Spot Bitcoin ETF Could Attract Institutional Investors, says Volatility Shares Co-Founder
The co-founder and president of Volatility Shares, Justin Young, believes that the introduction of a spot Bitcoin (BTC) exchange-traded fund (ETF) could signal a new era of institutional investor participation in the cryptocurrency market. Young suggests that investors seeking exposure to Bitcoin are actively searching for the “easiest and most regulated way” to invest, and a spot ETF could offer a compelling solution.
Young expressed his views in a recent interview, stating that ETF issuers who submit applications for spot Bitcoin ETFs are highly regarded by investors. The filing made by BlackRock, the world’s largest asset manager, on June 15, coincided with a surge in Bitcoin’s price to its highest levels in over a year. Subsequently, other firms like Fidelity, Valkyrie, and Invesco also submitted applications, contributing to the growing interest in spot Bitcoin ETFs.
While the Securities and Exchange Commission (SEC) has previously expressed concerns about the risks associated with Bitcoin spot markets and rejected ETF applicants accordingly, it has shown more openness towards ETFs based on Bitcoin futures. Notably, on June 23, the SEC granted regulatory approval to Volatility Shares, making it the first Bitcoin ETF focused on leveraged futures to receive permission to operate.
Young believes that this regulatory approval for the leveraged futures-focused ETF could serve as a stepping stone for the eventual approval of spot ETFs. He remains optimistic that the SEC’s stance may evolve over time, allowing for the emergence of spot Bitcoin ETFs that cater to the interests of institutional investors.
Regulated Spot Bitcoin ETF Presents a Potential Solution to SEC Concerns
Regulated Bitcoin Spot ETF Offers Solutions to SEC Concerns
The Securities and Exchange Commission (SEC) has consistently cited concerns over inadequate cross-exchange market surveillance, as well as fears of fraud and market manipulation, as the primary reasons for not approving a Bitcoin spot exchange-traded fund (ETF) thus far. However, according to Justin Young, these concerns can be effectively addressed through the introduction of a regulated spot ETF.
Young acknowledges the validity of the SEC’s concerns, but asserts that a regulated spot ETF would provide a solution. Firstly, an ETF operating in the spot market with regulatory approval would offer a safer option, mitigating the SEC’s worries about unregistered entities and illicit practices on major cryptocurrency exchanges.
Secondly, the approval of a spot ETF has the potential to bring more stability to Bitcoin markets. The uncertain legal status of Bitcoin currently leads to significant price volatility, which the SEC views as a concern for potential investors. Young argues that approving a regulated spot ETF could help reduce this volatility and attract a broader range of investors seeking transparent financial products.
“The biggest advantage of having a spot ETF and market is that you create more stability and less of the volatility that the SEC doesn’t like,” explains Young.
Furthermore, Bernstein, a brokerage firm, recently expressed strong belief in the SEC soon approving a Bitcoin spot ETF. The absence of such an ETF has led to the rise of over-the-counter (OTC) products like Grayscale’s Bitcoin Trust (GBTC), which Bernstein notes are more expensive, illiquid, and inefficient compared to ETFs. Therefore, the introduction of a regulated spot ETF would provide a more accessible and efficient investment option for investors.