Invesco abandoned its Bitcoin Strategy ETF because it could not offer a combination of futures swaps and spot bitcoin.

After U.S. asset manager Invesco dropped its bid for a Bitcoin (BTC) exchange-traded futures fund (ETF) in October, it revealed the reasons for its decision.

Anna Paglia, Global Head of ETFs and Indexing Strategies at Invesco, said the main reason the application was rejected was because the US Securities and Exchange Commission only approved Bitcoin ETFs with 100 percent Bitcoin futures. .

The Invesco Bitcoin Strategy ETF perfectly combines futures swaps, physical bitcoin and private equity in the bitcoin industry, Paglia said in an interview with the Financial Times Sunday. Such a composition would help protect investors in the event of a liquidity crunch, she explained, adding:

“We thought CME futures would be a very effective portfolio item. We never thought they would be effective if they were 100% product.”
Paglia said that Invesco realized there were better ways to provide this special information than giving investors something they didn’t need. She also cited concerns about the capacity and liquidity of the futures market.

Invesco originally filed for its Invesco Bitcoin Strategy ETF in early August, planning to invest its holdings in bitcoin futures and exchange-traded products, as well as bitcoin-related private equity funds such as the Grayscale Bitcoin Trust. Paglia said Invesco filed for the ETF within 24 hours of SEC Chairman Gary Gensler suggesting the regulator might be ready to approve bitcoin futures ETFs traded on the Chicago Mercantile Exchange.

“It was easier to say yes and see how things would go than to say no and explain the decision. We had to make this difficult decision and make the decision ourselves. I would do the same again,” said Paglia.

Paglia’s comments come shortly after Bitwise Asset Management became yet another company to drop its Bitcoin ETF application in early November, despite the launch of Bitcoin futures ETFs such as the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF.

Related: SEC rejects VanEck Bitcoin spot ETF as BTC price falls below $63,000

Matt Hogan, chief investment officer of Bitwise, noted that the contango of a bitcoin futures ETF – a situation where the futures price is higher than the spot one – can cost investors dearly.

Hogan added that the company will continue its efforts to launch a spot Bitcoin ETF in the US, as such products have not been launched since Gemini crypto exchange founders Cameron and Tyler Winklevoss first applied for such a product in 2017.

Source: CoinTelegraph