Commentary October 17, 2021 at 07:44 AM Share & Print
What You Need to Know
- The ProShares Bitcoin Strategy ETF (BICO) will invest primarily in Bitcoin futures contracts, not in actual Bitcoin.
- The ETF will trade on the NYSE, charge a 0.95% fee and be available for investors with brokerage accounts.
- The SEC has yet to approve an ETF that invests directly in Bitcoin. Many such applications are pending.
The first Bitcoin futures ETF will start Tuesday on the New York Stock Exchange, marking a new stage in the evolution of cryptocurrency as an investment asset.
On Tuesday morning, ProShares plans to launch the ProShares Bitcoin Strategy ETF (BICO), which will invest primarily in Bitcoin futures contracts, not in actual Bitcoin. In July, an affiliate company, ProFunds, launched the first Bitcoin-linked mutual fund in the U.S.
The new ETF will provide exposure to Bitcoin to investors with brokerage accounts who don’t “want to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a Bitcoin wallet or are concerned that these providers may be unregulated and subject to security risks,” said ProShares CEO Michael Sapir in a statement.
He added that “2021 will be remembered for the first cryptocurrency-linked ETF,” much like the “1993 is remembered for the first equity ETF, 2002 for the first bond ETF and 2004 for the first gold ETF.”
Bitcoin has been rallying in anticipation of the Bitcoin futures ETF approval and is now trading near $62,000.
To date, the Securities and Exchange Commission has rejected or postponed approval of more than a dozen applications for ETFs that would invest directly in Bitcoin, starting with its 2017 rejection of a filing by Tyler and Cameron Winklevoss.
Many applications for Bitcoin ETFs are still pending before the commission, including at least five others that would invest in Bitcoin futures.
The ProShares Bitcoin Strategy ETF will have a net expense ratio of 0.95%, which compares to a 2% fee charged by the Grayscale Bitcoin Trust, which invests directly in Bitcoin.