Invesco explains rejection of Bitcoin ETF over regulatory constraints

One of the largest American investment firms, Invesco, explained the decision not to launch an exchange-traded fund (ETF) based on Bitcoin futures with regulatory constraints that would make the instrument too expensive for investors. The Financial Times reports.

«We believed that the Chicago Mercantile Exchange futures would be an extremely effective component of the portfolio. But we never thought they would be effective if they made up 100% of the product», said Anna Palya, head of ETF and index strategies at Invesco.

The company believes that the basket should include the cryptocurrency itself, futures, swaps, and private funds to guard investors from liquidity drain.

«We ran a number of simulations in which the cost of rolling futures amounted to 60–80 basis points per month. We are talking about serious numbers, 5–10% on an annual basis», added Palya.

Invesco noted that they filed an application to launch a Bitcoin ETF within a day of SEC Chair Gary Gensler announcing the need to comply with the 1940 Investment Company Act.

On October 15, the SEC quietly approved the ProShares Bitcoin futures ETF application. Launched on October 19, the fund posted the second-most active debut.

In October, the SEC approved bitcoin futures ETFs from VanEck and Valkyrie Investments.

In November, the crypto-lending platform BlockFi filed an application to launch a spot Bitcoin ETF based on the first cryptocurrency, in accordance with the Securities Act of 1933. Earlier, the SEC delayed a decision on the Valkyrie Investments ETF.

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