Volatility Shares “2x Bitcoin Strategy ETF” premier could shine light on SEC’s erratic decision-making

Volatility Shares is expected to premier a pioneer product to give leveraged exposure to CME-traded futures. This comes barely two weeks after the recent move by institutional finance to apply for spot Bitcoin Exchange-traded fund (ETF) approvals by the Securities and Exchange Commission (SEC).

Also Read: China crypto narrative is alive as HSBC supports trade in Bitcoin and Ethereum Futures ETF in Hong Kong

Volatility Shares ETF may roll out this week

Volatility Shares could roll out its ETF today [Tuesday, June 27] or sometime this week after the court postponed it by eight days. The firm’s 2x Bitcoin Strategy ETF (BITX) focuses on investment outcomes corresponding to twice the excess return of the S&P CME Bitcoin Futures Daily Roll Index.

The product delivers seamless and liquid access to leveraged BTC exposure to cryptocurrency customers in the US via a traditional brokerage account. Traditional, in this case, means crypto exchange accounts becoming unnecessary, which would be revolutionary considering the current regulatory heat in the digital asset space.

Nevertheless, there is still skepticism about spot BTC going live, with the likes of financial futurist at data firm VettaFi, Dave Nadig, saying it is highly unlikely. In his words:

If, in fact, they do, I suspect they’ll be short-lived and only used in the narrowest of retail use cases.

Noteworthy, the main reason behind the SEC refusing to allow spot bitcoin ETF is because spot exchanges, unlike derivatives, have proper supervision. This means that companies like BlackRock being able to meet the regulatory demands and therefore proving satisfactory oversight over spot exchanges increases the odds of the firm’s spot ETF application going through. Needless to say, this depends on if and when they meet that threshold. 

Volatility Shares application going through could mean SEC loosening grip on BTC

Volatility Shares is not the first spot BTC applicant, coming after BlackRock, WisdomTree, Invesco, and others. The institutional players represent the latest series of ETF bids expected to hold the flagship crypto directly.

While the financial regulator is yet to allow spot BTC ETFs into the market, James Seyffart, an analyst with Bloomberg Intelligence, thinks the regulator considering a clear pathway for leveraged BTC futures ETF suggests a loosening grip on BTC products.

On the other hand, CoinShares’ head of research, James Butterfill, seems to think the CME’s control over BTC futures contracts is the main reason behind the SEC approving Volatility Share’s ETF application.

Nevertheless, some institutional investors have already pulled back their applications. Specifically,  Direxion and ProShares withdrew their 2X Bitcoin futures applications on June 1 and 7 respectively, with Seyffart attributing the move to fear of coming second place or being turned down entirely. 

Meanwhile, Cathie Wood’s Ark Invest Management seems to think it will be the first recipient of the SEC spot BTC ETF approval. The stance challenges the popular belief that BlackRock is better placed for the green light.