Derivatives and ETF Roundup: Coinbase to Launch ‘nano’ Bitcoin Futures, ProShares Debuts A

Here are this week’s trending headlines from the crypto derivatives niche:

• Coinbase to avail a first crypto (Bitcoin) derivatives product next week
• ProShares launches maiden Bitcoin-linked ETF betting against the asset
• SkyBridge Capital has not entirely given up on an ETF product tracking BTC’s spot price
• SEC commissioner expresses support for a spot Bitcoin ETFs approval

Coinbase to offer first crypto derivatives product via third-party brokerage

Coinbase announced in a blog post published on Thursday that it will be introducing a Bitcoin futures contract offering next week on its recently acquired derivatives platform. The ‘nano’ Bitcoin futures (BIT) will be available on the Coinbase Derivatives Exchange platform, previously FairX, starting Monday, June 27.

The CFTC-regulated firm is targeting retailers with the hopes of capitalizing on a market with a global volume of $3 trillion. Each contract is worth 1/100th of a BTC, a fraction the exchange described as ideal since it doesn’t require a lot of upfront capital relative to traditional offerings.

The exchange itself won’t be directly involved in offering the BIT futures. It has collaborated with intermediaries like ADMIS, NinjaTrader, Wedbush, Advantage Futures, Ironbeam and Optimus Futures that’ll facilitate brokerage. Alongside the product offering update, the exchange revealed that it is in the process of acquiring a futures commission merchant (FCM) license. Regulatory approval on the FCM would allow it to avail the futures without third-party brokers and clearing firms.

ProShares launches the first short Bitcoin-linked ETF in the US

Adding to the Bitcoin-bullish ETF already under its belt,  US-based ETF issuer ProShares on Monday announced the launch of a Bitcoin-bearish ETF to allow investors to bet against the market’s leading digital asset. Markedly, the ETF firm launched the initial short Bitcoin ETF shortly after last weekend’s pullback, which saw the token’s price slide below $18,000.

ProShares, which has over $60 billion in assets, availed the ProShares Short Bitcoin Strategy (ticker BITI) on Tuesday, running at a management fee of 0.95%. BITI became the first short Bitcoin-linked futures ETF. Providing the convenience of liquidity and cost-conservancy as well as the added benefit of using an exchange fund to gain Bitcoin exposure, BITI will enable investors to bet ‘short’ on the leading crypto Bitcoin.

Investors can leverage the ‘reverse’ returns on the Chicago Mercantile Exchange Bitcoin Futures Contracts Index. The investment product provider, via its mutual fund affiliate firm ProFunds, also launched the Short Bitcoin Strategy ProFund (BITIX), intended to serve the same purpose as the short ETF.

The ‘Bitcoin-against’ ETFs are becoming popular in this bear market, with the likes of Horizon ETFs’ BetaPro Inverse Bitcoin ETF seeing 142% in positive returns since late last year. Listed in Europe, the 21Shares Short Bitcoin ETP has seen 127% in returns since the same last November.

SkyBridge Capital takes another shot at a spot Bitcoin ETF

In January, the US SEC rejected an application by SkyBridge Capital in collaboration with First Trust Advisors proposing to launch a Bitcoin spot ETF. The Commission explained that the proposed product did not meet the minimums for a securities exchange which require the design to be free of fraud and potential manipulation to protect the investor and general public’s interests.

The Antony Scaramucci-led investment firm is reportedly back again with plans to file for a Bitcoin ETF listed on the New York Stock Exchange, per a Bloomberg Law report. Citing an individual familiar with the matter, the report suggested that the filing could happen before the weekend. The rumored filing comes as industry key figures express frustration over the delayed approval.

Earlier this month, pro-crypto SEC commissioner Hester Pierce raised questions on the SEC’s perplexing and unusual approach characterized by its refusal to interact effectively with crypto developers and users over the past four years.

Crypto sentimental Hester Pierce decries the SEC’s delays on spot Bitcoin ETFs approval

The commissioner, in a published speech, questioned the SEC’s apparent lack of intent to approve an exchange-traded fund (ETF) product tied to the live BTC price. Pierce argued that the watchdog’s role should include providing regulatory clarity and facilitating exchanges, funds, and other entities to gain the ability to launch such a product.

The commissioner acknowledged that the regulator has occasionally justified its decision (or lack thereof). She, however, noted that the reasons have been unreasonable, contradictory, and unclear, which has birthed a disappointing outcome thus far. The Commission has consistently dismissed tabled spot Bitcoin ETFs on some grounds without providing recommendations on a workaround.

“The reasoning underlying the Commission’s denials of spot bitcoin ETPs is itself general and conclusory, which makes it difficult to know how approval could be achieved,” she explained.

Bitcoin phobia, probably?

The commissioner dispelled claims that a Bitcoin ETP would mean risky investor exposure to volatile cryptocurrencies since, after all, they get that exposure from elsewhere. She believes that such a product, if properly designed, could serve to provide exposure via securities, hence providing a low-fee fund for retail investors.

The SEC is still denying approval of a spot ETF, with the applications done so far being those of Ether and Bitcoin futures offering – to which it has been much more receptive. Pierce highlighted this contrasting standard as something that needs to be ironed out. Explaining that the Commission is bent to “subject anything related to Bitcoin,” the attorney clarified that she has no idea when approval on a spot ETF would possibly come.

To learn more about Bitcoin futures visit our beginner’s guide here.