In the latest attempt to bring the Securities and Exchange Commission around to digital assets, alternative asset management firm Valkyrie filed a Bitcoin exchange-traded fund Friday. The fund’s holdings will be entirely Bitcoin and will be custodied with Coinbase.
Steven McClurg, CIO of Valkyrie and former managing director at Guggenheim Partners, is hopeful his experience with ETFs and knowledge of digital assets will lead to a favorable decision from the SEC.
“I built out Guggenheim’s ETF business from basically nothing to $60 billion,” McClurg told Blockworks. “I’ve got a lot of experience getting things through the SEC that normally are very, very difficult.”
Valkyrie is not the first to file a cryptocurrency ETF with the SEC. No previous filings have ever been approved. In August 2018, the SEC rejected nine crypto ETF proposals in one day. VanEck Associates Corp. filed a Bitcoin ETF in Dec 2020 after withdrawing its most recent application in September 2019.
Despite the uphill battle, the landscape for digital assets is changing, McClurg said, pointing to new innovations in crypto that will potentially alleviate regulators’ concerns about the asset class.
“Security and custody is probably the most important thing, and really in the last six to nine months, exchanges like Coinbase, Gemini and Anchorage have stepped up their game,” said McClurg. “Coinbase even in the last three months has stepped up their game to the point where they feel like a very institutional-like shop, which is why we ended up going with them.”
There are also concerns regarding the pricing of a crypto ETF, McClurg said, but, overall, he is optimistic.
“I’ve gone from ‘SEC could never approve it’ to ‘we’re probably less than three years away if not less than two years away,” said McClurg.
A Bitcoin ETF remains a critical missing bit of infrastructure for the digital asset ecosystem and would pave the way for a wider variety of participants such as registered investment advisors to safely invest.