Crypto analysts are convinced that 2022 will be the year in which a real bitcoin-based exchange-traded fund (ETF) comes about. To be fair, one already exists; it was established last year by Pro Shares, but that one is based on bitcoin futures. This new one, they believe, will be based on spot trading. In other words, it will be real.
Will a Spot Bitcoin ETF Come About This Year?
The sentiment comes following the Securities and Exchange Commission (SEC) approving an application for the Teucrium bitcoin futures ETF in early April. The fund was filed under the Securities Act of 1933, which is the same rule utilized for products like Grayscale’s bitcoin futures ETF.
Michael Sonnenshein – the CEO of Grayscale Investments – commented in an interview:
From the SEC standpoint, there were several protections that 40 Act products have those 33 products don’t have, but never ever did those protections address the SEC’s concern over the underlying bitcoin market and the potential for fraud or manipulation. So, the fact that they’ve now evolved their thinking and approved a 33 Act product with Teucrium really invalidates that argument and talks to the linkage between the bitcoin futures and the underlying bitcoin spot markets that give the futures contracts their value.
He went on to say that some of the protections included would be custody rules, accounting, and an independent board. He said:
It really is, in our opinion, a matter of when and not if. If the SEC can’t look at two like issues, the futures ETF and the spot ETF, through the same lens, then it is, in fact, potentially grounds for an Administrative Procedure Act violation.
Matt Hougan was also critical of the SEC, claiming that the agency is simply objecting to an ETF based on manipulation worries, but that size of the crypto space largely downplays many of the concerns it has. He stated:
Bitcoin is now an institutional market. It’s a market with institutional service providers, institutional investors, [and] a large and robust regulated futures market. We’ve gotten the bitcoin futures ETF under the 40 Act. We’ve gotten the bitcoin futures ETF on under the 33 Act. The next step is what people want, which is a spot bitcoin ETF that gives pure exposure to bitcoin.
Pro Shares Was First, but It Won’t Be Last
Pro Shares garnered quite a bit of attention last year in the sense that it was the first company to truly get a bitcoin-based ETF onto the market. However, things didn’t quite garner the positive attention they deserved in the sense that the product was based on futures technology rather than actual, physical bitcoins, which many analysts say are far superior to futures in that spot trading ultimately gives people full access to their trading gains.
The SEC, up to that point, had been turning down ETF applications from the likes of Bitwise for years.