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Barring a last minute setback, it looks like the SEC is finally set to approve the long-elusive bitcoin ETF.

The SEC's review period for four different bitcoin ETF filings is set to run out before the end of October. In the recent past, the regulatory body has kicked the can down the road on these by either delaying the decision date or getting the issuer to withdraw the filing altogether. The biggest reason given was that it was uncomfortable with the potential risks of fraud, manipulation and a lack of regulatory oversight.

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Over the past month, the tone has changed. SEC Chair Gary Gensler, who was appointed by President Biden earlier this year, has been more open to cryptocurrencies products than his predecessors giving investors hope that a bitcoin ETF might actually get another chance.

Bloomberg published a story last night saying that a "bitcoin futures ETF would not face opposition from the SEC". Several SEC members, including Hester Peirce, have expressed an openness to cryptocurrencies and related products in the past, but this is the first indication that the regulator wouldn't actually stand in the way.

The timing of this is important because two separate bitcoin ETF filings - the ProShares Bitcoin Strategy ETF and the Invesco Bitcoin Strategy ETF - are coming up on the SEC approval deadline on Monday and Tuesday of next week, respectively. Given recent statements, it now appears likely that these products will finally receive the green light with actual trading set to begin in the days following.

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What's changed this time around to make the SEC ready to approve a bitcoin ETF? For the most part, it's the structure of the proposed products themselves.

The regulator isn’t likely to block the products from starting to trade next week, said the people, who asked not to be named while discussing the decision. Unlike Bitcoin ETF applications that the regulator has previously rejected, the proposals by ProShares and Invesco Ltd. are based on futures contracts and were filed under mutual fund rules that SEC Chairman Gary Gensler has said provide “significant investor protections.”

Gensler has said he prefers a futures-based ETF filing over one that would house physical bitcoin. Dozens of ETFs that use futures contracts, mostly in the commodities space, already exist. Many also use futures in order to provide leveraged exposure to a product or sector, so it's not like it's a complete unknown as to how these products will work. Also aiding is the fact that bitcoin ETFs already exist in Canada and have been operating without issue. A few ETFs in the United States, including the blockchain ETF - the Amplify Transformational Data Sharing ETF (BLOK), have amended their mandates to allow for the use of Canadian bitcoin ETFs in their portfolios due to their structural advantages and tighter crypto exposure.

Gensler is also a fan of the "significant investor protections" that have been added to protect potentially unwitting shareholders. A pricing structure that would average out prices over a short period of time instead of a specific point in time would, in theory, help limit some of wilder swings that could potentially occur.

In other words, the filings set to be ruled on next week would check all of Gensler's major sticking points.

Bitcoin responded positively to the news as it broke last night, rising roughly $2000 per coin.

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Based on the timing of the filings, it looks like ProShares is going to win the battle for first bitcoin ETF officially approved by the SEC, but expect a number of similar bitcoin ETF filings from the likes of ARK, Bitwise, VanEck, Valkyrie and AdvisorShares to eventually get their approvals as well.

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