Nasdaq Announces Application for Valkyrie Bitcoin Futures ETF

Valkyrie Investments is the (procedural) front-runner in the race to establish a bitcoin futures exchange-traded fund (ETF) for US investors.

The existence of the previously unknown ETF proposal, Valkyrie's second that attempts to package bitcoin futures into an ETF, was revealed on Tuesday by a surprise regulatory filing by Nasdaq to "list and trade shares" of the Valkyrie XBTO Bitcoin Futures Fund.

In reality, it was Valkyrie's first; the company claimed it had submitted a secret patent application for the device months earlier.

The fact that it now has a partner exchange means the Securities and Exchange Commission may begin considering the product, putting Valkyrie in a better position than any other hopeful issuer to have a bitcoin futures ETF approved.

The SEC is also examining a few applications for bitcoin ETFs that are focused on the underlying asset rather than any futures markets.

It's unclear if Valkyrie's product will withstand regulatory scrutiny. According to industry experts, Gary Gensler's SEC is more likely to approve a bitcoin futures ETF proposal than the dozen or so ETF applications that would trade the commodity itself.

Valkyrie CIO Steve McClurg stated, "I believe we're basically the only ones out there who have a pure-play futures product." For futures trading, he stated the company has a partnership with XBTO.

The newly disclosed Valkyrie futures ETF, according to McClurg, is a so-called "33 Act fund," alluding to the Securities Act of 1933, that may only invest in bitcoin futures contracts. Many of the latest bitcoin futures ETF applications would be “40 Act” products, meaning they would have to invest in fixed income or treasuries in part, he added.

All of this regulatory jargon may make the Valkyrie/XBTO fund's journey more difficult. Gensler has shown interest in "40 Act" funds, which he claims provide greater investor protection than "33 Act" funds.

Gensler's recent remarks sparked a flurry of custom bitcoin futures ETF registrations, including one from Valkyrie, which filed a 40 Act fund with the SEC earlier this month.

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