US regulators will not approve a leveraged Bitcoin ETF, reports say – DiarioBitcoin

Texas could raise funds through NFT and harness 'abundant' energy to mine Bitcoin

US regulators will not approve a leveraged Bitcoin ETF, reports say - DiarioBitcoin By Hannah perez

Neither cash nor leveraged. The SEC appears to be sending an unofficial rejection message to Valkyrie, which this week submitted an application for a leveraged Bitcoin futures ETF.

***

The United States Securities and Exchange Commission (SEC), the nation’s top financial regulator, will not approve any exchange-traded funds (ETFs) of Bitcoin leveraged. This was reported by various news outlets citing a newspaper publication Wall street journal.

Sources familiar with the matter told Wall street journal that The SEC had directed at least one digital asset provider not to go ahead with plans to apply for an ETF of Bitcoin leveraged. Basically, the report suggests that regulators are not ready to approve a crypto fund made up of debt, at least for now.

The term leverage, also called “margin trading“, Refers to financial operations in which borrowed funds are used, that is, where the operator gets into debt, to carry out an operation. It is often used as a strategy to increase investment returns, although it can also increase losses.

SEC says no to leveraged ETFs

According to the report, those close to the matter claimed that the regulatory agency’s goal was to limit investment products related to Bitcoin focusing on those that offer unlevered exposure. The middle Wall street journal he quoted the words of the knowledgeable source:

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 that it wants to limit new bitcoin-related products to those that provide unlevered exposure to bitcoin futures contracts, such as the ETF, which launched last week.

The reports emerge shortly after the company Valkyrie Investments submit an application to the SEC to offer a futures ETF of Bitcoin leveraged. As reported Bloomberg On Tuesday, the firm filed the request this week for a leveraged fund that would offer 1.25x exposure to the digital asset.

See also  Bitmain: we will not send more Bitcoin miners to clients in China

It should be noted that this percentage of leverage is relatively low. In the stock markets it is normal to see leverage of 2x to 5x, while in the futures markets it is common to see leverage of 15x to 25x. In the cryptocurrency space, some trading platforms even offer 100x leverage.

Although the SEC has the authority to request fund managers to withdraw filings Under certain conditions, the proposed ETF of Valkyrie it is still active. The Commission has 75 days to review the application and render a verdict.

First Bitcoin ETFs Receive Approval

The news comes after the approval of the first ETFs of Bitcoin in United States. As reported DailyBitcoin, the futures fund of bitcoins from ProShares began trading under the symbol BITO on the New York Stock Exchange (NYSE) on October 19. The debut of the first ETF of its kind on the US stock market came after SEC approval.

Regulators have also given the green light to two other companies, Valkyrie and VanEck, to launch futures ETFs of Bitcoin. The bottom Bitcoin Strategyfrom Valkyrie, which is not the same as mentioned above, was launched on the Nasdaq stock market on October 22.

The arrival of the first ETFs of Bitcoin the US market caused an explosive rise in the price of the main digital asset. Bitcoin reached an all-time high of USD $ 66,878 on Wednesday of last week, amid news of the launch of the fund of ProShares. The digital currency market has seen a general increase since then.

See also  4% of the US workforce has abandoned their formal job due to cryptocurrencies - DiarioBitcoin

The SEC had rejected all cryptocurrency ETFs in the past, and has generally held a rigid stance around approving these types of investment products. Despite the historic milestone for the cryptocurrency industry, the community is still awaiting approval of an ETF of Bitcoin cashAlthough SEC Chairman Gary Gensler has hinted that the regulator is not yet ready to greenlight such a fund, citing concerns about the risks associated with market volatility.

The US body has yet to review more than thirty applications for ETFs linked to Bitcoin and digital currencies.


Recommended reading


Sources: CoinDesk, Finbold, file

Hannah Estefanía Pérez’s version / DailyBitcoin

Image from Unsplash

Leave a Comment

Your email address will not be published. Required fields are marked *