2 More Issuers Plan Inverse Bitcoin Futures ETFs

ProShares filed for an inverse bitcoin futures ETF with the Securities and Exchange Commission earlier this month, and since that document landed, two more issuers—Direxion and AXS—have followed suit.  

There are some variations in the filings, however. The ProShares fund will provide -1x exposure to an index that is only named as the “Unaffiliated CME Bitcoin Futures Contract Index” in the initial prospectus.  

Meanwhile, the Direxion fund is actively managed, with its prospectus noting that it will “seek capital appreciation” by managing short exposure to bitcoin futures, and the AXS fund will simply look to provide the inverse of the daily performance of the Bitcoin Reference Rate, according to their prospectuses.  

Unlikely Approval? 

The filings come at a time when the Financial Industry Regulatory Authority is soliciting comments on “complex” financial products, including certain ETFs—especially those that rely on derivatives—and whether there should be barriers to customers easily accessing them. The SEC is also conducting its own review of geared ETFs.  

On top of that, the SEC has essentially rejected previous efforts by Direxion and Valkyrie to launch inverse and lightly leveraged (1.25x) bitcoin futures ETFs via filings made in late October. The applications were withdrawn in a matter of days after protests from the regulatory agency.  

Interestingly, the Direxion filing for the Direxion Bitcoin Strategy Bear ETF is largely similar to the prospectus filed in October with regard to the fund’s “Principal Investment Strategy,” with the most obvious differences being in how the document explains the proposed fund’s associated risks.  

The new filings did not include expense ratios, but the AXS filing indicated that the ticker for its fund, the AXS Short Bitcoin Strategy ETF, would be SBCO. 

Contact Heather Bell at [email protected]