First bitcoin futures ETF debuts on New York Stock Exchange
The first bitcoin-linked exchange-traded fund in the United States today debuted on the New York Stock Exchange, presenting new investment opportunities for holders of brokerage accounts.
Though the offering, called the ProShares Bitcoin Strategy ETF (trading as BITO), falls short of what the cryptocurrency industry has long advocated for—funds that invest directly in bitcoin—its launch marks another watershed moment for the nascent market. The anticipation propelled the world’s largest cryptocurrency to break above $62,000 for the first time since April on Friday, just below its all-time high of $64,957, set in the spring. At press time, it is trading at $62,903.
“BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider,” says ProShares CEO Michael L. Sapir.
Bethesda, Md. firm, an ETF provider with more than $64 billion in assets, filed an updated prospectus with the offering with the Securities and Exchange Commission late Friday after Thursday reports signaled that the SEC wasn’t likely to block a bitcoin futures exchange-traded fund.
ProShares will not invest directly in or hold the cryptocurrency but instead will be purchasing cash-settled, front-month CME bitcoin futures—monthly contracts with the nearest expiration date that trade on the Chicago-based CME exchange—and will charge a management fee of 0.95%, to be paid each year as a percentage of investment’s value, ProShares’ global investment strategist Simeon Hyman confirmed to Forbes.
ProShares estimates annual expenses for those investing in the fund at $97 per $10,000 invested—less than half of the 2% world’s biggest bitcoin fund, Grayscale Bitcoin Trust, charges.
Many hope that the futures-based ETF will pave the way to ultimately launching a full-fledged bitcoin ETF. Industry participants have sought to launch one since 2013, when Tyler and Cameron Winklevoss, billionaire founders of cryptocurrency exchange Gemini, filed the first bitcoin ETF application. The SEC has rejected every previous filing to date.