Valkyrie files new S-1, adopts cash-only approach for spot Bitcoin ETF

In an update on X, Bloomberg Intelligence analyst James Seyffart shares that Valkyrie Funds has filed a new S-1 at 6:01 a.m. today.

This move follows the lead of Bitwise and Invesco, emphasizing cash-only creations and redemptions.

Looking ahead

Like Invesco, the filing expresses a desire to transition to in-kind transactions when regulations permit.

Update: @ValkyrieFunds submitted a new s-1 at 6:01 AM this morning. They are joining Bitwise and Invesco by stating that creations and redemptions will only occur in cash. Like Invesco, this filing specifically says they want to use in-kind in future if/when allowed. https://t.co/51NSmjxWAK pic.twitter.com/ARpGEHkAlL

— James Seyffart (@JSeyff) December 14, 2023

In response to a post from North Rock Digital, which raised concerns about the cash-only approach for ETF creations and redemptions, Seyffart clarified that the SEC’s stance could impact the tax efficiency of spot ETFs.

Acknowledging the surge in inquiries, Seyffart emphasized the less tax-efficient nature of potential capital gains distributions, a characteristic shared with mutual funds operating on a cash-create and redeem model.

Despite differing opinions on Twitter, Seyffart conveyed that while not meaningless, the impact might not be as detrimental as others in the community have asserted.

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Busy for the holidays

As the holiday season approaches, the SEC remains actively engaged, with four different issuers, including BlackRock, holding meetings in recent days to discuss their Bitcoin ETF filings.

BlackRock has met with the SEC for the third time, according to a Dec. 12 report, while Grayscale, Franklin, and Fidelity held meetings with the regulatory entity a week earlier.

Read more: Fidelity may be considering a bitcoin spot ETF

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