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Volatility Shares Trust Seeks SEC Approval for Leveraged Bitcoin Futures ETF

Fredrik Vold
Last updated: | 2 min read
Source: iStock/Photographer, Filmmaker, Designer

A new exchange-traded fund (ETF) backed by Bitcoin (BTC) futures and with 2x leverage is set to go live on Tuesday after the Securities and Exchange Commission (SEC) appears to have given the greenlight.

The ETF, sponsored by Volatility Shares Trust, will be listed on the CBOE BZX Exchange under the ticker BITX, according to an SEC filing.

The filing further explained that the fund “seeks investment results that correspond to two times (2x) the return of the Chicago Mercantile Exchange (CME) Bitcoin Futures Daily Roll Index.”

The ETF’s management fee will be 1.85%, well above the 0.95% that BITO, the first Bitcoin futures ETF in the US, charges.

News that the ETF is set to go live was shared on Twitter by Bloomberg’s senior ETF analyst Eric Balchunas, who said he was originally “doubtful it would happen,” before adding that it now “looks like it’s official.”

In the tweet, Balchunas also speculated that the apparent approval by the regulator could be an “early sign of SEC lightening up,” perhaps to the idea of other types of Bitcoin ETFs down the road.

It is hoped in the Bitcoin community that one of the new types of Bitcoin ETFs the SEC could be warming up to is a spot Bitcoin ETF, like the one BlackRock applied to list on June 15.

Following BlackRock, other asset managers such as Valkyrie Funds, WisdomTree, and Invesco have all applied to list similar spot-based ETFs backed by Bitcoin.

Spot Bitcoin ETFs differ from the Bitcoin ETFs that are currently traded in the US, which are all backed by Bitcoin futures contracts instead of actual Bitcoins.

It is widely believed that an investment product backed by the real thing would generate more physical demand for Bitcoin, which in turn could drive the price up to new highs.

Commenting under Balchunas’ tweet, several Twitter users pointed out how little sense it makes from an investor protection standpoint that a leveraged futures-based ETF is approved before a simple spot-based ETF.

“Yes 2x bitcoin futures really protects investors,” one Twitter user ironically wrote, while another called the situation “ridiculous,” saying:

“When we look back on the bitcoin ETF saga in 5 or 10yrs, this will be one of the most ridiculous aspects… A 2x leveraged futures product launching before a straightforward spot ETF. Wild.”