SEC approves Valkyrie Bitcoin ETF with no spot product in sight

SEC
TL;DR Breakdown
  • The United States Securities and Exchange Commission (SEC) approves the Valkyrie Bitcoin Futures ETF.
  • The fund is the second such product to be approved by the Securities and Exchange Commission under the Securities Act of 1933.
  • Securities and Exchange Commission pushes for crypto regulation.

The Securities and Exchange Commission has given its approval to the second Bitcoin futures ETF submitted under the same regulatory framework that spot Bitcoin ETFs have utilized. The entity has given its approval for a futures exchange-traded fund (EFT) application from Valkyrie. The move marks another ETF that the SEC has approved in the year. The SEC has been accepting futures ETFs but has not accepted any spot ETFs yet.

SEC gives an operational green light for Valkyrie Bitcoin ETF

According to Chief Investment Officer Steven McClurg, Valkyrie Investments is eager to launch its recently authorized Bitcoin Futures Fund (XBTO). The entity filed under the Securities Exchange Act of 1934 with a 19b-4 form. Also, Teucrium utilized this type to get validated.

The Valkyrie Bitcoin Futures ETF was first filed in Aug and tracked Bitcoin futures contracts. The SEC said that “it is unlikely that trading in the ETP would be the predominant influence on prices” but did not comment on a launch date.

It is not the first time that the Securities and Exchange Commission has authorized a Bitcoin futures-based ETF. Last October, the SEC gave approval for ETFs to invest in Bitcoin futures contracts for the first time. ProShares was the first company to bring such an investment vehicle to market; Valkyrie and VanEck followed with similar funds (under the Investment Company Act of 1940.

The regulators authorized the first Bitcoin futures ETF filed under the ’33 Act from fund group Teucrium last month. The SEC suggested that it would allow spot ETFs if it had more supervision and control over the cryptocurrency market.

Several firms have submitted applications for ETFs in the past year, but some have withdrawn their applications, such as Bitwise, which has refocused on a spot fund. The funds have performed well so far, but many anticipate big things from a spot ETF’s debut.

Valkyrie is one of a handful of ETFs attempting to launch a Bitcoin-related investment vehicle. Despite the fact that such vehicles exist in Canada, Europe, and Latin America, US regulators have so far refused to allow the creation of an ETF.

Most crypto firm executives are doubtful about when the Securities and Exchange Commission will allow a spot bitcoin ETF, but most think one will not debut until at least 2023.

As for a spot Bitcoin ETF, we do believe that today’s news puts us closer to an eventual approval, but would hesitate to put a timeline on such a decision and are instead keen to continue working with regulators to help further satisfy warranted concerns and collaboratively work towards progress in this rapidly evolving asset class.

McClurg.

Securities and Exchange Commission pushes for crypto regulation

The government entity has repeatedly sought to regulate and monitor the cryptocurrency industry. It requested that crypto exchanges provide surveillance information to the government. The ask is unlikely to happen voluntarily by crypto exchanges because it goes against the principle of decentralization.

It’s apparent that the market will have to endure additional regulation before a spot ETF is permitted. However, as new regulatory measures emerge every day, it may be sooner rather than later.

The SEC’s argument to deny spot Bitcoin ETFs is weakened by the decision, according to Grayscale Investments CEO Michael Sonnenshein, who added that the agency previously cited differences between the ’40 Act and ’33 Act as a reason for denial. The Grayscale Bitcoin Investment Trust (GBTC) is seeking to become an ETF, and the agency will rule on the application in July.

The Securities and Exchange Commission is ramping up its battle against cryptocurrency fraud by recruiting more than a dozen new staff to combat internet crime. On Tuesday, the Securities and Exchange Commission announced that it had added 20 jobs to its Cyber Unit, which the government formed within the SEC’s enforcement division in 2017. The expansion of the Cyber Unit will cause it to almost quadruple in size, giving it a new name: the Crypto Assets and Cyber Unit.

The agency will also be keeping an eye on non-fungible tokens, decentralized finance platforms, and stablecoins, in addition to cryptocurrency exchanges and coin offerings. The SEC said the hiring schedule would include jobs for fraud specialists, trial and enforcement attorneys, and supervisors.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. A digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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