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Monday, December 4, 2023

SEC might not approve Leveraged Bitcoin ETF

After a long wait, Bitcoin ETFs are now also conquering the USA. You can follow developments overseas live in our news ticker.

You can try it. This is probably what Valkyrie and Direxion thought, who each filed a slightly more daring Bitcoin ETF with the United States Securities and Exchange Commission (SEC) last week.

Valkyrie’s application was for a leveraged futures ETF with the ticker symbol BTFX. With this, a 1.25-fold exposure to the Bitcoin reference rate should be offered. It also allegedly contained Bitcoin futures, swaps, options and futures.
The second application came from Direxion and was named Direxion Bitcoin Strategy Bear ETF. According to Bloomberg analyst Eric Balchunas, this was an inverse future Bitcoin ETF product. That would have meant that, unlike ‘traditional’ ETFs, the inclusion and profit or loss would have been made in the base currency. For this product that means; on Bitcoin and not, as usual, on USD.

As Balchunas writes, it now appears that the SEC has so far only been interested in direct futures products and not in more exotic ones. It can therefore be assumed that these are the two products that have now been rejected by the SEC. Direxion’s warning beforehand did nothing to change that. It read: “The value of an investment in your [own] fund could drop significantly to zero without warning. You should be ready to lose all of your investment ”

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