Will Valkyrie be the fourth company to apply for a bitcoin futures ETF?
The SEC appears to be more favorable to Bitcoin ETFs related to futures contracts than those focused on spot markets, according to asset managers.
Valkyrie Digital Assets, an alternative financial services organization, has filed for a Bitcoin exchange-traded fund (ETF) that will provide indirect exposure to BTC through cash-settled futures contracts.
According to a draft prospectus dated August 11, Bitcoin futures contracts will be purchased via exchanges registered with the US Commodity Futures Trading Commission by a Cayman Island-based company that is completely owned by the fund.
The fund will initially invest only in Bitcoin contracts traded on the Chicago Mercantile Exchange (CME), with the ETF aiming for a total notional value of its underlying futures contracts “as close to 100 percent of the fund's net assets as possible,” according to the prospectus.
Valkyrie previously filed for a spot Bitcoin ETF under the Securities Act of 1933, but the new filing comes just one week after SEC Chairman Gary Gensler hinted that he might be open to approving exchange-traded products exposed to regulated Bitcoin futures contracts under the Investment Company Act of 1940.
The '40 Act, when paired with other federal securities laws, provides significant investor protections,' according to Gensler.
“Given these critical safeguards, I eagerly await the staff's evaluation of such filings, especially if they are limited to certain CME-traded Bitcoin futures.”
Valkyrie is now the fourth asset management to file for an ETF related to Bitcoin futures under the 1940 Company Act since Gensler's speech, following ProShares, Invesco, and VanEck, according to Bloomberg's senior ETF analyst Eric Balchunas.
Balchunas speculated that the funds could receive a decision from the SEC as early as November, based on Gensler's recent remarks.