There are reports that the US Securities and Exchange Commission recently rejected one or two Bitcoin exchange-traded fund applications, indicating that regulators are not ready to accept more exotic futures products.
Just a day after Valkyrie applied for a leveraged Bitcoin futures ETF, Direxion applies for short reverse fund, The US Securities and Exchange Commission seems to have vetoed both of them.
On October 28, Eric Balchunas, a senior ETF analyst at Bloomberg, mentioned the Dow Jones alert, indicating that the Valkyrie leveraged fund has been shelved by the SEC. He added that this move may also apply to reverse fund applications.
It seems that the US Securities and Exchange Commission has no leveraged (possibly reversed) Bitcoin futures ETF. Try it without injury. If they have experienced trading tools that could be worth billions of dollars within a few years.By Dow Jones pic.twitter.com/MspMRf3hL9
— Eric Balchunas (@EricBalchunas) October 27, 2021
On October 26, Direxion, the issuer of the ETF, applied for the Bitcoin Strategy Bear ETF, which will enable speculators to buy futures that short BTC prices. On the same day, Valkyrie applied for a leveraged BTC futures ETF, which will provide 1.25 times exposure to the asset.
Direxion products invest purely in futures, however, Valkyrie products will hold futures, swaps, options and forwards. Another Dow Jones alert report stated that the SEC currently appears to be only interested in direct futures products, namely funds that purchase contracts from the Chicago Mercantile Exchange (CME).
At this stage, regulators do not seem to be keen to approve any product that invests in the asset itself or any product other than CME futures contracts. Balciunas confirmed:
“If they let the inverse one pass, it will be interesting (and possible). That is limited to futures. Valkyrie’s language is a bit different from that language.”
President of ETF Store, Nate Geraci, Report On October 27, AXS Investments applied for two more ETFs. The U.S. Securities and Exchange Commission’s document is for a conventional Bitcoin strategy ETF similar to the two approved ones, and another short-selling or reverse fund.
Another Dow Jones report stated that Grayscale believes that the US Securities and Exchange Commission will be ready to approve a spot Bitcoin ETF by July 2022.
On October 19th, Grayscale filed an application with the US Securities and Exchange Commission Converted its popular Bitcoin Trust (GBTC) into a spot fund This is backed by the asset itself, not the futures contract.
Geraci commented on the current lack of regulation of the spot crypto market, “Then the crypto market/exchange will be regulated at that time? It seems very ambitious.”
In related news, VanEck is making final preparations for the launch of its Bitcoin strategy ETF, which will be traded under the stock symbol XBTF.Wednesday, Barcunas Said It is likely to start trading on Friday, October 29, but it could also be Thursday.