ETF Prime: Lara Crigger on a Futures-Based Bitcoin ETF

On this week’s episode of ETF Prime, host Nate Geraci is joined by ETF Trends Managing Editor Lara Crigger, who lends her perspective on the launch of a mutual fund holding Bitcoin futures, in addition to sharing thoughts on the future of futures-based bitcoin ETFs in light of recent SEC comments. Additionally, ETF industry pioneer Herb Blank discusses the rise of actively managed ETFs. And finally, Inspire Investing’s Robert Netzly covers his firm’s lineup of faith-based ETFs.

Stepping back into the Bitcoin ETF topic, the SEC recently made some remarks concerning funds that abide by mutual fund rules. Crigger believes the commission is speaking more to a Bitcoin futures mutual fund rather than a physically-backed ETF for two reasons. For one thing, Bitcoin futures are already a regulated product, which feeds into the idea of who has the regulatory jurisdiction over Bitcoin and other cryptocurrencies.

The other element is that since mutual funds come closed to new investments, the SEC may enjoy greater confidence knowing that position limits can be maintained. Many do not realize the limit there is in a futures market regarding how large a position is and how one trader/investor can take in any given futures contract month.

So, if the fund becomes popular, the managers would need to buy more and more futures contracts to meet the influx of demands, potentially running up against position limits. A mutual fund can close its fund to new investors if it gets close to that limit. However, an ETF cannot.

This happened before. In 2020, a run on the popularity of front-month oil funds led to, as Crigger explains, “investors trying to buy the dip in oil prices.” The fund issuers then had to change around the portfolio construction to keep from breaking position limits.

The SEC likely understands all of this, which is why a Bitcoin ETF would likely find popularity and need to have various parameters modified to hold investors off from breaking what’s been set up to accommodate a more standard fund.

Active and Faithful Funds

Later on, Senior Quantitative Analyst at Value Engine and Head of Investment Product Consulting at Global Finesse, Herb Blank, provides his market insights. As the man who established the first suite of ETFs to ever trade on the NYSE, back in 1996, the various contributions he made to the iShares ETF, SPDR, GLD, and other foundational stuff in the ETF space has made him a person of interest when considering what’s trending today. He focused on the hot topic of the rise of actively managed ETFs.

Finally, the Founder and CEO of Inspire Investing, Robert Netzly, provided a further understanding of the companies’ biblically responsible ETFs, which have quietly risen to over one billion in assets. Unlike other areas of ESG investing, these funds have been grassroots-driven. Inspire currently offers 8 funds in total.

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