By Alicia Maher
The United States Securities and Exchange Commission (SEC) has approved a crypto exchange-traded fund (ETF), reports say. The SEC, which is the apex regulatory body for financial platforms in the nation, announced on Saturday that it has given a go-ahead for the crypto ETF to take off under the U.S. Financial Act. The new ETF will provide interested investors with a way to trade cryptocurrencies that are held by third parties.
Named Volt Crypto Industry Revolution and Tech ETF by its parent company, Volt Equities, the ETF is the latest crypto ETF to secure approval from the government following months of intense scrutiny and debates over the safety of crypto ETFs. The ETF is meant to track the accomplishments of public companies that own or trade large amounts of cryptocurrencies or have some business interests in the crypto industry. MicroStrategy and Marathon Digital Holdings are two such companies with the former having a huge amount of bitcoins and the latter a giant in manufacturing blockchain mining equipment.
In the official prospectus submitted by Volt Crypto Industry Revolution and Tech ETF to the SEC, the ETF stated that it would put its assets in crypto and traditional stocks in a ratio of 80:20. The 20% investment in traditional stock is only a precautionary hedge against the risks associated with trading cryptocurrencies.
The SEC said that it would list Volt Crypto Industry Revolution and Tech ETF under the ticker BTCR and that it would be closely observed because of its status as a crypto ETF. The regulatory body went further to state that since blockchain and crypto are relatively new and their use is largely unestimated, investors must be aware of the risks that they face with it. The ETF is expected to offer investors exposure to cryptocurrencies prices and will therefore be a closely managed instrument on any exchange.
A Start for Crypto ETFs
The crypto community has long called for a crypto stock ETF to trade on exchanges alongside the traditional stock ETFs but the SEC has understandably been reluctant to approve any. Even now, with the approval of Volt Crypto Industry Revolution and Tech ETF, the SEC is reluctant to approve any Bitcoin ETFs for which applications have been submitted for a long time now. The SEC has even moved the decision deadline for Bitcoin ETFs to November 2021, increasing the number of applications that are left pending.
With the US stating its desire to regulate crypto and not ban it, the SEC will expect an increase in the number of companies seeking approval for crypto ETFs. investors will also look forward to an increase in the adoption of cryptos on exchanges around the world.
Although there is no telling how long the crypto community would have to wait for a Bitcoin ETF, the closest thing to that has now been approved by the SEC and the community would hope that a strongly positive performance will influence the SEC’s decision about Bitcoin ETFs in the future.
For now, investors can take advantage of the latest ETF to explore the cryptocurrency market.