In a recent argument, Donald Verrilli, attorney for Grayscale, argued that leveraged crypto ETFs are “even riskier investment products”. The Volatility Shares 2x Bitcoin Strategy ETF, also known as BITX, became effective last month after avoiding a rejection from the SEC.
Risk of leveraged bitcoin ETFs according to Grayscale lawyer
Lawyers for asset management firm Grayscale have criticized the US Securities and Exchange Commission (SEC) for having allowed first Leveraged bitcoin ETFswhile rejecting previous efforts to create a cash fund.
Grayscale attorney Donald Verrilli argued in a letter to the United States Court of Appeals for the District of Columbia on Monday that the leveraged bitcoin ETF is “an even riskier investment product”.
“The Commission’s approval of a leveraged bitcoin futures-based ETP demonstrates that the Commission continues to arbitrarily treat spot bitcoin ETPs differently from futures-based bitcoin ETPs,” said Donald Verilli.
THE Volatility Shares 2x Bitcoin Strategy ETF, known as BITX, became effective last month after not being rejected by the SEC. The agency allowed the first Bitcoin futures ETF to be traded in 2021.
Grayscale sues SEC over rejected spot bitcoin ETF
Grayscale filed a lawsuit against the SEC last year for allegedly rejected his proposal to convert its flagship fund, GBTC, into a spot bitcoin ETF.
The SEC pointed out that futures products are considered as less manipulablethanks in part to their reliance on prices set by the Chicago Mercantile Exchange (CME), an exchange regulated by the Commodity Futures Trading Commission (CFTC). This regulation builds confidence in the integrity of the prices used for futures contracts.
Although the SEC has not yet approved a spot bitcoin ETFmajor asset managers such as BlackRock and Ark Invest have recently filed fund requests with the agency.
Applications could face obstacles from the SEC, which has often raised concerns about fraud and market manipulation when reviewing previous applications.
The future of bitcoin ETFs continues to generate interest, and upcoming developments will remain the focus of attention for market participants and investors.
Source : The Block