- The SEC has approved a new application for a BTC Futures Fund. This allows institutional investors to invest in Bitcoin shares.
- According to some experts, this increases the probability that the SEC could approve a Bitcoin ETF in the near future.
To date, the SEC has not approved any application for the launch of a Bitcoin ETF. However, the latest developments could greatly increase the chances for 2020. Industry experts are currently discussing the possibilities and options.
SEC approves Bitcoin Futures Fund
On December 02, 2019, the SEC approved the New York Digital Investment Group LLC (NYDIG) application to launch a Bitcoin Futures Fund. This allows the company to offer shares based on various Bitcoin futures to its clients, who are primarily institutional investors. Registered investment advisors as well as own clients and qualified investors may invest in these funds.
Although there is no official information on the price of the shares yet, sources entrusted with the investment indicate that the maximum offer price per share for the fund will be USD 10 per share. In addition, the initial capital of the Fund will initially be USD 25 million. The official name of the fund is “New York Digital Investment Group Bitcoin Strategy Fund” and is intended to maximize capital growth over the long term.
The fund says in the official announcement:
The Fund will seek to purchase a number of Bitcoin futures so that the total value of the Bitcoin underlying the Bitcoin futures held by the Fund is as close to 100% of the net assets of the Fund (the “Target Exposure”), as it is reasonably practicable to achieve.
The SEC’s decision represents another important step in the Bitcoin market. The approval follows shortly after the SEC announced its intention to review the Bitwise Assets Management Bitcoin ETF application.
Is the way paved for a Bitcoin ETF?
Industry experts disagree on whether the time is right for a Bitcoin ETF. To date, the SEC has opposed a Bitcoin ETF application. According to Mike McGlone, a renowned commodities trader from Bloomberg Intelligence, acceptance of the above application for a Bitcoin ETF in 2020 increases the opportunity to 50-50.
The trader LightCrypto has shared the research results on Twitter and describes them (freely translated):
Approval shows that lobbying by issuers such as VanEck and Bitwise is starting to pay off
Bloomberg Intelligence: SEC's approval of the Stone Ridge interval Bitcoin fund paves the way for a Bitcoin ETF.
Sees odds for approval in 2020 at 50-50. pic.twitter.com/2qZJlvuUNT
— light (@LightCrypto) December 6, 2019
Bitcoin bull and founder of Fundstrat, Thomas Lee, stated in an interview that the market is not yet ready for a Bitcoin ETF. With a current market capitalisation of just under USD 202 billion, the market is still too small for the SEC to pay much attention to this market.
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Lee describes that Bitcoin’s price would have to rise to USD 150,000 for there to be sufficient demand to fully cover a Bitcoin ETF. Even though many investors in the cryptographic market accuse the SEC of reluctance to innovate, Lee is very satisfied with the committee’s work and decisions to date.
With its current course, the SEC brings all relevant players to a negotiating table where all further developments are discussed and Bitcoin is prepared for the mainstream:
If you’re involved in crypto, the SEC can look like an obstacle. They’re establishing protections for individuals and right now it’s not convenient for the industry, but if the SEC is someone that people trust. That’s how you get the mainstream willing to get involved in crypto.
However, Brian Kelly, CNBC employee and financial expert, currently sees no need for a Bitcoin ETF, as the entry of Fidelity and TD Ameritrade provides sufficient opportunities to enter the market with larger amounts of capital.
Bitcoin’s price continues to trend sideways (- 0.66%) and stands at USD 7,510.01 at the time of writing.