Key Takeaways
- • The ProShares bitcoin futures ETF, ticker BITO, began trading on the New York Stock Exchange on Tuesday, October 19, 2021, marking the first U.S. exchange-traded product tied to bitcoin to list there, according to Marketplace.
- • The SEC allowed the listing without a formal approval process, which Marketplace describes as a first; the fund holds bitcoin futures rather than bitcoin itself.
- • As of the afternoon of listing day, BITO had sold more than 20 million shares, per Marketplace.
- • Simeon Hyman of ProShares called the listing a big step toward making cryptocurrency mainstream, while tax adviser Amy Wall warned the ETF structure may give investors a false sense of safety.
- • Analysts stress that the product remains as volatile as bitcoin itself, and investors should not risk more than they can afford to lose.
Summary
A bitcoin-linked exchange-traded fund began trading on the New York Stock Exchange on Tuesday, October 19, 2021, a milestone for the cryptocurrency market. The product, ticker BITO, was created by ProShares. According to Marketplace, the Securities and Exchange Commission allowed the listing quietly, which it describes as a first. The fund does not hold actual bitcoin. Instead, it is based on bitcoin futures contracts, so investors gain exposure to bitcoin's price movements without owning the asset itself. Marketplace notes that investors buying BITO would be speculating on the price of bitcoin, a point made by James Angel, a finance professor at Georgetown University.
Simeon Hyman of ProShares said the product is a significant step toward mainstreaming cryptocurrency and that growing participation should add liquidity and transparency as the market matures. He also pointed to government oversight of the futures market, describing it as a regulated price. Marketplace reports that the structure may appeal to investors because of simpler tax treatment and the absence of wallet security risks. Amy Wall, who represents taxpayers before the IRS, said the ETF format could lead investors to view bitcoin exposure as safer than it is. She added that the product is no less volatile than bitcoin itself and that the fund may attract retirement accounts and pensions despite that risk.
As of the afternoon of the listing, BITO had sold more than 20 million shares, according to Marketplace. Wall's advice to investors was to avoid committing more capital than they can afford to lose.
Simeon Hyman of ProShares said the product is a significant step toward mainstreaming cryptocurrency and that growing participation should add liquidity and transparency as the market matures. He also pointed to government oversight of the futures market, describing it as a regulated price. Marketplace reports that the structure may appeal to investors because of simpler tax treatment and the absence of wallet security risks. Amy Wall, who represents taxpayers before the IRS, said the ETF format could lead investors to view bitcoin exposure as safer than it is. She added that the product is no less volatile than bitcoin itself and that the fund may attract retirement accounts and pensions despite that risk.
As of the afternoon of the listing, BITO had sold more than 20 million shares, according to Marketplace. Wall's advice to investors was to avoid committing more capital than they can afford to lose.
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