‘40 Act provides significant investor protections for mutual funds and ETFs.”
Gensler finished his comments related to cryptocurrency assets by stating that he was looking forward to the SEC review of filings for Bitcoin ETF futures.
Bitcoin futures are an investment instrument to speculate on the cryptocurrency’s future prices. With Bitcoin futures, you do not need to buy tokens. These futures are used to compensate volatility: a long position opens up when growth is anticipated, and a short position can be taken to protect your assets against losses in case of an expected price decrease. Therefore, Bitcoin futures protect your investments in any market conditions.
Such services are offered by many crypto exchanges. For instance, Binance offers perpetual and quarterly contracts.
In spite of the long wait for an ETF based on Bitcoin or Bitcoin futures, 2021 has been a generally good year for investment instruments linked to cryptocurrency assets. This year, open-ended mutual funds investing in CME-traded crypto futures have been launched — they have laid the groundwork for a potential market in this sphere.
An example of such funds is the Bitcoin Strategy ProFund (BTCFX). It was launched in late July and has been growing steadily ever since. This indicates the interest of investors in any products exposed to Bitcoin in any way.
BTCFX mainly holds Bitcoin futures contracts and strives to provide investors with access to BTC through a familiar investment instrument with several protection levels.
BTCFX invests in “front month” futures contracts — the most liquid type of futures contract, and the closest to the spot price of the underlying instrument. However, the fund does not hold Bitcoin directly.