After previously approaching bitcoin derivatives with caution, the New York Stock Exchange Group (NYSE) has submitted a proposal to the US Securities and Exchange Commission, requesting to list five bitcoin-affiliated exchange-traded funds (ETFs) on its secondary marketplace, called Arca.
The ETFs are being structured by Direxion Asset Management, which has specialized in fund creation and nontraditional investments since 1997, and are designed to track the emerging bitcoin futures markets, not the price of bitcoin proper.
The five proposed ETFs are Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares, Direxion Daily Bitcoin 2X Bear Shares.
These financial products would provide opportunities for those seeking to invest in the price of bitcoin without requiring them to jump through the somewhat complex crypto-hoops that are associated with trading directly on cryptocurrency exchanges. Notably, there are three "bull" and two "bear" structured funds presently under SEC review.
The bull ETFs are for investors who seek to bet that bitcoin futures will increase in value. Inversely, the bear ETFs are structured for investors who think bitcoin futures will drop in value.
Per the section in the filing titled "Investment Objectives of the Leveraged Bull Funds," the ETFs will "correlate positively to either 125%, 150%, or 200% the daily return of the target benchmark."
Essentially, this means that if bitcoin futures go up 1 percent, it would ideally equate to a 1.25 percent rise in the share price of the 1.25X bull ETF.
The NYSE has stated that the new funds would "enhance competition among market participants, to the benefit of investors and the marketplace."
NYSE's rival exchanges CBOE and CME have both already launched bitcoin futures. Who knows where the trend of listing cryptocurrency-realted financial products on traditionally fiat exchanges will take the value of cryptocurrencies in 2018.