March 27, 2024
Spot Bitcoin ETF Approval Encourages Pension Fund Investment
Bitcoin News

Spot Bitcoin ETF Approval Encourages Pension Fund Investment

The Chicago Board Options Exchange (CBOE) anticipates that the approval of spot Bitcoin exchange-traded funds (ETFs) could usher in a new era of institutional investment in the cryptocurrency, potentially expanding to retail interest.

John Palmer, the president of CBOE Digital, America’s largest options exchange, emphasized the significance of approval in a Jan. 2 interview on Bloomberg TV. Palmer highlighted the potential for pension funds and registered investment advisor (RIA)-based funds to invest in spot Bitcoin ETFs, offering a direct exposure to Bitcoin that is currently unavailable to many funds.

Palmer’s comments come ahead of the U.S. Securities and Exchange Commission’s (SEC) Jan. 10 deadline to decide on the approval of the ARK Invest 21 Shares Bitcoin ETF application. He believes that if approved, institutional investors will increasingly turn to Bitcoin derivatives for hedging purposes.

The CBOE Digital president expressed the challenge of predicting the breakdown of investor interest but suggested that institutions would lead in accessing hedging tools. Palmer emphasized that retail investors would also seek such opportunities.

CBOE Digital, the crypto division of the exchange, plans to launch margined Bitcoin and Ether derivatives trading on Jan. 11, enabling investors to trade these contracts without providing the full collateral. In response to the potential approval of spot ETFs, some mutual funds are already making strategic adjustments.

Advisors Preferred Trust, a mutual fund manager, modified its prospectus to allow for up to 15% of total assets to be invested indirectly in Bitcoin. This exposure would be achieved through shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.

As the SEC’s decision deadline approaches, industry players are closely watching for regulatory developments that could pave the way for broader institutional and retail participation in the Bitcoin market. The approval of spot ETFs is seen as a crucial catalyst for this transformative shift in the crypto investment landscape.

Photo by Andrea Piacquadio

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