First Trust Files 'Buffer' Cryptocurrency ETF with SEC as Gensler Reevaluates Strategy

First Trust Files for Crypto ETF with SEC

Illinois-based financial services firm First Trust has officially submitted Form N1-A to the US Securities and Exchange Commission (SEC), announcing its plans to launch a crypto-backed exchange-traded fund (ETF). The ETF, called First Trust Bitcoin Buffer ETF, will not be a spot Bitcoin ETF.

The Fund will participate in the positive price returns of the Grayscale Bitcoin Trust or other ETF-backed crypto product that provides access to the performance of the leading cryptocurrency. It aims to serve as a cushion against the initial 30% of losses of the underlying exchange-traded product (ETP) over a target outcome period.

First Trust Sets the Pace in Crypto-backed ETFs

First Trust’s decision to offer a buffer ETF sets it apart from other applicants, such as BlackRock and Grayscale, who are pursuing spot Bitcoin ETFs. The firm’s move represents another significant entry by a legacy financial institution into the crypto market.

Bloomberg’s ETF analyst James Seyffart expects more Bitcoin ETF applicants to follow First Trust’s lead in the coming weeks.

Gensler Reevaluates Bitcoin ETF Filings

The SEC Chair, Gary Gensler, has announced that the agency is taking a fresh look at Bitcoin ETF filings following court intervention. Currently, there are around 10 to 12 spot Bitcoin ETF applications under review by the SEC. Gensler emphasized that each application will be evaluated thoroughly before approval is granted.

Spot Bitcoin ETF Approval Expected Soon

An approval for a spot Bitcoin ETF is anticipated between January 10 and 15, 2024, according to James Seyffart. Meanwhile, asset management firm BlackRock has submitted an in-kind redemption model to the SEC for its spot Bitcoin ETF application, aiming to provide a cleaner link to on-chain activity and resistance to market manipulation.

Hot Take: First Trust Leads the Way with Crypto-backed ETF

First Trust’s submission of a crypto-backed buffer ETF to the SEC marks an important development in the growing crypto ETF space. By offering a cushion against losses and participating in the positive price returns of established crypto products, this unique strategy aims to attract investors looking for risk mitigation and exposure to the cryptocurrency market. As other financial institutions take note of First Trust’s approach, we can expect more innovative and differentiated strategies to emerge in the coming weeks. With regulatory authorities like the SEC reevaluating their stance on Bitcoin ETFs, the path towards broader adoption of these investment vehicles is becoming clearer.