ProFunds Mutual Fund has been authorized to launch a BTC Price Binding Fund. It will be traded mainly through BTC futures contracts, making it accessible to small investors.
ProFunds makes a mutual fund for BTC futures available to retail
The management company ProFunds, which manages more than $ 60 billion in capital worldwide, has registered the mutual fund with the US Securities and Exchange Commission (SEC). It was approved under the 1940 Act, through which such an application can pass more easily than applications for ETF funds, which are assessed under the Securities Act as late as 1933.
A regulated mutual fund tied to the price of BTC through futures contracts may be a small step forward before approving the BTC ETF applications that the SEC currently has up to fourteen on the table. It is a fund that has some similar characteristics to ETFs, but differs mainly in that it cannot be traded as ETFs or equities throughout the day, which reduces its attractiveness among investors.
Eric Balachunas said in an interview with Bloomberg that this fund is something like a music artist who releases his work only through a CD and does not make it available on streaming services. In other words, it is a product that is not so accessible, which reduces its popularity.
“Mutual funds receive a little less attention, because the ETF is where the real price is. This thing keeps futures in the packaging of investment funds and is unlikely to be tax efficient. What people really want is a physically covered BTC ETF, ”He said.
BTC Strategy Profund (BTCFX) aims to invest all or substantially all of its assets in BTC futures contracts on CME. However, during unusual market conditions, it may also invest in BTC ETFs in Canada from Purpose or Galaxy Digital. However, the fund document states that it does not invest more than 10% of all assets in such ETFs.
The fund description also states that it will mainly invest in BTC futures during periods when the price is calm or falling, but may also invest during periods when the price of BTC is rising. Should the price of BTC fall, the Fund does not plan to leave its positions unless necessary to meet investor redemption requirements.