Asset managers believe the SEC will be more receptive to Bitcoin ETFs linked to futures contracts than to those focused on spot markets.
Valkyrie Digital Assets is the latest alternative financial services firm to file for a Bitcoin exchange-traded fund (ETF) that will provide indirect exposure to BTC via cash-settled futures contracts.
According to a draft prospectus dated August 11, the fund will purchase Bitcoin futures contracts through a Cayman Island-based subsidiary wholly owned by the fund on exchanges registered with the US Commodity Futures Trading Commission.
According to the prospectus, the fund will initially invest exclusively 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.”
Valkyrie filed for a spot Bitcoin ETF under the Securities Act (1933) in April, but the new filing comes just one week after SEC chairman Gary Gensler suggested he might be open to approving exchange-traded products exposed to regulated BTC futures contracts under the Investment Company Act of 1940.
“When combined with other federal securities laws, the ’40 Act provides significant investor protections,” Gensler said.
“Given these important safeguards, I eagerly await the staff’s review of such filings, especially if they are limited to these CME-traded Bitcoin futures.”
According to Eric Balchunas, senior ETF analyst at Bloomberg, Valkyrie is the fourth asset manager to file for an ETF linked to Bitcoin futures under the 1940 Company Act since Gensler’s speech, following ProShares, Invesco, and VanEck.
Based on Gensler’s recent comments, Balchunas predicted that the funds could receive a decision from the SEC as early as November.