Alternative financial services firm Valkyrie Digital Assets has become the latest company to file for a Bitcoin exchange-traded fund (ETF) offering indirect exposure to Bitcoin (BTC) via cash-settled futures contracts.
According to a draft prospectus dated Aug. 11, the Bitcoin futures contracts will be purchased via a Cayman Island-based subsidiary wholly owned by the fund via exchanges registered with the United States Commodity Futures Trading Commission.
The prospectus adds that the fund will initially exclusively invest in Bitcoin contracts that are traded on the Chicago Mercantile Exchange, with the ETF targeting a total notional value of its underlying futures contracts “as close to 100% of the net assets of the fund as possible.”
Valkyrie also filed for a spot Bitcoin ETF under the 1933 Securities Act in April. However, the new filing comes one week after SEC Chairman Gary Gensler suggested he may be open to approving exchange-traded products exposed to regulated BTC futures contracts under the Investment Company Act of 1940.
“When combined with the other federal securities laws, the ’40 Act provides significant investor protections,” said Gensler.
“Given these important protections, I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded Bitcoin futures.”
Eric Balchunas, senior ETF analyst at Bloomberg, noted that Valkyrie is now the fourth asset manager to submit filings for an ETF tied to Bitcoin futures under the 1940 Company Act since Gensler’s speech, following ProShares, Invesco and VanEck.
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Drawing on Gensler’s recent remarks, Balchunas tentatively predicted the funds could receive a verdict from the SEC as early as November.
This is the 4th bitcoin futures ETF filed under the crucial (for Gensler) 1940 Act, joins Proshares, VanEck and Invesco. It's poss these are approved as early as Nov this year but I've had football pulled away too many times to say it's definite.
— Eric Balchunas (@EricBalchunas) August 11, 2021