Valkyrie Pulls Leveraged ETF Application At SEC’s Request

Valkyrie has withdrawn its leveraged bitcoin futures ETF application after being instructed to do so by the SEC.

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key takeaways

  • Valkyrie withdraws leveraged bitcoin futures ETF three days after filing
  • The SEC has instructed issuers with these types of applications to withdraw, according to a source familiar with the matter

Three days after filing the first leveraged bitcoin futures exchange-traded fund, Valkyrie has withdrawn its application at the Securities and Exchange Commission’s request, according to a source familiar with the matter. 

“This strikes me as inconsistent and somewhat problematic,” said Nate Geraci, president of the ETF Store. “The SEC has blessed CME bitcoin futures from a regulatory perspective by allowing bitcoin ETFs to come to market.” 

The Securities and Exchange Commission (SEC) has asked other issuers to pull any applications that differ from the already approved structure of investing in bitcoin futures contracts, the source said. 

“Historically, they have allowed leveraged and inverse ETFs to exist in markets they have deemed acceptable,” said Geraci. “For example, the SEC recently greenlit leveraged and inverse VIX ETFs. I’m not sure why bitcoin futures would be any different.” 

The Valkyrie XBTO Levered BTC Futures ETF was first filed on Tuesday morning. The fund, which intended to trade under the ticker BTFX, would have provided 1.25x exposure to the bitcoin reference rate and hold futures, swaps, options and forwards. The application was withdrawn Friday, according to the filing

Investors are now watching to see if Direxion, which filed for an ETF that would allow investors to systematically short bitcoin futures on Tuesday, will also withdraw. A Direxion spokesperson declined to comment.

The news came as investors and analysts continue to wait for VanEck’s bitcoin futures ETF to launch. The fund was expected to begin trading this week given their post-effective filing was released Wednesday. 

Bitcoin futures-based ETFs began trading last week with the launch of ProShares’ Bitcoin Strategy Fund launched October 19. Valkyrie’s BTF made its Nasdaq debut three days later.

After filing for bitcoin futures ETFs, VanEck and ProShares had also revealed plans in August to launch Ethereum futures products. Both fund managers subsequently withdrew the applications for those proposed ETFs. 

Industry professionals said at the time that the SEC may have told the firms that these ETFs are unlikely to be approved anytime soon.

SEC Commissioner Hester Peirce previously said in an interview with Blockworks that though she couldn’t comment on exactly why ProShares and VanEck withdrew the filings, the SEC is focused on bitcoin-based products.  

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