US Securities and Exchange Commission Reportedly Rejects Leveraged Bitcoin ETF

US Securities and Exchange Commission Reportedly Rejects Leveraged Bitcoin ETF

October 28, 2021

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.

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