First Trust, a financial services firm, recently applied for approval from the U.S. Securities and Exchange Commission (SEC) to launch a new investment product known as the First Trust Bitcoin Buffer ETF.
On December 14, First Trust filed Form N1-A with the SEC to introduce a new investment product named the First Trust Bitcoin Buffer ETF.
This suggests that they are seeking approval to launch a financial product linked to Bitcoin.
The fund is designed to participate in the positive price returns—before fees and expenses—of the Grayscale Bitcoin Trust or another exchange-traded product (ETP) that provides exposure to the performance of Bitcoin.
Unlike a regular Bitcoin ETF, this fund aims to use options to achieve specific investment goals.
These are often referred to as “defined-outcome ETFs” because they use options to ensure a particular investment outcome. The First Trust Bitcoin Buffer ETF, in particular, aims to protect against a predetermined percentage of downside losses while capping potential gains.
Bloomberg ETF analyst James Seyffart says, “Expect to see other entrants in the space with unique, differentiated strategies offering Bitcoin exposure over coming weeks.”
First Trust’s Bitcoin Buffer ETF is among the early filings of this type with the U.S. SEC. As of now, there are 139 buffer ETFs actively trading on U.S. markets, collectively managing assets worth $32.54 billion.
These buffer ETFs cover various asset classes, such as stocks, commodities, and fixed income.
Also Read: SEC Chief Gensler Reassesses Bitcoin ETF with New Insight
