ProShares Set to Launch Bitcoin Strategy ETF Next Week

Bloomberg Intelligence analyst says ProShares, Valkyrie and Invesco’s futures-based products could all begin trading in coming days.

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Source: Nasdaq

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key takeaways

  • ProShares’ Bitcoin Strategy ETF will cost 95 basis points, Bloomberg Intelligence ETF Analyst James Seyffart reveals in Twitter post, which is less than half of the Grayscale Bitcoin Trust’s annual fee
  • Valkyrie filed an 8-A form for its planned futures-based product with the SEC Friday morning, likely signaling the firm is also close to launching

ProShares is set to go live with its bitcoin strategy ETF next week, according to people familiar with the matter. 

The fund, which was first filed in August, would be actively managed and invest in bitcoin futures contracts traded on the CME, according to the initial disclosure.

Though the first filing indicated that the fund may also invest in Canadian ETFs, an amended prospectus filed Friday afternoon took out that portion.

Bloomberg Intelligence ETF Analyst James Seyffart wrote in a Twitter post Friday morning that the offering would be going live early next week. The ETF’s ticker will be $BITO and its expense ratio will be 95 basis points, he noted. 

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A ProShares spokesperson declined to comment.

Competition for Grayscale

BITO’s price will be less than half of the 2% fee charged by the Grayscale Investment’s Bitcoin Trust (GBTC), which the firm is trying to convert to an ETF. Grayscale executives have urged the SEC to allow it to convert at the same time that they approve ETFs that invest in bitcoin futures contracts, so as to maintain a “level playing field.” But now bitcoin futures-based ETFs appear to be just days away from launching.

Industry watchers have predicted that ProShares could win the approval race due to its being the first to be filed under the Investment Company Act of 1940 — shortly before Invesco and Valkyrie. SEC Chairman Gary Gensler said during a virtual forum in August that the ’40 Act provides “significant investor protections.”

Valkyrie and Invesco could also launch next week, however, Seyffart told Blockworks.

While Invesco has not yet updated the prospectus of its planned bitcoin strategy ETF, Valkyrie updated its bitcoin futures ETF prospectus on Wednesday, adding ticker BTF to the proposed product.  Valkyrie filed an 8-A with the SEC Friday morning, a form that companies must complete before offering securities on an exchange. 

VanEck also filed for a bitcoin strategy ETF in August and expects to soon receive a ruling on that product. 

“We are still in the registration phase but hope to be able to launch before the end of the month,” Ed Lopez, the firm’s head of ETF product, told Blockworks in an email.

Seyffart said it now appears the SEC won’t approve all the proposed bitcoin futures-based ETFs at once. Some industry professionals said green-lighting the products at the same time could avoid one gaining an edge to gather assets ahead of the others.

“I thought that was the better way to do it, but it doesn’t seem like that’s going to be what’s going to happen,” Seyffart said. “All these names are being thrown out and there’s so much hype around it. I think there is going to be a first-mover advantage, but I don’t know how big it’s going to be.”

The demand for bitcoin futures-based products remains to be seen, and some analysts have argued that these products may be less than ideal for many investors.

“They’ll be more adept at being used as trading vehicles,” Seyffart said, comparing them to commodity products such as the United States Oil Fund (USO). “Over the long term, the futures contango and roll costs can add up, so they’re not necessarily going to be the greatest things for long-term holding.”

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