On October 19, 2021, ProShares Advisors LLC began offering ProShares Bitcoin Strategy ETF (ProShares ETF), an exchange traded fund (ETF) that provides investors exposure to US bitcoin futures contracts, as the SEC raised no objection to the launch within the required 75-day review period provided under Rule 485(a) of the Securities Act of 1933 (Securities Act).

On October 15, 2021, the New York Stock Exchange indicated the ProShares ETF had been approved for listing as "BITO" – this listing is solely for shares of the ETF and does not provide direct access to bitcoin futures or to the bitcoin spot market. The fund therefore tracks the future cost of bitcoin, not the current price of the cryptocurrency itself. This will produce a variance between the price of bitcoin and performance of the ETF shares.

The ProShares ETF was filed under the Investment Act of 1940 (ICA). The ICA in relevant part regulates mutual funds and other companies that engage primarily in investing, reinvesting and trading in securities, and whose own securities may be offered to the investing public, including ETFs. The SEC's Accounting and Disclosure Information 2019-07 sets out the relevant details regarding effectiveness of an ETF application with the SEC, providing that under Rule 485(a) of the Securities Act, a new open-end fund that is organized as a new series of an existing registrant can file a post-effective amendment to an existing registration statement, and automatically become effective in as early as 75 days after filing the amendment.

The SEC's tacit approval of the ProShares ETF comes after years of withdrawn or stalled applications by dozens of other applicants seeking to launch ETFs that hold bitcoin (see Legal Update, SEC Further Delays Decision on VanEck Bitcoin ETF Listing). Previous ETF applications were rejected over concerns regarding:

However, the ProShares launch comes after a suggestion last month by SEC Chairman Gary Gensler that the SEC may be more receptive to a bitcoin futures ETF than a bitcoin ETF providing direct exposure to the cryptocurrency. This was consistent with the May 11, 2021 public statement from the SEC Investment Management Division noting that bitcoin is a highly speculative investment. The May 2021 public statement was echoed by an SEC investor bulletin issued June 10, 2021, which differentiated between bitcoin and bitcoin futures, but emphasized the speculative nature of both.

It is anticipated that the ProShares ETF offering could open the door to other bitcoin-related offerings. A similar offering set to come to market is Valkyrie Bitcoin Strategy ETF, which received approval for listing on Nasdaq on October 15, 2021. In addition, Grayscale, the world's largest digital currency manager, plans to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF. Anticipation of the ProShares offering had a positive effect on bitcoin's value, with the cryptocurrency jumping nearly 10% in the weeks before the offering. On October 20, 2021, bitcoin hit a new all-time high of almost $67,000.

Investors with self-directed brokerage accounts will be among the first to access the ProShares ETF, as larger brokerage houses and investor funds perform due diligence to determine the appropriateness of investing in bitcoin futures contracts.