A year after obtaining a BitLicense to operate a cryptocurrency-related business, the New York Digital Investment Group (NYDIG) has received the greenlight from the United States SEC to offer cash-settled Bitcoin futures contracts to institutional investors.
Presently, the world’s leading and most diverse derivatives marketplace, the CME Group, is the only exchange in the US offering cash-settled Bitcoin futures contracts. The other exchange that is looking to do the same is Bakkt which will launch very soon on the Intercontinental
Christened the NYDIG Bitcoin Strategy Fund, the new fund will let investors invest in cash-settled Bitcoin futures contracts that are traded on exchanges registered with the US Commodity Futures Trading Commission (CFTC).
However, the new fund will not let you invest in Bitcoin or any other cryptocurrencies directly. With the new fund, the New York-based group is planning to raise more than $25 million.
Meanwhile, experts are of the view that this decision by the SEC might be a sign of the Commission softening its stance on such funds. It can be recalled that the SEC has been opposing cryptocurrency-based funds like Bitcoin ETFs.
As recently as October 90, the SEC rejected a proposal from Bitwise Asset Management and NYSE Arca to launch a Bitcoin ETF, apparently for failing to satisfy necessary regulatory requirements.
Bitwise’s is not an isolated case. In May this year, more than a dozen Bitcoin ETF proposals were rejected by the SEC citing the high volatility of the Bitcoin price, among other regulatory issues, as reasons. Besides, several investment firms even withdrew their proposals sensing the same fate.
Meanwhile, the NYDIG is not new to this kind of business. Earlier in November last year, the New York State Department of Financial Services (DFS) granted a BitLicense to NYDIG Execution, a subsidiary of the Group. The DFS license allowed NYDIG Execution to operate cryptocurrency-related businesses. The license allowed the group to operate as a crypto custodian for Bitcoin, Bitcoin Cash, Ethereum, XRP, and Litecoin.