Thursday Deadline Looms for SEC Ruling on ProShares Bitcoin ETF

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21.08.2018

The U.S. SEC’s final deadline to approve or deny the two ProShares Bitcoin ETFs is on 23 August 2018, and unlike the regulator’s earlier decision to delay a ruling for the Cboe’s VanEck/SolidX bitcoin ETF, this rule change proposal – filed by ProShares in conjunction with NYSE Arca – cannot be postponed any further.

With over $30 billion in assets, ProShares is one of the largest provider of ETFs, particularly in the area of leveraged and inverse ETFs.

On 4 December 2017, NYSE Arca first filed a proposal with the SEC to list and trade two ProShares Bitcoin ETFs: ProShares Bitcoin ETF and ProShares Short Bitcoin ETF. The notice of the filing was published on the Federal Register on 26 December 2017.

The Registration Statement was filed with the SEC on 19 December 2017.

According to the Registration Statement:

  • the investment objective of ProShares Bitcoin ETF is “to seek, results (before fees and expenses) that, both for a single day and over time, correspond to the performance of lead month [6] bitcoin futures contracts listed and traded on either the Cboe Futures Exchange (“CFE”) or the Chicago Mercantile Exchange (“CME”) (the “Benchmark Futures Contract”).”

  • the investment objective of ProShares Short Bitcoin ETF is “to seek results, for a single day, that correspond (before fees and expenses) to the inverse (−1x) of the daily performance of the Benchmark Futures Contract.”

According to the notice in the Federal Register:

“Each Fund will seek to achieve its respective investment objective by investing, under normal market conditions, substantially all of its assets in Benchmark Futures Contracts (or short positions in Benchmark Futures Contracts, as applicable).”

If approved, the ETF’s performance would be tracked on popular exchanges like the Cboe and CME. While not being connected to actual Bitcoin holdings, the ProShares Bitcoin ETF would derive its value from Bitcoin futures contracts and their performance on the aforementioned exchanges.

The SEC’s decision this week will be final, and if approved, would give many traditional investors the ability to invest into the cryptocurrency market through Bitcoin futures contracts.

To date, the regulator has only denied or delayed Bitcoin ETF proposals, with the latest denial coming last month when it rejected a proposal filed by Gemini founders Cameron and Tyler Winklevoss.

Meanwhile, Bryan Courchesne, the managing director of Digital Asset Investment Management, claims the SEC will not approve any Bitcoin ETF’s at all.

“I think the ETF does not get approved. One of the reasons the Winklevoss ETF was denied was because of the SEC’s concern over manipulation in the underlying market. Nothing has changed in the space to curtail that and it is tough to prove that bitcoin markets are resistant to manipulation,” he told Blokt.com.

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