Bitcoin ETF chances jump after SEC green lights futures-based fund; here's why

For years, crypto financial services firms across the U.S. have been trying their hand at issuing publicly-traded Bitcoin funds.

Unfortunately for these hopefuls, the U.S. Securities and Exchange Commission has long not agreed with these firms' assertions that the Bitcoin market is ready for its own regulated, tradable fund.

In a surprise turn of events, the financial regulator quietly approved a fund tied to the Bitcoin futures market just last week-a move that analysts say dramatically increases the chances for the approval of other funds in the near future.

According to a filing published on and dated Dec. 2, the New York Digital Investment Group has procured a green light from the SEC to launch the NYDIG Bitcoin Strategy Fund, a portfolio fund in the Stone Ridge Trust Vl. This fund will invest in cash-settled Bitcoin futures contracts traded on Commodity Futures Trading Commission-approved exchanges, like the CME Group, which has its own BTC futures contract.

"The Fund will seek to purchase a number of Bitcoin futures so that the total value of the Bitcoin underlying the Bitcoin futures held by the Fund is as close to 100% of the net assets of the Fund.".

The SEC's approval of this fund comes shortly after a note published to the Federal Directory revealing that the agency would be revisiting Bitwise Asset Management's physically-settled Bitcoin ETF proposal, which it denied earlier this year citing manipulation concerns.

Bloomberg Intelligence: SEC's approval of the Stone Ridge interval Bitcoin fund paves the way for a Bitcoin ETF. Sees odds for approval in 2020 at 50-50.

While the SEC itself has suddenly warmed up to Bitcoin, not everyone is convinced that the underlying spot market could support a fund.

"Ultimately, you're going to be able to buy Bitcoin in a regular brokerage account, or it's going to look like a regular brokerage account. So I'm less concerned that you need a bitcoin ETF at this point in time."

There are already signs that investors are seeking Bitcoin exposure through other means than an ETF. CryptoSlate reported on Dec. 6 that Charles Schwab, one of the largest retail brokerage firms in the United States, has noted that Grayscale's Bitcoin Trust is the fifth most popular investment amongst its millennials clients, those born after 1981 and before 1996.Posted In: Bitcoin, Adoption, Regulation.