ProShares Cannot Invest in Canadian ETFs or any other pooled investments

Just before the launch date, SEC unexpectedly came out with its instructions for the launch. ProShares can proceed but it should note that only investment in fiat futures, as well as Treasury bills, is permitted. Canadian ETFs or any other pooled investments are out of the question.

ProShares fiat Bitcoin futures will pay a maintenance fee of 0.95% a year. The fee may potentially translate to additional expenses for BITO holders when trading begins.

Additionally, the Bitcoin ETF will be invested in monthly futures contracts, which will expire on every last Friday of the month. The expiration period may end up being costly to holders as per the ‘contago’ relationship. Traders should note that futures contracts with a longer term to expiration usually have a higher price compared to those with a shorter term to expiration.

The contago relationship will consequently push funds to sell the expiring contract at a relatively lower price and buy a longer-dated contract at a relatively higher price.

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