December 5, 2022

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A crypto-focused investment firm in the United States, Valkyrie Digital Assets, has made another attempt to issue a bitcoin exchange-traded fund (ETF) via a modified prospectus filing. Named as the Valkyrie Innovative Balance Sheet ETF, the NA-1 filing would allow investors to purchase stocks from companies that have made investments in Bitcoin. They submitted the relevant documents on Friday to the US Securities and Exchange Commission (SEC). It was highlighted in the document that the company would allow investors to invest in securities of companies that have some kind of exposure to Bitcoin on their balance sheet.

This would include digital wallet providers, Bitcoin trading platforms, custodians, companies that create technology for promoting Bitcoin adoption and companies that assist in crypto payments via BTC. Moreover, the ETF will also invest approximately 25% of its assets in firms that fall in the information sector. One of the hottest topics that are being talked about in the financial market these days are ETFs. They provide effective metrics for predicting the price movements in the market. Investors are attracted to ETFs also because they are not time-restricted, which means they can be traded at any time during the day, as opposed to traditional common stocks.

A similar filing was made in the past week by another investment firm JP Morgan Chase with the SEC and they had described their own offering as a ‘crypto exposure basket’. JP Morgan highlighted that investors would be able to purchase structured notes whose value would be related to 11 stocks of companies that hold Bitcoin or any other cryptocurrency. According to the US investment manager, almost 68% of their initiative would comprise of payment facilitator Square, intelligence firm MicroStrategy, gaming chipmaker NVIDIA and crypto mining firm RIOT blockchain. The company also added that they didn’t plan on electric car maker Tesla Inc., even though they also have bitcoin on their balance sheet. 

This was primarily due to the high stock price of the company. According to an analyst for JP Morgan, the stocks of Tesla are overvalued and this can impact markets adversely. The analyst was not in favor of investors stocking up on Tesla’s shares. Valkyrie has not toed the same path as JP Morgan and has not disclosed the names of the companies that will be part of its ETF offering, if it gets approval. There has been an increasing number of Bitcoin ETF filings with the SEC. No filing has been approved by the regulatory agency for an exchange-traded fund up till now. 

The regulator has been called out by critics for being indifferent to the surge occurring in the crypto industry. They have not addressed recent filings by VanEck, NYDIG and now Valkyrie. The SEC remains steadfast in claiming that a Bitcoin ETF could have a negative impact on the market because it has the potential of manipulating the market easily. The SEC has been asked by industry experts to provide regulatory clarity to the entire crypto ecosystem because their silence could result in other countries moving ahead. 

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