The filing shows that the firm would like to provide a “cost-effective means to gain price exposure to the Bitcoin market” for potential investors.
A wave of bitcoin ETFs
If approved, the ETF would trade on the NYSE Arca exchange and would track Bitcoin futures contracts. The Teucrium Bitcoin Futures Fund (BCFU) is different from other Bitcoin ETFs that have been filed, in that it involves being physically backed by bitcoin.
It will likely be a few months before we hear from the SEC about the state of the ETF, and it’s anyone’s guess as to whether or not it will be approved. The SEC has been hesitant about approving ETFs for several reasons, and recent remarks by authorities don’t offer much hope.
Bitcoin futures allow traders to open positions based on the future price of the asset. A long position indicates that they expect bitcoin to increase in price, while a short position indicates that they think the price might drop. This investment vehicle also helps to give traders a sense of price sentiment.
However, the increase in the number of ETF applications indicates that market participants are growing confident. Bitcoin and the cryptocurrency asset class, in general, have begun entrenching themselves in the public consciousness, and governments have been slowly warming up. It appears that a Bitcoin ETF approval is a matter of when not if.
ETFs may take some time to arrive
Bitcoin exchange-traded funds have been notoriously unsuccessful in the United States, as regulators have been wary about the volatile market and potential market manipulation. Numerous authorities have made remarks to this end.
U.S. Treasury Secretary Janet Yellen has said in the past that the protection of investors is the biggest concern. A BTC ETF would expose the asset to a vast majority of the public. The volatility of the crypto market may result in heavy losses, which is understandably a concern.
Gary Gensler, recently appointed SEC Chairman, has also emphasized that investor protection is the primary concern. The SEC delayed its decision to approve a Bitcoin ETF just a few weeks ago. Newly appointed Acting Comptroller of the OCC Michael J. Hsu has also said that there would be a review of past guidelines — which could go either way as far as regulations go.
U.S. financial authorities are only just beginning to truly look into cryptocurrency regulation to form a framework, so it may still be some time before an ETF approval. There has been a stark lack of clarity in the market, though it’s unlikely that the U.S. will impose any Draconian restrictions.