December 6, 2022

Invesco Blames Its Bitcoin Futures ETF Withdrawal on SEC’s Rules

2 min read

Anna Paglia– a top executive at Invesco– described that her business withdrew its Bitcoin Futures ETF application because of the SEC’s guidelines.

Individually, Bitwise Asset Management also pulled off its declare a futures-based ETF, mentioning it is not an appropriate decision for the long-lasting.

Invesco Gave Its Explanation

Invesco– an American investment firm with over $1.5 trillion in properties under management– submitted with the Securities and Exchange Commission to introduce two cryptocurrency-based ETFs in August this year.

A few months later on, the business withdrew its applications just hours prior to the Bitcoin Futures ETF was expected to go live and failed to justify its choice.

In a recent interview, though, Anna Paglia– Global Head of ETFs and Indexed Strategies at Invesco– explained that such a product would have been too “costly” for financiers. She asserted that these rules by the SEC would develop a Bitcoin Futures ETF contango – – significance that the futures agreements’ rates would be higher than area’s – – would hurt investors.

The Commission allows ETFs with 100% direct exposure to bitcoin futures contracts only, which is not what Invesco aimed for:

“We never thought they would be effective when they would be 100 percent of the item.”

Rather, the executive exposed that the ideal portfolio of her business was a mix of futures contracts, physical bitcoin, swaps, ETFs, and personal funds purchasing the bitcoin industry. Therefore, investors would have optimal defense in case of a liquidity crunch, she believed.

“Our failure to dot that actually drove our decision. The more we investigated the marketplace and the area, the more we pertained to recognize there are better methods of supplying this specific exposure instead of going ahead and giving investors something that was not aligned with what they anticipate from Invesco.”

Anna Paglia
Anna Paglia, Source ESG Matt Hougan– Chief Investment Officer of Bitwise Asset Management– offered a comparable reason why his company decided to retreat from introducing a futures-based BTC ETF. He believes such a product would be too costly for investors, and it would not be suitable for the long-lasting:

“If you are making a short-term bet [they] can be fine. For long-lasting investors there can be much better chances out there.”

BITO’s Success

The first Bitcoin Strategy futures-backed ETF saw the light of day on October 19, this year. It was a significant achievement for the cryptocurrency industry considering that such a product did not exist in the USA until then.

BITO created around $1 billion in trading volume on its opening day as more than 24 million shares changed hands, and it ended up being the second-highest traded fund ever.