After withdrawing an application for a Bitcoin (BTC) futures exchange-traded fund (ETF) in October, US $ 1.6 trillion asset manager Invesco has revealed the reasons behind its decision.
Anna Paglia, Global Head of ETFs and Indexed Strategies at Invesco, said the main reason for dropping the presentation was that the US Securities and Exchange Commission only approved Bitcoin ETFs with 100% exposure to futures of Bitcoin
Invesco’s Bitcoin Strategy ETF was ideally designed to be a combination of futures swaps, physical Bitcoin, and private funds in the Bitcoin industry, Paglia said in a Sunday interview with the Financial Times. Such a composition would help protect investors in the event of a liquidity crisis, he stated, adding:
“We thought CME futures were going to be a very effective portfolio item. We never thought they would be effective when they would be 100% of the product. “
Paglia said that Invesco realized that there are better ways to provide this particular exposure rather than giving investors something they don’t need. He also cited concerns related to capacity and liquidity in the futures market.
Invesco originally applied for its Bitcoin Strategy ETF in early August, planning to invest its assets in Bitcoin futures and publicly traded products, as well as Bitcoin-linked private investment trusts such as the Grayscale Bitcoin Trust. According to Paglia, Invesco applied for the ETF within 24 hours after SEC Chairman Gary Gensler hinted that the regulator might be open to approving Bitcoin futures ETFs traded on the Chicago Mercantile Exchange.
“It was easier to say ‘yes’ and see how it goes than ‘no’ and explain the decision. We had to make this difficult decision and make the decision. I would do the same again, ”said Paglia.
Paglia’s comments come shortly after Bitwise Asset Management became another company abandoning its Bitcoin ETF application in early November despite the launch of Bitcoin futures ETFs such as the ProShares Bitcoin Strategy ETF and the Bitcoin Strategy. Valkyrie ETF.
Bitwise chief investment officer Matt Hougan noted that Bitcoin futures ETF contango, a situation where the futures price is higher than the spot price, could be costly for investors.
Hougan added that the company will continue its efforts to launch a spot Bitcoin ETF in the US as no such products have been launched since the founders of cryptocurrency exchange Gemini, Cameron and Tyler Winklevoss, first applied for such a product. in 2017.
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