Last week, Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), shared a certain interest in exchange-traded products that are linked to futures contracts. bitcoin (BTC).
After this speech, several companies acted to submit proposals for such products – crypto exchange traded funds (ETF). Valkyrie is the most recent manager to have taken this step this Wednesday (11).
According to outline of a proposal dated yesterday and sent to the SEC:
The Fund will not invest directly in bitcoin.
Under normal circumstances, the Fund seeks to acquire a number of bitcoin futures contracts so that the total notional amount of bitcoin present in the futures contracts stored by the Fund is as close as possible to 100% of the Fund’s net assets.
[…] The Fund will invest indirectly, through a wholly owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”), in standardized futures contracts executed in physical money in bitcoin.
Such futures contracts are traded at commodity brokerage firms registered with the Commodity Futures Trading Commission (the “CFTC”).
Currently, bitcoin futures contracts in which the Fund will invest are traded only on, or subject to the rules of, the Chicago Mercantile Exchange (the “CME”).
The value of bitcoin futures is determined by reference to CME CF Bitcoin Reference Rate, which provides an indication of the price of bitcoin among certain bitcoin brokers. The Fund aims to invest in cash denominated bitcoin futures.
In April, Valkyrie had submitted a proposal for a bitcoin ETF but, like other managers, the SEC has neither approved nor rejected the current batch of proposals. In June, Valkyrie raised $10 million in a funding round, as previously reported.
ProShares, Invesco and, last Tuesday (10), VanEck sent documents to ETFs linked to bitcoin futures to the SEC since the Gensler’s speech. In 2017, VanEck had proposed this type of ETF, but its initiative was not successful.
Is there any chance of a bitcoin ETF
be approved in the US in 2021?
In day august 3rd, Gensler stated:
I hope there will be requests regarding funds traded on the Exchange (ETF) under the Investment Companies Act (1940 law). When combined with other federal securities laws, the 1940 Act provides significant investor protections.
Given these important safeguards, I look forward to the Commission’s review of these documents, particularly if they are limited to these CME-traded bitcoin futures.
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