The New York Stock Exchange, on behalf of the fund provider Direxion Asset Management, filed a request with the Securities and Exchange Commission (SEC) to list five listed investment funds (ETFs) in Bitcoin that would increase risk and return on investment.
The application was made available through various media and on the New York Stock Exchange (NYSE) website. The documents specify that the request was filed for five ETF's that will fluctuate in relation to the futures contracts of the first cryptocurrency, recently implemented by Cboe and CME, and will be exchanged and quoted on the NYSE Ark platform.
Bitcoin's quoted funds will be named Direxion Daily Bitcoin, and specifically will be distinguished under the names: Bear 1X, 1.25X Bull, 1.5X Bull, 2X Bull and 2X Bear. In this sense, the value of bull stocks will increase or decrease along with the price of bitcoin futures; while the value of bear stocks will increase when the price of bitcoin futures decreases, and decrease when bitcoin futures increase.
It is worth mentioning that Direxion Asset Management specializes in creating products for investors and currently manages around 12.5 billion dollars. Listed funds or ETF's, on the other hand, are investment instruments that are traded on the stock exchange as an equity security, so that at all times you can know the composition and market price of the portfolio, allowing the investor to buy and sell at any time during the stock market session.
However, a possible effect of these five funds, if approved by the SEC, would be an increase in movements with bitcoins, since they facilitate access and investment in the cryptocurrency. In this respect, it is stated in the application documents:' they improve competition between market participants, to the benefit of investors and the market'.
However, in the case of Direxion's ETFs, it would imply both higher investment risk and higher return (between 100%, 150% and 200%) as these listed investment funds will work with leverage, an investment strategy that works with borrowed capital to increase return on investment.
The U. S. Securities and Exchange Commission has delayed in responding to several ETF requests, while others have been flatly rejected. This is the case with SolidX, whose ETF proposal was rejected by the SEC in March following a lengthy deliberation. Similar situation to the request of the Winklevoss brothers, despite the fact that the BATS stock exchange signed a notice of legal petition for the SEC, asking to reconsider its decision. The Commission's repetitive argument has been the high volatility of the market and its lack of regulation, which poses risks to investors.
Among some of the requests received by the SEC and still awaiting approval, VanEck Vector and REX signatures, which generally seek to offer more investment options with bitcoins, stand out.
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