Valkyrie Exec Sees Spot Bitcoin ETF Approval This Month

BTF issuer’s CIO McClurg says November approval means February fund launch.

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The Securities and Exchange Commission may approve the much-anticipated spot bitcoin ETF as soon as this month, Valkyrie’s Steven McClurg said, as firms push forward to create the investment vehicle expected to pull in billions of investment dollars. 

The chief investment officer for Valkyrie, which runs two ETFs managing $51.1 million, said he thinks that firms have addressed issues of market manipulation and pricing that have caused the SEC to deny previous applications. Those issues have largely been settled through the years and won’t be the basis for ongoing amendments filed with the agency, he said in an interview with etf.com.  

Bitcoin prices have doubled over the past year, reaching their highest since May, 2022, as investors bet on approval of the spot bitcoin ETF. Firms including BlackRock Inc., Fidelity Investments, ARK Invest, Grayscale Investments and more are among those that have pushed for years to issue ETFs that hold bitcoin, rather than the bitcoin futures currently permitted. 

Valkyrie Expecting Rule Changes at Month's End

McClurg said he expects the SEC will send firms another round of comments in the next few weeks, followed by potential approval of firms’ 19b-4 rule changes at month's end. The firm this week amended its own spot bitcoin ETF application.  

“A late November approval likely means a February launch,” McClurg said in an interview, arguing that the agency could wait until the new year to ask firms to put final touches on S-1 filings. “Before anything else happens, we get a second round of comments, and I believe we’ll probably get those comments in the next one to three weeks.”  

If the SEC is satisfied with responses to those comments, then they will likely approve the 19b-4 forms, which are rule changes to exchanges to permit the funds, at the end of November. McClurg said he thinks the SEC could approve the S-1 filings in the early new year. 

SEC Chairman Gary Gensler has said the agency is reviewing eight-to-10 spot bitcoin applications.  

The rule changes (19b-4) and registration statement filings could be approved at the same time, or one kind of filing could be approved before the other. 

The focus of the SEC comment letters to firms has been asking for more explanation on various risk disclosures and inquiring about how the firms will use their respective indexes and calculate NAV, according to multiple people familiar with the matter. The most recent amended filings have included environmental risk disclosures, further explanation about pricing sources and underlying benchmarks, and details about custodial arrangements. BlackRock’s and VanEck’s filings have added information about how the funds will be seeded.  

Despite surging optimism that the so-called spotcoin will be approved, others noted that it is unclear whether the SEC considers issues of market manipulation and custody put to bed.  

“I would say that market manipulation is still a potential stumbling block even though we have the GBTC lawsuit and you’re seeing a lot of progress,” Matt Hougan, CIO of Bitwise Asset Management. “Custody isn’t [necessarily] a wrap… so there’s still a lot of work to do,” he added.  

Bitcoin Market Size 

McClurg said he expected about $10 billion in demand for these products in the first four to eight weeks after launch. Hougan put his expectations in different terms, speculating that the funds could see “somewhere north of $50 billion in inflows” over the first five years, but with inflows weighted towards the back years.  

Hougan emphasized he was “hopeful” that the firm is on a path to see a spot bitcoin ETF launch in upcoming months. “It feels like we’re in the red zone, to use a football analogy,” he said. “The questions is: can we get across the line?” 

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.