Bitcoin ETF’s Launch Sparks Record Investor Interest Amid Regulator Wariness
The launch of the first Bitcoin ETF sparked record interest among investors, however competition is already heating up in the sector. More than 20 million shares of the ProShares Bitcoin ETF traded on its first day, ranking it as the second-busiest ETF launch ever, InvestmentNews reported, adding that VanEck’s pending Bitcoin Strategy ETF will carry a management fee of 0.65%, which would undercut the 0.95% expense ratio on the ProShares Bitcoin ETF. The Financial Times also pointed out that other firms are on deck to launch similar products, including Valkyrie Funds which launched three days after the ProShares product. Retail investors accounted for only around 12-15 per cent of net buying in the ProShares Bitcoin ETF on the first two days of trading, pointing to significant interest among institutions, the FT reported. Media reports also acknowledged the continuing battle for the SEC’s blessing on cryptocurrency. The FT noted that “the decisive factor in allowing the ProShares ETF to go ahead was that the vehicle holds futures contracts traded on the Chicago Mercantile Exchange, a fully regulated venue, rather than digital coins outright.” Meanwhile, lawyers from Dechert discussed the enforcement landscape for cryptocurrency in an article and urged caution. “Although reasonable minds can agree to disagree on the precise role that cryptocurrencies will take in our national and international economies and topics of discourse, one fact appears rock solid: enforcement and regulation of cryptocurrencies are here to stay—especially at the federal level.” The lawyers advise that companies and participants in the cryptocurrency space should consider doing several things, including:
- Creating, reviewing, and/or updating any policies or procedures regarding compliance with applicable cryptocurrency-related laws and regulations;
- Conducting a gap analysis to identify any material weaknesses with internal controls that are focused on the cryptocurrency space;
- Implementing and strengthening controls to mitigate risks identified in the gap analysis; and
- Investing and building out compliance functions.