Gary Gensler of the U.S. Securities and Exchange Commission (SEC) has expressed a certain and sudden openness regarding bitcoin and crypto-based exchange-traded funds (ETFs), though many BTC and crypto analysts aren’t too happy about the situation.

Will Bitcoin ETFs Soon Garner Approval?

As it turns out, Gensler wants these ETFs to operate under a strict mutual fund rule that dates all the way back to the 1940s. In addition, he has stated that while the agency would be open to bitcoin ETFs, they should focus primarily on bitcoin futures, which would require that investors put down a lot of money before engaging in any sort of trade.

Matthew Sigel – head of digital assets research at Van Eck – was particularly upset with this news, claiming that bitcoin futures are “inferior products,” and that regulation needs to be molded to fit the product. He stated in an interview:

We see bitcoin futures-based funds as inferior products that have consistently underperformed the bitcoin price and bring additional complexities regarding how they must be managed at a higher cost than ETFs. Simply put, they are substandard vehicles… What the SEC seems to be doing is pushing individual investors into higher-risk, lower-quality products to get their bitcoin exposure instead of sticking with the tried-and-true ETF wrapper, which has given millions of investors exposure to so many different assets, many of which are much more speculative and illiquid than bitcoin.

Meanwhile, everyone is not happy that the United States has been slow to approve a bitcoin ETF while regions like Canada have beaten it to the punch. Nate Geraci – president of the ETF Store – explained:

Investors want the real deal, and a quick glance north of the border shows the real deal not only exists but is prospering… Futures introduce a layer of complexity, as contracts held by an ETF must be managed and rolled. Futures-based ETFs are unlikely to perfectly track the spot price of bitcoin. Plus, there are differences in taxation. That said, I view this as a positive step towards ‘physical’ bitcoin ETF approval. Bitcoin futures are regulated by the CFTC, which provides the SEC with a level of comfortability they don’t currently have with crypto exchanges. If futures-based bitcoin ETFs are approved and show their mettle, perhaps the SEC can get more comfortable with entertaining the real deal.

A Good Step Foward?

James Seyffart – an ETF analyst with Bloomberg Intelligence – stated that while the move is not the perfect one to make, it is a step towards getting the United States to where it needs to be both technically and financially. He said:

I view it all as different steppingstones. The same level of demand won’t be there for a futures product, so they won’t grow to be as large or grow as quickly as a physical bitcoin ETF product will.

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