This Proposed ETF Could Allow Betting Against Bitcoin (BTC)

ProShares, the fund manager behind the first U.S. Bitcoin futures ETF recently applied for a new product that will allow betting against the token.

A filing with the U.S. Securities and Exchange Commission showed that ProShares intended to launch the Short Bitcoin Strategy ETF, which will move inversely to a CME index that tracks Bitcoin futures.

The move comes amid a pullback in BTC from 2022 highs hit in March. The token has seen trade thin out over the past few days, as investors await major economic cues from the U.S. Government.

Bet against BTC?

Essentially, the ETF could allow traders to gauge how much the market is betting against BTC. If approved by the SEC, it could also be the first U.S. ETF that allows trading against the token, Bloomberg reports.

It is likely to be approved by the SEC, given that the regulator has been open towards crypto-related derivatives. It had last year approved ProShares’ Bitcoin Futures ETF, although with some caveats.

But the SEC is yet to approve any funds that allow spot trading in BTC, and has rejected proposals from several notable asset managers. Most recently, the regulator rejected an ETF proposal from star investor Cathie Woods’ company.

The SEC cited a need for safeguards against the extreme volatility seen in crypto markets. It has also repeatedly criticized the potential for fraud and money laundering through crypto.

Still, crypto has seen growing interest from trading houses this year, which has resulted in a wide variety of derivatives being developed.

Regulatory landscape is changing

A changing regulatory landscape may see the SEC eventually soften its rhetoric. President Joe Biden’s executive order on crypto appeared to be largely positive for the industry, and called for major government bodies to collaborate over developing the space.

SEC Chair Gary Gensler recently expressed hope over bringing crypto markets in line with U.S. capital markets regulation. He also intends to have crypto tokens registered as securities.

Crypto may offer new ways for entrepreneurs to raise capital and for investors to trade, but we still need investor and market protection.

-Gensler

Major proponents of the crypto industry have also predicted a softer rhetoric from the SEC, as adoption grows. SkyBridge Capital founder Anthony Scaramucci said last month that he expects to introduce an SEC-compliant BTC fund by the end of 2022.

About Author

With more than five years of experience covering global financial markets, Ambar intends to leverage this knowledge towards the rapidly expanding world of crypto and DeFi. His interest lies chiefly in finding how geopolitical developments can impact crypto markets, and what that could mean for your bitcoin holdings. When he isn’t trawling through the web for the latest breaking news, you can find him playing videogames or watching Seinfeld reruns.
You can reach him at [email protected]