US Securities and Exchange Commission Reportedly Rejects Leveraged Bitcoin ETF

Thursday, 28/10/2021 | 11:21 GMT by Bilal Jafar
  • The authority is against leveraged BTC exchange-traded funds.
US Securities and Exchange Commission Reportedly Rejects Leveraged Bitcoin ETF
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According to some recent reports, the US Securities and Exchange Commission (SEC) has rejected at least one of the two recent Bitcoin exchange-traded fund (ETF) applications because of the risky nature of the leveraged financial products.

The report published by the Wall Street Journal mentioned that the regulator is planning to allow only unleveraged products related to Bitcoin, at present. The latest announcement from the SEC came nearly two days after Valkyrie filed for a leveraged Bitcoin futures ETF and Direxion applied for an inverse fund for bears.

Today, Eric Balchunas, Bloomberg’s senior ETF analyst, highlighted the recent rejection reports and said that it would be interesting to see if the US Securities and Exchange Commission let the inverse fund go through.

“Looks like the SEC [is] not having it with the leveraged (and likely inverse) Bitcoin futures ETFs. Can’t hurt to try though. Had they gone through, likely billion-dollar trading vehicles in a few years. Would be interesting if they let the Inverse one go through. That one was limited to futures. Valkyrie’s was a bit of a departure from that language,” Balchunas Tweeted.

Bitcoin ETF Optimism

Bitcoin and most of the other cryptocurrency assets touched all-time highs after the latest bullish crypto momentum driven by the SEC’s approval of a Bitcoin ETF in the US. However, the latest reports suggest that the SEC is against leveraged crypto trading products.

“The Securities and Exchange Commission asked at least one asset manager not to proceed with plans for a leveraged bitcoin exchange-traded fund, according to a person familiar with the matter. The SEC indicated it wants to limit new bitcoin-related products to those that provide unleveraged exposure to bitcoin futures contracts, such as the ETF, which was launched last week, the person said,” the Wall Street Journal highlighted in the report.

The SEC has kept a tough stance on BTC and other digital currencies in the last few months. In an interview with CNBC, the SEC’s Chairman, Gary Gensler called Bitcoin a speculative asset.

According to some recent reports, the US Securities and Exchange Commission (SEC) has rejected at least one of the two recent Bitcoin exchange-traded fund (ETF) applications because of the risky nature of the leveraged financial products.

The report published by the Wall Street Journal mentioned that the regulator is planning to allow only unleveraged products related to Bitcoin, at present. The latest announcement from the SEC came nearly two days after Valkyrie filed for a leveraged Bitcoin futures ETF and Direxion applied for an inverse fund for bears.

Today, Eric Balchunas, Bloomberg’s senior ETF analyst, highlighted the recent rejection reports and said that it would be interesting to see if the US Securities and Exchange Commission let the inverse fund go through.

“Looks like the SEC [is] not having it with the leveraged (and likely inverse) Bitcoin futures ETFs. Can’t hurt to try though. Had they gone through, likely billion-dollar trading vehicles in a few years. Would be interesting if they let the Inverse one go through. That one was limited to futures. Valkyrie’s was a bit of a departure from that language,” Balchunas Tweeted.

Bitcoin ETF Optimism

Bitcoin and most of the other cryptocurrency assets touched all-time highs after the latest bullish crypto momentum driven by the SEC’s approval of a Bitcoin ETF in the US. However, the latest reports suggest that the SEC is against leveraged crypto trading products.

“The Securities and Exchange Commission asked at least one asset manager not to proceed with plans for a leveraged bitcoin exchange-traded fund, according to a person familiar with the matter. The SEC indicated it wants to limit new bitcoin-related products to those that provide unleveraged exposure to bitcoin futures contracts, such as the ETF, which was launched last week, the person said,” the Wall Street Journal highlighted in the report.

The SEC has kept a tough stance on BTC and other digital currencies in the last few months. In an interview with CNBC, the SEC’s Chairman, Gary Gensler called Bitcoin a speculative asset.

About the Author: Bilal Jafar
Bilal Jafar
  • 2440 Articles
  • 84 Followers
About the Author: Bilal Jafar
Bilal Jafar holds an MBA in Finance. In a professional career of more than 8 years, Jafar covered the evolution of FX, Cryptocurrencies, and Fintech. He started his career as a financial markets analyst and worked in different positions in the global media sector. Jafar writes about diverse topics within FX, Crypto, and the financial technology market.
  • 2440 Articles
  • 84 Followers

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