Bitcoin tops US$60,000, a six-month high, on US ETF expectations

Cryptocurrency investors have been waiting for approval of the first U.S. ETF for bitcoin.
Cryptocurrency investors have been waiting for approval of the first U.S. ETF for bitcoin.PHOTO: REUTERS

LONDON/NEW YORK/HONG KONG (REUTERS)- Bitcoin topped US$60,000 for the first time in six months on Friday, nearing its all-time high, as hopes grew that United States regulators would allow a futures-based exchange-traded fund (ETF), a move likely to open the path to wider investment in digital assets.

Cryptocurrency investors have been waiting for approval of the first US ETF for Bitcoin, with bets on such a move fuelling its recent rally.

The world's biggest cryptocurrency rose to US$61,869.05, its highest since mid-April, and was last up 6.9 per cent at US$61,346. It has risen by more than half since Sept 20 and is closing in on its record high of US$64,895, hit in April.

The US Securities and Exchange Commission (SEC) is set to allow the first American Bitcoin futures ETF to begin trading next week, Bloomberg News reported on Thursday. Such a move would open a new path for investors to gain exposure to the emerging asset, according to traders and analysts.

"Crypto ETFs are inevitable. A product like this will eventually come to fruition since there is a demand for it," said Mr Chris Kline, chief operating officer and co-founder of Bitcoin IRA.

"It seems clear that regulators will approve some version of a crypto ETF soon, most likely by Monday," Mr Kline added.

"As regulators become more familiar with the space, the SEC is starting to understand how these assets are stored, secured and reconciled so that it makes sense in traditional finance."

Bitcoin's moves on Friday (Oct 18) were spurred by a Twitter post from the SEC's investor education office urging investors to weigh risks and benefits of investing in funds that hold Bitcoin futures contracts, said Mr Ben Caselin of Asia-based crypto exchange AAX.

Several fund managers, including the VanEck Bitcoin Trust, ProShares, Invesco, Valkyrie and Galaxy Digital Funds, have applied to launch bitcoin ETFs in the US.

The Nasdaq on Friday approved the listing of the Valkyrie Bitcoin Strategy ETF.

After months of back-and-forth between the SEC and potential Bitcoin futures ETF issuers, the regulator appears prepared to green light a handful of filings that will open the door to wider access to cryptocurrencies to retail and institutional investors alike.

Under the rule sets used by the ETF issuers, the SEC does not have to give explicit approval to the ETFs, which can be launched at the end of a 75-day period if the US regulator has no objections.

The 75-day time period for the ProShares Bitcoin Strategy ETF ends on Monday, and the ETF can be launched on Tuesday.

The SEC declined to comment.

Crypto ETFs have launched this year in Canada and Europe, growing in popularity amid surging interest in digital assets.

Futures exchange operator Cboe Global Markets applied for a rule change with the SEC that would allow it to list certain complex ETFs. The SEC approved that application on Oct 1.

SEC Chair Gary Gensler has previously said the crypto market involves many tokens that may be unregistered securities and leaves prices open to manipulation and millions of investors vulnerable to risks.

Citing sources, the Bloomberg report said proposals by ProShares and Invesco, based on futures contracts, were filed under mutual fund rules that Gensler has said provide "significant investor protections".

"It's one of the final frontiers for mandate access," said Mr Joseph Edwards, head of research at crypto broker Enigma Securities. "Plenty of Americans in particular have strings attached to how they deploy a lot of their wealth. It allows Bitcoin to get in on the sorts of windfall that keep US equities as consistently strong as they are."