SEC said to shoot down plan for leveraged bitcoin ETF
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 ProShares Bitcoin Strategy ETF
BITO,
which was launched last week, the person said.
The decision is the latest challenge to the asset-management industry’s efforts to cash in on the investor interest in cryptocurrencies by launching new products. Regulators have been curtailing product launches in a bid to limit investor exposure to offerings that they deem vulnerable to fraud, manipulation and other risks.
Valkyrie Investments on Tuesday proposed to launch a fund that 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. Valkyrie was asked to pull its proposal, added the person familiar with the discussions. As of Wednesday afternoon, Valkyrie’s filing remained effective.
Later the same day, Direxion filed plans for an ETF that aimed to allow investors to effectively bet against the bitcoin futures contracts used by the ProShares ETF. Direxion declined to comment.
An expanded version of this report appears on WSJ.com.
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