After submitting an application to set up a fund to trade bitcoin (BTC) futures in October, Invesco’s $ 1.6 trillion manager revealed the reasons for the decision.
The main reason for the refusal to apply is that the US Securities and Exchange Commission has only approved a Bitcoin ETF that is 100% dependent on Bitcoin futures, said Anna Paglia, Global Head of ETF and Indexed Strategies at Invesco.
The Invesco Bitcoin Strategy ETF is designed as the perfect blend of bitcoin futures physical swaps and private equity in the bitcoin industry, Paglia said in an interview with the Financial Times on Sunday. This configuration will help protect investors in the event of a liquidity crisis, she said, adding:
“We thought CME futures would be a very effective portfolio component. We never thought they would be effective when they were 100% a product.”
Paglia said that Invesco realized that there are better ways to deliver this special offer than to give investors what they do not need. He also mentioned capacity and liquidity problems in the futures market.
Invesco originally applied for the Invesco Bitcoin Strategy ETF in early August and plans to invest its assets in bitcoin futures and exchange-traded products, as well as private bitcoin-related investment funds such as the Grayscale Bitcoin Trust. Paglia said Invesco applied for ETFs within 24 hours after SEC Chairman Gary Gensler suggested the regulator may be open to approving Chicago-based commodity bitcoin ETFs.
“It was easier to say yes and see how it went than to explain the decision. We had to make this difficult choice and make a decision. I would do the same again, said Paglia.
Paglia’s comments came shortly after Bitwise Asset Management switched to another company to leave its Bitcoin ETF in early November, despite the launch of Bitcoin Futures ETFs such as ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF.
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Matt Hogan, investment manager at Bitwise, noted that Bitcoin ETF futures – a situation where the price of futures contracts is higher than the spot price – can be costly for investors.
Hogan added that the company will continue its efforts to launch a Bitcoin ETF in the US, where no such products have been launched since crypto exchange founders Cameron and Tyler Winklevoss first placed an order for such a product in 2017.