By James Davis
The crypto rally that began last month when asset manager BlackRock filed for a Bitcoin spot exchange-traded fund (ETF) is still on. Now, the approval of a Bitcoin leveraged futures ETF has raised hopes that the Securities and Exchange Commission (SEC) will give the green light to spot ETFs.
Volatility Shares’ President and founder, Justin Young, says Bitcoin spot ETFs provide an effective way for people seeking exposure to BTC and want to invest in a regulated manner.
Besides BlackRock, several other top companies submitted their Bitcoin spot ETF applications to the SEC in June. They include Valkyrie, Invesco, and Fidelity. Although the approval expectations are high, it is worth mentioning that the US regulator has turned down all spot ETF filings submitted in the past.
But this doesn’t mean the SEC is against other ETFs related to BTC. At the end of June, the agency approved Volatility Shares’ Bitcoin leveraged futures ETF application. Since then, Young has been optimistic that the SEC will also approve ETFs for the spot market. He argues that if the agency has allowed a leveraged product related to BTC in the market, then it is only right that it also approves a spot ETF.
What’s an ETF?
An ETF works just like commodities and stocks, allowing investors to get exposure to an underlying asset without actually owning it. Therefore, people who do not want to hold BTC can acquire shares of an ETF. There are two types of Bitcoin ETFs: Spot and Futures.
The first Bitcoin ETF application was filed in 2013 by the Winklevoss twins, the founders of crypto exchange Gemini. But as mentioned earlier, the SEC never approved it. The agency also blocked all the other filings that followed, arguing that the applicants did not explain how they would shield investors from market manipulation and fraud risks.
How Bitcoin Spot ETFs Can Help Bring in New Investors
Young says the SEC concerns are warranted. However, he believes that Bitcoin spot ETFs can help to address them. He claims these ETFs will ‘dampen’ the volatility, which the SEC worries about. This would, in turn, attract new investors looking to inject their money into transparent, regulated financial products.