Citadel Securities Ready for Crypto ETFs When Regulators Approve It

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Last year, the Securities and Exchange Commission finally authorized an ETF that tracks bitcoin futures contracts, which indirectly track the coin’s spot price and are overseen by the Chicago Mercantile Exchange.

Mr. Griffin called on the SEC to move from just discussing crypto regulation to making rules. For now, the agency said existing securities laws apply to crypto. But Mr. Griffin said that once more specific regulations are in place, “Tier 1” companies will start providing liquidity and other services will regularize digital assets.

“We are getting a huge volume of calls about spot Bitcoin ETFs, but they are all from potential issuers,” said Cory Laing, Delta-One sales manager at Citadel Securities. “The calls don’t come from customers.”

Customers who want to be in crypto are finding ways, according to Laing. “They don’t expect a good packaged product,” he said. If a spot bitcoin ETF gets approval, Laing predicts demand will follow.

Although futures funds from issuers such as ProShares and VanEck have proven less popular than expected with investors, companies are still looking to launch a spot bitcoin ETF. Grayscale Investments, in particular, is struggling to convert its bitcoin trust to the format. But the SEC continues to refuse applications, including one for a One River Asset Management product last week.

While ETFs that hold crypto-related stocks such as Coinbase Inc. have risen through the ranks over the past year, performance has been lackluster. The six worst performing unleveraged ETFs in the $6.6 trillion arena in 2022 are all crypto-related equity funds, according to data compiled by Bloomberg.

Citadel Securities is monitoring regulatory actions and the performance of existing ETFs before a formal decision is made within the company, Ms. Brennan said. “We haven’t seen a lot of changes in the space over the past two months, but we’re thinking about what’s next.”

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