Crypto lender BlockFi is the latest one to file for a bitcoin futures exchange-traded fund (ETF).
This week, the company filed for a fund called “BlockFi Bitcoin Strategy ETF” that would not invest directly in Bitcoin, rather in futures contracts traded on the regulated derivatives exchange CME, according to the regulatory filing.
The fund would be registered under the Investment Company Act of 1940, which is in line with the product Securities and Exchange Commission (SEC) Chair Gary Gensler has signaled his support twice now, raising the hopes in the $6.7 trillion US ETF industry.
Ever since he first hinted that such a product might finally receive approval in August, several firms including VanEck, ProShares, Valkyrie, Invesco, Galaxy Digital, and Bitwise have filed for Bitcoin Futures ETF.
ETF firm VanEck has already secured an insurance policy for its yet-to-be-launched Bitcoin futures ETF in preparation for a go-ahead from Gensler. The policy goes into effect on Oct. 26, the day after the SEC’s decision deadline.
Given that there are already multiple firms in line ahead of BlockFi, it is unlikely that the crypto lender would be the first one to get approval. Meanwhile, experts believe one such investment product could finally get approved in the coming weeks.
Bloomberg Intelligence’s senior ETF analyst Eric Balchunas predicts that at least one application will get approved this month.
Gonna start a thread laying out a case as to why @EricBalchunas and I are putting odds at 75% for a Bitcoin Futures ETF coming to the U.S in October. Here's where we view the odds of the ETF getting first approval 1/x pic.twitter.com/LRrzG9XLX1
— James Seyffart (@JSeyff) October 8, 2021
This month, the US SEC actually has to approve, reject, or delay a number of applications for futures-backed ETF.
“We are pretty bullish on approval here,” said James Seyffart, another ETF analyst with Bloomberg.
“We just can’t see Gensler and the SEC going out of their way to state positive comments about a 1940-act Bitcoin futures ETF at the end of September and then denying all of them less than a month later.”
What further raises the hope for approval is that the regulator asked two issuers to withdraw their Ethereum-futures ETF filings over the summer but didn’t make a similar demand on Bitcoin-based applications.
The first application for a Bitcoin ETF, a physical one, was made over eights years ago by Cameron and Tyler Winklevoss, the twin founders of Gemini Trust Co., in 2013.
“It seems somewhat disingenuous for the SEC to encourage more filings at this point only to disapprove them,” said Nate Geraci, president of the advisory firm the ETF Store.
“Approving futures-based Bitcoin ETFs seems like an easy way for the SEC and Chair Gensler to get a ‘win’ in terms of appearing forward-thinking on crypto.”
As long as the agency follows the usual process and doesn’t discriminate between the filings, ProShares could be the first to get an approval, and then Valkyrie, which filed a week after ProShares, said Bloomberg’s Seyffart.