2021-10-28 13:23:08

An exchange-traded fund backed by physical bitcoin is still far off, says the man behind the second-ever bitcoin futures ETF.

The Valkyrie Bitcoin Strategy ETF (BTF), an actively managed product that holds a mix of front-month bitcoin futures contracts, Treasurys, corporate bonds and cash, followed in ProShares’ footsteps last week. Valkyrie’s ETF launch attracted $10 million in the first 5 minutes of trading.

Unfortunately for bitcoin ETF hopefuls, these debuts don’t necessarily bring the Securities and Exchange Commission any closer to approving ETFs based on spot bitcoin, Valkyrie Funds chief investment officer Steven McClurg told CNBC’s “ETF Edge” on Monday.

“I don’t think we see a bitcoin spot ETF until at least middle of next year,” McClurg said. “The staff is still trying to get their heads around what exactly is going on with these exchanges. They’re trying to put a little bit more regulatory structure around them before they … move forward with this.”

More than a dozen firms have filed for ETFs tracking bitcoin itself, but none have received SEC approval due to regulatory concerns including issues around custody. However, the SEC’s first hard deadline is approaching: It must approve or deny VanEck’s proposal for a physical bitcoin ETF by Nov. 14.

In the meantime, some are jumping on the futures bandwagon, with VanEck slated to be next to market.

Though BTF didn’t make as big of a splash as ProShares’ billion-dollar debut, Valkyrie’s strategy could pay off in the long run, McClurg said.

“We’re OK with having a fraction of what ProShares has. ProShares is a goliath. We’re a brand-new issuer, McClurg said. “We also right now care more about the spread.”

“We’ve been trading within a penny out there,” he said. “We also care about tracking error. Those are things that are really going to matter in the long run and if we can keep those things really tight in the first few weeks, then I think that we’re really going to be the long-term play here.”

BTF gained more than 4% on Thursday. The ProShares Bitcoin Strategy ETF (BITO) climbed nearly 4%.

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