First Trust, a financial services firm based in Illinois, has submitted Form N1-A to the US Securities and Exchange Commission (SEC) for the launch of a cryptocurrency-backed exchange-traded fund (ETF). The proposed ETF, named First Trust Bitcoin Buffer ETF, will not be a spot Bitcoin ETF. Instead, it will participate in the positive price returns of the Grayscale Bitcoin Trust or other ETF-backed crypto products. The ETF aims to act as a buffer, protecting against the initial 30% of underlying exchange-traded product losses over a specific period. This unique approach differs from traditional ETF products, offering a determined investment outcome with protection against market losses.
First Trust’s move represents a significant development in the cryptocurrency market, with the financial services firm leveraging its 32-year record in issuing ETF products and other financial services. The buffer feature in the Bitcoin ETF is considered a unique strategy, and Bloomberg’s ETF analyst, James Seyffart, anticipates that more Bitcoin ETF applicants may follow this route in the coming weeks. Gary Gensler, the SEC Chair, mentioned that the SEC is taking a “new look” at Bitcoin ETF filings, and a decision on spot Bitcoin ETF applications is expected between January 10 and 15, 2024.
Asset management firm BlackRock has also submitted an in-kind “prepay” redemption model for its spot Bitcoin ETF application, aiming to make it easier for traditional financial institutions to hold Bitcoin and provide resistance to market manipulation concerns.
Note: The provided information is based on the original article, and specific details may be subject to change as more updates are available.