NYSE Arca, the exchange owned and operated by the Intercontinental Exchange (ICE), has again thrown its hat into the ring to list the first Bitcoin exchange-traded fund, just a few months after the US regulator denied several bids to list ETFs based on the high-flying digital currency.
As revealed in a filing registered with the SEC on December 19, ICE is applying to list two Bitcoin ETFs on the NYSE Arca trading platform, namely the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF. Neither fund will hold the virtual coin directly, nor track its underlying price, but rather will be exposed to the performance of the US exchange-traded futures contracts.
According to the registration statement, the investment objective of the ETFs is to seek results that “correspond to the performance of lead month bitcoin futures contracts listed and traded on either the Cboe Futures Exchange (“CFE”) or the Chicago Mercantile Exchange (“CME”).”
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It further reads: “The value of the Bitcoin Futures Contracts will be based on the expected value of bitcoin at a future point in time, specifically, the expiration date of such Bitcoin Futures Contracts. By being long Bitcoin Futures Contracts, the Fund seeks to benefit from daily increases in the price of the Bitcoin Futures Contracts. The Fund will not be benchmarked to the current price of bitcoin and will not invest directly in bitcoin. When the price of Bitcoin Futures Contracts held by the Fund declines, the Fund will lose value.”
Fund managers have been racing
The ETF product is expected to expand the audience for virtual currency if the fund is approved by the SEC. The benefits of being first on a major exchange could be big, assuming that Bitcoin does manage to establish itself as a viable asset class in the regulated markets.
In addition to ProShares, at least three other groups are seeking approval for their Bitcoin ETFs. Winklevoss Capital Management LLC, operated by twins Cameron and Tyler Winklevoss, has been trying since 2013 to get approval for their Winklevoss Investment Trust.
Earlier this year, the SEC refused to grant an exemption that would have let the blockchain technology firm SolidX become the first Bitcoin-based ETF to launch on the New York Stock Exchange (NYSE). In an order disapproving of the proposed rule change, the agency said it believed the significant markets for Bitcoin are unregulated.
The SEC repeatedly delayed making a decision on the ETFs applications, first extending the time it had to act on the proposals, then instituting formal proceedings to determine approval, and again extending its deadline to future dates.