U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler testifies before the SEC Senate Banking, Housing, and Urban Affairs Committee oversight hearing on Capitol Hill in Washington, U.S. September 14, 2021.
Evelyn Hochstein | Reuters
The Securities and Exchange Commission is set to allow the first US bitcoin futures-traded funds to begin trading next week, a historic victory for the cryptocurrency industry that has long sought permission from Wall Street’s biggest regulator, according to a person familiar with the matter. .
Specifically, the person said the Securities and Exchange Commission (SEC) was unlikely to block the ETFs proposed by ProShares and Invesco, which are based on futures contracts and which were introduced under mutual fund guidelines that SEC President Gary Gensler believes offer investors protection big.
The person familiar with the SEC’s decision-making process requested anonymity because the discussions are private and pending.
A spokesman for the Securities and Exchange Commission did not respond to CNBC’s request for comment. Invesco and ProShares representatives also did not immediately respond to emails seeking comment.
Bitcoin traded north of $60,000 on Friday, its highest level since April 17, due in part to speculation that the Securities and Exchange Commission will green-light ETFs. The world’s largest cryptocurrency by market capitalization is up nearly 40% in October alone and is nearing a high of $64,869 set earlier this year.
The launch of the fund will mark the end of a years-long campaign by the nearly $7 trillion ETF industry to persuade the SEC to research and sanction the popular cryptocurrency ETF.
However, ProShares and Invesco funds will provide investors with indirect ways to invest in bitcoin. ETFs are based on Bitcoin futures contracts that are already traded on the Chicago Mercantile Exchange. Bloomberg News first reported that the Securities and Exchange Commission (SEC) is set to allow bitcoin futures ETFs to begin trading.
Many others are eager for an ETF to play purely with the support of physical bitcoins, even though no decision on this money has been expected for months. Investors say this direct money circumvents the high cost of trading in futures contracts, which do not adequately track the spot price of bitcoin.
The Securities and Exchange Commission has argued for much of the past decade that the volatility and fraud throughout the crypto space have made ETFs and other funds too risky to be approved. Gensler, who before joining the Securities and Exchange Commission (SEC) taught courses on cryptocurrency from MIT, expressed concern that bad actors could exert significant pressure on prices or limit the liquidity of the assets.
He told the Senate Banking Committee in September that he and his team are trying to protect investors by better regulating thousands of new digital assets and coins, as well as overseeing the more popular bitcoin and ether markets.
“Right now, we don’t have enough investor protection in cryptocurrency financing, issuance, trading or lending,” Gensler said in prepared remarks last month. “Honestly, at this time, it feels more like the Wild West or the old world ‘buyer beware’ that existed before the securities laws were enacted.”
The largest regulator on Wall Street has also questioned whether crypto assets can be kept safe from hackers and whether there will be future issues for verifying ownership of coins.
However, Gensler’s addition to the Securities and Exchange Commission has been heralded by many traders as a future advance given his previous work building the Commodity Futures Trading Commission in the Obama administration. While there, Gensler helped put in place and establish a new supervision system for the swap market that had been largely unregulated before the financial crisis.