We have written extensively about the efforts that go back to when, in 2013, Gemini founders Tyler and Cameron Winklevoss first sought to launch a Bitcoin ETF.  The SEC has rejected numerous such applications since then, and many are pending now.  Over the past month or so, however, Securities and Exchange Commissioner Chairman Gary Gensler had indicated that he was more favorably inclined to allow futures-based cryptocurrency ETFs (as opposed to those that invest directly in cryptocurrencies) because they provide stronger protections for investors.

The official Twitter account for the SEC’s Office of Investor Education and Advocacy tweeted on Thursday, October 14: “Before investing in a fund that holds bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits.”  Some took this as a sign that a change was imminent.

It now looks like ProShares will be the first to launch a Bitcoin futures ETF.  Late on October 15, 2021, the company filed a “post-effective” registration statement with the SEC, and the New York Stock Exchange approved the listing, according to securities filings. The fund — Bitcoin Strategy ETF (ticker: BITO) — is expected to start trading on October 19.  While this is not the ETF that that many had hoped for that could invest directly in Bitcoin, it a start.  At the same time, investors will have to understand that it is not unusual for there to be discrepancies between the prices of futures-based contracts and the underlying assets they track.  ProShare’s latest prospectus makes this clear: “The performance of Bitcoin futures contracts and therefore the performance of the Fund may differ significantly from the performance of Bitcoin.”

Similar ETF products are also under SEC review, such as from VanEck, Inveso, Valkyrie, Galaxy Digital, Blockfi and Bitwise.  It is expected that they, too, will be cleared for trading in the coming weeks and months.  Indeed, it is not necessary for the SEC to grant formal approval; it is sufficient that it does not object before the relevant deadline.

In a related move, the SEC recently approved  the Volt Crypto Industry Revolution and Tech ETF (ticker: BTCR).  Again, this ETF will not invest directly in Bitcoin.  Rather, at least 80 percent of its net assets will be in “Bitcoin Industry Revolution Companies,” which are defined as those that hold a majority of their net assets in Bitcoin or derive a majority of their revenue or profits directly from Bitcoin mining, lending or transacting.  The remaining 20 percent of the fund will be  invested into more traditional stocks to offset its risk.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.