Valkyrie pulls back on Ether futures merge with Bitcoin ETF
Valkyrie Funds LLC will suspend the purchase of Ether (ETH) futures contracts for its Valkyrie Bitcoin and Ether Strategy ETF (BTF.O). Additionally, the firm will unwind any positions in Ethereum that it has already acquired.
The move comes barely 24 hours after the asset manager said it secured approval to convert its existing bitcoin futures exchange traded fund (ETF) to a two-for-one investment vehicle. Valkyrie was the first firm to do so among several pending applications with the US securities regulator.
This approval was granted after Valkyrie updated its prospectus and risk disclosures regarding Ethereum futures. The company said yesterday it expects the ETF’s conversion to become effective on October 3, 2023, or earlier depending on the SEC’s registration statement.
“The Fund will not purchase ether futures contracts until the effectiveness of an amendment to the Fund’s registration statement contemplating the addition of ether futures contracts to the principal investment strategy of the Fund,” Valkyrie said in a filing with the Securities and Exchange Commission. “Until such time, the Fund will unwind any existing positions in ether futures contracts.”
Interestingly, the SEC had not yet published a proposed rule change to allow the listing of a new Ethereum (ETH) futures ETF on the Nasdaq Stock Exchange. However, they did release an order related to “additional analysis” regarding the listing of the Valkyrie Bitcoin Fund, which is a spot Bitcoin ETF.
Valkyrie also submitted an S-1 application form with the US Securities and Exchange Commission (SEC) for a Bitcoin spot exchange-traded fund. The company aims to have its fund listed on the Nasdaq exchange using the ticker symbol BRRR.
The main objective of the Valkyrie Bitcoin Fund, as outlined in the application, is to offer investors a convenient and cost-effective avenue for investing in Bitcoin. The fund’s investment strategy revolves around tracking the performance of the value of Bitcoin, specifically referencing the CME CF Bitcoin Reference Rate – New York Variant (the “Index”).
Notably, Valkyrie has a track record in Bitcoin-related ETFs. It introduced the Valkyrie Bitcoin Strategy ETF (BTF), the second BTC futures ETF in the US, in October 2021. In December of the same year, it launched the Valkyrie Balance Sheet Opportunities (VBB) fund, which was later liquidated in October 2022.
Valkyrie also manages the Valkyrie Bitcoin Miners ETF (WGMI), a fund that tracks the securities of companies involved in Bitcoin mining operations. The fund invests at least 80% of its net assets in securities of firms that derive a minimum of 50% of their profit from bitcoin mining. This includes mining farms and companies producing specialized chips, hardware and software or other services to companies engaged in bitcoin mining.
Valkyrie’s mining fund is actively managed, but doesn’t invest directly in bitcoin or companies with BTC on their corporate balance sheets.