Some on Wall Street are gritting their teeth over a possible Bitcoin ETF that is in the proposal stage at the moment. It comes from a firm called Direxion Asset Management. They are actually seeking approval to release five Bitcoin-related ETF funds all at the same time. Within those different funds they have one that simply tries to match the price movement of Bitcoin itself, but the other four are what are known as “leveraged-ETFs”. This means that they attempt to not just match the movement of Bitcoin, but magnify it.
Bitcoin is already considered a very volatile investment, and many on Wall Street say that the SEC would be “insane” to approve these funds according to CNBC. The inherent risk of Bitcoin is already too high to have some kind of fund that would actually magnify that risk. Those who are worried about it believe that some investors could get sucked into this believing that they were doing nothing more than investing in Bitcoin. What they might really be doing is taking a massive gamble on the price movements of Bitcoin.
Those who understand how these types of funds work say that the paperwork filed with the SEC on January 4th just gets the process started. That say that this could take as many as six months to get approved if it does at all. They are still concerned with what it would mean to have the SEC approve such a measure, but they understand that the process has only just begun, and it would not be wise to get overly worried about something that has not even yet come to pass.
On the other side, you do have those who say that allowing Bitcoin to be traded in ETF form will help bring more legitimacy to the crypto-currency. They also believe that investors ought to be the ones that decide what kind of investments are right for their particular situation. As such, it may be best to allow the ETF to come into being at least for right now and see what happens.
There are leveraged ETFs on a number of other types of assets including on all of the major indexes and commodities. Perhaps it is not as wild of an idea as some might like to think on the surface of things. It could be something that people actually want to put their money to work in. We will all just have to wait to see what the SEC says about it first.