Billionaire crypto proponent and Galaxy Digital CEO Mike Novogratz is seeking SEC approval for a bitcoin futures exchange-traded fund (ETF). Along with other firms, Galaxy is waiting for the SEC to give the green light on applications for physically-backed bitcoin ETFs, something SEC Chairman Gary Gensler suggested he may be open to approving.
Who is Mike Novogratz?
Mike Novogratz is an ex-hedge fund manager and CEO of Galaxy Investment Partners, an asset management fund specialised in crypto assets. Novogratz is an outspoken proponent of crypto assets and has criticised politicians and regulators for having a flawed understanding of crypto and its technological underpinnings on multiple occasions. He has described crypto as the “future of our financial systems” and pressed politicians and regulators to do their homework before implementing misguided policies to regulate the industry.
Novogratz has also expressed understanding for retail investors overextending themselves in the current market environment. “Crypto is not just Bitcoin being bought as a hedge against bad monetary fiscal policy,” which is why retail investors were getting too excited by news of institutional interest from Amazon and Visa in the space. That overextended interest was the reason for too much leverage in the system, which is why recent price corrections were “a little air being popped out of the balloon.”
Why does Novogratz want to register a Bitcoin ETF?
Given his overall stance on cryptocurrencies, it is unsurprising that Novogratz is backing crypto with his financial services firm Galaxy Digital Holdings. According to the filing with the Securities and Exchange Commission, with the planned Bitcoin ETF, the fund would invest in futures and not directly in bitcoin. Despite positive signals from chairman Gary Gensler, who indicated his preference for ETFs based on bitcoin futures, the SEC has so far not approved any of the dozens of applications for crypto ETFs in recent years.
Besides Galaxy Digital, which filed its application in April, a dozen other firms, including Fidelity, WisdomTree Investments, and Anthony Scaramucci’s SkyBridge Capital are looking for ETF approvals from the ETF. Investors and funds alike are monitoring which fund is to be approved first. However, Chairman Gensler and other policymakers have cited market manipulation concerns as a reason for their apprehension about the approval of bitcoin ETFs. Bitcoin ETFs are not a recent phenomenon. The first attempt at an ETF approval dates back to 2013, when the Winklevoss twins Cameron and Tyler, founders of the Gemini crypto exchange, failed to get their ETF recognised.
Currently, Bitcoin futures contracts are subject to the rules of the Chicago Mercantile Exchange (CME). Approval of ETFs would likely drive more institutional interest in the crypto asset, which opens the prospect of more price appreciation. Novogratz indicated that Bitcoin’s price recovery to above $40,000 stemmed from institutional buying activity. With ETFs possibly on the horizon, Bitcoin might well be on its way to higher prices and a continuation of its impressive recovery from record lows during the price crash in March 2020.