SEC has rejected Valkyrie’s leveraged Bitcoin ETF

Further exotic Bitcoin futures products do not seem to be wanted by the SEC. One or two recent Bitcoin ETF applications have been denied, according to reports from the Securities and Exchange Commission, indicating that the regulator is not quite ready for more exotic futures products yet.

The SEC seems to have denied both Valkyrie’s leveraged Bitcoin futures ETF and Direxion’s bear inverse fund only a few days after they were filed.

Eric Balchunas, the senior ETF analyst at Bloomberg, reported on October 28 that the Securities and Exchange Commission (SEC) has canceled the Valkyrie leveraged fund. This, he said, would likely apply to the inverse fund as well.

Direxion, an ETF provider, filed for a Bitcoin Strategy Bear ETF on October 26th, allowing investors to short the price of BTC by purchasing futures contracts. The same day, Valkyrie applied for a leveraged BTC futures ETF, which would have provided 1.25x exposure to the asset’s price movements.

Compared to the Direxion product, the Valkyrie one contained futures, swaps, options, and forward contracts in addition to futures. However, according to a Dow Jones story, at this time, the SEC seems to be solely interested in direct futures products such as funds that purchase contracts from the Chicago Mercantile Exchange (CME).

Any investment products other than CME futures contracts have not been approved by the regulator so far. Balchunas verified what we already knew:

The Inverse one being let through would be intriguing (and possible).” That one was only available to those who traded futures. The vocabulary spoken by Valkyrie differed somewhat from that of the other characters.

Nate Geraci, President of the ETF Store, said that AXS Investments has applied for two new exchange-traded funds on October 27. In addition to the two previously authorized ETFs, the SEC has received files for a normal Bitcoin Strategy ETF and another shorting or inverse fund.

Grayscale believes that the SEC will be ready to approve a spot Bitcoin ETF by July 2022, according to another Dow Jones story.

Grayscale submitted an application with the Securities and Exchange Commission (SEC) on October 19 to convert its popular Bitcoin Trust (GBTC) into a spot fund that is backed by the commodity itself rather than futures contracts.

“So crypto markets/exchanges will be regulated by then?” said Geraci in response to the present absence of regulation on spot crypto markets. It’s a touch over the top.”

Regarding the topic of Bitcoin Strategy ETFs, VanEck is putting the last touches on the upcoming launch of its ETF, which will trade with the ticker symbol XBTF Balchunas said on Wednesday that it was “likely” that the stock will begin trading on Friday, Oct. 29, but that it might happen as early as Thursday.

Also Read: There Will Be No Crypto-Based Income In Russia, According To Russia’s Internet Authority