The US SEC is yet to approve a cryptocurrency ETF, but it is considering those that indirectly track the performance of the coins
The United States Securities and Exchange Commission (SEC) has approved a crypto stock exchange-traded fund (ETF). The ETF is set to track the performance of cryptocurrency companies, allowing investors to gain indirect exposure to the crypto market.
According to the SEC’s prospectus filed on the first of this month, the regulatory agency has approved the Volt Crypto Industry Revolution and Tech ETF. Per the document, the ETF will track the performance of Bitcoin companies currently listed on the stock exchange.
The ETF will track the performance of companies that hold a majority of their net assets in cryptos like Bitcoin, such as MicroStrategy (NASDAQ: MSTR), or entities that make most of their profits via cryptocurrency mining or manufacturing mining equipment, such as Marathon Digital Holdings (NASDAQ: MARA).
The document revealed that roughly 80% of the ETF’s assets would be invested in the cryptocurrency stocks, while the remaining 20% will be invested in traditional stocks. This is to offset the risks that cryptocurrency investments will pose to the fund’s portfolio. However, the fund will not directly hold any cryptocurrencies.
The US SEC has been reluctant to approve any cryptocurrency ETFs. The SEC is wary of approving an ETF that directly tracks the performance of Bitcoin or other cryptocurrencies or invests in them. The SEC chair, Gary Gensler, has stated on numerous occasions that he favours Bitcoin futures ETFs over actual Bitcoin ETFs.
Despite that, the US SEC is yet to approve any of the numerous crypto ETF or crypto futures ETF applications on the table. The regulatory agency continues to review the applications and is expected to give its verdict on some of them by the end of the year.
Meanwhile, Canada and Brazil are ahead of other countries after approving a few cryptocurrency ETFs earlier this year. Their actions have attracted numerous foreign institutional investors seeking to gain exposure to Bitcoin and other cryptocurrencies via ETFs.