ProShares is seeking approval from the SEC for three new Bitcoin-denominated ETFs.
These funds are designed to track the performance of major indices like the S&P 500, Nasdaq-100, and even gold, but with a twist, as they’ll measure returns in Bitcoin instead of U.S. dollars.
Unit of account?
So, what exactly are these ETFs? Well, they’re called the ProShares S&P 500 Bitcoin ETF, ProShares Nasdaq-100 Bitcoin ETF, and ProShares Gold Bitcoin ETF, and instead of directly investing in Bitcoin, these funds will use Bitcoin futures contracts to achieve returns that are calculated in Bitcoin terms.
Basically, they’ll hold a long position in their respective assets while simultaneously taking a short position on the U.S. dollar against Bitcoin through futures contracts.
Alex Thorn from The ETF Store explains it simply, telling it’s like having a long position in stocks or gold and then hedging with a short USD/long BTC position using BTC futures.
Each fund plans to invest up to 25% of its total assets in Cayman Islands subsidiaries quarterly to keep things compliant with U.S. tax laws.
Crypto meets traditional finance
Traditional finance is starting to adopt crypto more openly, as just lately, Strive Asset Management launched the Strive Bitcoin Bond ETF, which gives investors exposure to Bitcoin through convertible securities and derivatives tied mainly to MicroStrategy’s holdings.
The Strive fund is putting at least 80% of its assets into Bitcoin bonds, swaps, and options while still keeping some cash in U.S.
Treasury securities and other crypto-focused funds. Some says it’s just financial speculation, and better buying Bitcoin directly, but others praising the more complex methods.
New kind of financial products
ProShares has built a reputation for being an innovator in the ETF space, offering everything from leveraged ETFs to inverse ETFs that want to boost market performance.
Earlier this year, they filed for five leveraged and inverse Bitcoin ETFs that track the Bloomberg Galaxy Bitcoin Index using futures contracts.
