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Asset managers are jockeying to create the first U.S. bitcoin exchange-traded fund after a top securities regulator signaled a path to approval.
In the past two weeks, ProShares, Invesco Ltd. , VanEck, Valkyrie Digital Assets and Galaxy Digital have all filed plans for bitcoin futures ETFs. If approved, the funds would make trading bets on bitcoin’s future value akin to buying a stock.
Earlier in August, Securities and Exchange Commission Chairman Gary Gensler indicated that he would be receptive to ETFs that will trade in bitcoin futures rather than cryptocurrency itself as long as they follow stricter rules usually reserved for mutual funds. The SEC has already approved the first U.S. bitcoin-futures-based mutual fund, which started trading last month.
Futures let traders bet on whether an underlying market such as oil, gold or, in this case, bitcoin, will rise or fall. Futures trade separately from the underlying asset they are derived from; values between the two sometimes deviate, sometimes widely.
Asset managers have been trying to persuade regulators to green-light bitcoin ETFs for nearly 10 years. So far, the SEC has rejected or delayed a decision on the funds. The regulator has taken a cautious approach to regulating the volatile crypto market. The digital assets have boomed in popularity with amateur traders and a growing number of professional money managers.