Direxion, ProShares seek ETFs that would hold BTC and ETH futures

Direxion and ProShares have filed for ETFs that, if approved, would hold futures contracts tied to both bitcoin and ether.

With Wednesday’s filings, Direxion and ProShares have put a different type of crypto-centric investment product in front of the US Securities and Exchange Commission. 

The SEC filings came after various firms — including ProShares — revealed plans in recent days to launch ETFs that would focus only on ether (ETH) futures. 

Two sources directly familiar with the latest ether futures ETF filings told Blockworks Wednesday the SEC has indicated its readiness to publicly consider such a product — a reversal from the US securities regulator’s apparent stance in May. 

Read more: SEC now ready to consider ETH futures ETFs, sources say — but what’s changed?

The SEC allowed ETFs that hold bitcoin futures contracts to come to market in 2021. The first to launch, the ProShares Bitcoin Strategy ETF (BITO), gained $1 billion in assets under management in its first few days. 

Aside from ProShares, Volatility Shares, Grayscale Investments, VanEck, Bitwise and Roundhill Investments, have filed for ETH futures ETFs over the past week.  

“It seems illogical for the SEC to allow ETFs holding CME-traded bitcoin futures, but not ones owning CME-traded ether futures,” Geraci said of the ETH futures ETF filings. “Given the past history of these filings, it’s difficult to speculate on how the SEC will respond.”

But now, ProShares and Direxion seek to combine an investment type already allowed in US ETFs with one yet to be permitted in such wrappers. The latest proposed funds would not hold BTC or ETH directly.

In the absence of a spot bitcoin ETF — the SEC has rejected every proposal for such a product to date — fund issuers have looked to get creative in an effort to allow investors to get crypto exposure through familiar vehicles.

Neena Mishra, director of ETF research for Zacks Investment Research, told Blockworks last month that fund providers constantly experiment with new products to see what resonates with investors.  

“This is why we continue to see so many niche, interesting, and sometimes weird products,” she said at the time.

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