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ProShares comments on advantages of futures-based crypto ETPs

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Commenting on what it calls ‘the current uncertainty in the cryptocurrency market’, as both exchanges and lenders have come under tremendous pressure amid issues like the collapse of FTX and the bankruptcy of crypto lender BlockFi, US ETP issuer ProShares writes that investors may be increasingly concerned about the safekeeping of their cryptocurrency assets.

Simeon Hyman, ProShares’ global investment strategist, says that the recent cryptocurrency market turmoil highlights several potential advantages for ETF investors in obtaining bitcoin-linked returns via futures, listing:

Custody Protections: Stringent regulatory requirements for the safekeeping of assets, including prohibitions on affiliated transactions and comingling fund assets. 

Board Governance: An independent board with a fiduciary duty to act in the best interest of ETF investors.

Regulated Exchange: Bitcoin futures contracts trade on a regulated exchange, which provides several features including, guaranteed trade settlement, transparent pricing, and standardised contracts.

Investors have continued to show faith in ProShares bitcoin-linked ETFs, BITO and BITI, the firm writes. Since the beginning of the year, these two futures-based ETFs have seen combined inflows of USD340 million, while all other cryptocurrency ETPs around the world have seen combined outflows of USD28.5 million, according to an analysis of Bloomberg data through November 25.

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