Valkyrie Bitcoin Futures ETF Could be First Considered by SEC

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In Brief
  • Valkyrie Investments may become the first to have its Bitcoin exchange-traded fund (ETF) assessed by the US Securities and Exchange Commission (SEC).

  • The Nashville, Tennessee-based firm sought regulatory permission for a futures-based fund two months ago.

  • The application had been hidden thanks to a quirk afforded to smaller companies, enabling them to file offerings confidentially.

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Valkyrie Investments may become the first to have its Bitcoin exchange-traded fund (ETF) assessed by the U.S. Securities and Exchange Commission (SEC).

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Although Valkyrie also filed for a physically-backed Bitcoin ETF in March, it wasn’t the first to do so. However, the Nashville, Tennessee-based firm sought regulatory permission for a futures-based fund two months ago. This likely makes it the first company to do so, long before others followed suit. 

Although less popular than physically-backed ETFs, once SEC Chair Gary Gensler signaled that regulators might be more open to a Bitcoin ETF based around futures rather than the cryptocurrency itself, bigger fund managers, such as Invesco, rushed to file for one. Many believe that being the first to receive approval might mean that such a fund attracts more inflows. This happened to be the case with the first to be sanctioned by regulators in Canada.

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The application had been hidden thanks to a quirk afforded to smaller companies, enabling  them to file offerings confidentially. It was only revealed this week by a response to the SEC from Nasdaq, where Valkyrie hopes to list.

Futures-based fund

Many cryptocurrency enthusiasts are less keen on a futures-based Bitcoin fund, which they feel is unnecessarily complicated. However, according to Steven McClurg, chief investment officer at Valkyrie Investments, approaching a Bitcoin ETF through futures seemed rather intuitive. 

“We still thought a physical Bitcoin ETF was a little further away and with futures, the way that they’re regulated and the way they trade with CME, they’re already a regulated product,” McClurg said. “So it’s like the one-step, two-step way to get to a physical ETF but we thought there was a lot of opportunity with futures.” 

McClurg believes that the SEC is justified in prioritizing caution, as is prompted by their mandate to protect investors. “Even though I do believe the market is ready for a physically-backed ETF, I know that they’re just trying to be extra cautious before putting something in the market that can hurt retail investors and this is their way of doing that,” he said.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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