Valkyrie ETF to ‘unwind’ ETH futures position — at least for now

A day after Valkyrie Investments became the first to offer ether futures exposure in an ETF, the crypto-focused firm is getting rid of those holdings.

At least for now. 

The Valkyrie Bitcoin Strategy ETF (BTF) will not purchase ether futures contracts “until the effectiveness of an amendment to the fund’s registration statement contemplat[es] the addition of ether futures contracts to the principal investment strategy of the fund,” Valkyrie said in a Friday filing. 

“Until such time, the fund will unwind any existing positions in ether futures contracts,” the disclosure adds. 

A Valkyrie spokesperson did not immediately return a request for comment. 

Valkyrie had filed with the US Securities and Exchange Commission in August to change the investment strategy of its bitcoin futures ETF to one that also allows it to invest in ether futures. 

A firm representative told Blockworks Thursday that BTF began adding exposure to ether futures contracts, noting that the new investment strategy was set to become formally effective on Oct. 3. The fund is set to be renamed the Valkyrie Bitcoin and Ether Strategy ETF that day.

Bloomberg Intelligence analyst James Seyffart said in an X post Friday that Valkyrie’s latest filing could indicate that the SEC asked the firm to reverse its ETH futures positions until the official effective date as competitors also prepare ETFs with such exposures.     

“The SEC does not want to be a kingmaker via their policies and will do whatever they can to prevent someone from launching on their own like BITO in 2021,” Seyffart added in a separate X post. 

The SEC did not immediately return a request for comment.

Seyffart is referring to the ProShares Bitcoin Strategy ETF (BITO) — the first bitcoin futures fund to launch in the US, which hit the market in October 2021. Though similar products by Valkyrie and VanEck launched in the following days, BITO gained the lion’s share of assets into these types of funds, quickly amassing $1 billion in assets under management. 

VanEck, ProShares and Bitwise have submitted updated prospectuses over the last 24 hours for their own ETFs that invest in ether futures contracts — with expense ratios ranging from 66 basis points to 95 basis points. Bloomberg Intelligence analysts said they expect these funds could go live as soon as Monday. 

VanEck posted a video on its X page Thursday — in tandem with a press release — teasing the “upcoming launch” of the VanEck Ethereum Strategy ETF. The company declined to comment further. 

Volatility Shares, which kicked off the latest wave of ether futures ETF filings in July, said last month it planned to launch its Ether Strategy ETF (ETHU) on Oct. 12. Its website continues to show that date. A representative for the firm did not immediately comment.  

Spokespeople for Bitwise and ProShares declined to comment.


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Source: https://blockworks.co/news/valkyrie-etf-ether-futures-unwind