Home Cryptocurrency US SEC said to shy away from levered and inverse Bitcoin futures ETFs |

US SEC said to shy away from levered and inverse Bitcoin futures ETFs |

by Gordon James

The United States Securities and Exchange Commission (SEC) has rejected two Bitcoin-related ETFs, citing the potential for market manipulation. The decision comes amid a growing number of firms looking to enter the cryptocurrency futures market with new products.

The “bitcoin futures price” is the price at which a person can buy or sell bitcoin in the future. The US Securities and Exchange Commission (SEC) said to shy away from levered and inverse Bitcoin ETFs.

The US Securities and Exchange Commission (SEC) is reportedly shy away from allowing levered and inverse Bitcoin futures ETFs. The SEC initiated a halt on the bevy of proposed blockchain-based ETFs after many raised concerns over these products, which can introduce large price swings to investors.The US Securities and Exchange Commission (SEC) has said it will not approve a pair of Bitcoin-based ETFs. The decision comes after the SEC rejected an application for a bitcoin futures product from Bitwise Asset Management on June 19th, 2018.The U.S Securities and Exchange Commission (SEC) has decided against allowing the proposed Bitcoin futures ETFs to raise capital, after deeming them “complicated.” The decision is generally seen as a pro-crypto move by industry observers.The “bitcoin etf approval 2021” is a news article that states the US SEC said to shy away from levered and inverse Bitcoin futures ETFs. This article also includes information about the issue with the ETFs and how it affects investors.

According to a recent report by the Wall Street Journal, the US Securities and Exchange Commission (SEC) told at least one asset manager to put plans for a leveraged Bitcoin (BTC) exchange-traded fund (ETF) on hold.

According to the source, the regulator has indicated that it intends to restrict new Bitcoin-related investment products to those that give unleveraged exposure to Bitcoin futures contracts, such as the ProShares Bitcoin Strategy ETF.

Valkyrie Investments is putting its leveraged product on hold. 

Valkyrie Investments filed for a leveraged Bitcoin futures ETF last Friday, after launching its own futures-based Bitcoin ETF last Friday. The leveraged Bitcoin futures ETF sought to amplify the daily returns of a portfolio of Bitcoin derivatives, including futures contracts and options, by using 1.25 times leverage or borrowed money, according to the report. 

The fund management was told by the SEC to retract its plan, according to an unidentified source in the Wall Street Journal.

The SEC has 75 days to react to ETF proposals before they take effect, however the agency may suggest that fund managers withdraw their submissions as a courtesy.

After then, the issuers must decide whether or not to withdraw their proposal.

The filing was still in force as of Thursday.

What about a Bitcoin ETF that is the opposite of Bitcoin?

Another issuer, Direxion, submitted intentions for an inverse Bitcoin ETF only hours after Valkyrie Investments filed for a leveraged Bitcoin futures ETF.

Bitcoin Strategy by Direxion Investors might wager against ProShares ETF’s Bitcoin futures contracts using a Bear ETF.

Direxion has filed for a -1x Bitcoin Futures ETF, which will strive to be short front month bitcoin futures, essentially the $XIV of $BITO. This announcement came only hours after the first leveraged bitcoin ETF was registered. pic.twitter.com/bN2m7pIZw5

October 26, 2021 — Eric Balchunas (@EricBalchunas)

The SEC is likely to put a stop to inverse Bitcoin ETFs as well, according to Eric Balchunas, Senior ETF Analyst for Bloomberg.

The SEC seems to be against the leveraged (and possibly inverse) Bitcoin futures ETFs. It can’t hurt to give it a go. via Dow Jones pic.twitter.com/MspMRf3hL9 Had they gone through possible billion-dollar trading vehicles in a few years

October 27, 2021 — Eric Balchunas (@EricBalchunas)

The agency’s approval of a ProShares Bitcoin Strategy ETF, the first Bitcoin futures-based fund in the United States, was hailed as a major step forward for cryptocurrencies.

Last Monday, the fund started trading under the ticker BITO, pushing the price of Bitcoin to a new all-time high (ALH).

According to CoinMarketCap, the price of Bitcoin hit $66,9300 on October 20 after the successful ETF launch.

In a statement on complex exchange-traded products released earlier this month, SEC Chairman Gary Gensler said leveraged ETFs “can pose risks even to sophisticated investors, and can potentially create system-wide risks by operating in unexpected ways when markets experience volatility or stress conditions.”

Meanwhile, the number of ETF registrations continues to rise.

That’s a good point. There are still more than 40 bitcoin ETFs in the queue. By Thanksgiving, I’ll most likely be 50. https://t.co/Lo11gFhEy3

October 28, 2021 — Eric Balchunas (@EricBalchunas)

“This week, there were four new futures filings. Additionally, Bitwise and Grayscale have re-started their preparations for a Spot Bitcoin ETF,” Balchunas said on Twitter. 

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US SEC said to shy away from levered and inverse Bitcoin futures ETFs |

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