U.S. SEC Chief Confirms Support for ETFs

United States  SEC Chief, Gary Gensler, has confirmed his support for Bitcoin Exchange Traded Funds, citing that the BTC Futures have been around for decades and are backed by the law. The SEC boss stated that ETFs would invest in futures instead of digital assets themselves. 

Bitcoin futures enable investors to gain exposure to the market, allowing them to buy and sell assets based on transparent speculation. In an interview with Financial Times on Wednesday, Gensler revealed that products, such as ETFs offering exposures to virtual assets have been around for decades. Several open-end mutual funds invest in BTC futures contracts that trade on the Chicago Mercantile Exchange under the 1940 Investment Act. 

The Act Protects Mutual Funds and ETFs

Gensler said that the 1940 Investment Company Act was designed to provide enough security for mutual funds and ETFs. The SEC head looks forward to his members reviewing applications to offer BTC ETFs, particularly those investing in Bitcoin Futures that trade on the CME. 

Currently, the SEC is reviewing several ETF filings for BTC and futures products, but none has been approved yet. In August, AdvisorShares filed for BTC Futures ETF with the SEC. The investment management firm with several actively managed ETFs through the company’s Trust applied in late August. 

According to the company, it would no longer hold BTC, but invest all or a substantial amount of its assets in Bitcoin futures contracts. However, neither the SEC nor the management firm has issued a word concerning the application. This looks worrisome, but the regulatory agency is being meticulous in its dealings to prevent potential fraud and liquidity problems. The regulatory agency has rejected many applications for ETFs in the past. 

Gensler has not shied away from supporting BTC futures ETF. In August, he stated that he would be open to BTC futures ETFs entering into the market than the typical crypto if the conditions are right. Following his comment, several investments firms decided to apply for BTC futures, including VanEck and Galaxy Digital. However, none of them is approved yet. VanEck eventually withdrew its application two days later. 

Although Gensler seems safer with ETFs than the normal cryptos, it takes longer than usual to get approval on futures-based BTC ETFs. Evidence points out that approval may not occur this year. The SEC is taking its time to review each application due to concerns over volatility in the ecosystem. The same evidence points out that the regulator may be looking to enact more regulations within the crypto space before approving any application. 

By Edward Harris
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