ETF Edge

Pure-play bitcoin ETF unlikely to win approval until 2022 or later, two market analysts say

Bitcoin ETF outlook for 2022 after another SEC rejection
Bitcoin ETF outlook for 2022 after another SEC rejection

Bitcoin ETF hopefuls beware.

Exchange-traded funds backed by the cryptocurrency itself are likely a long way off after the Securities and Exchange Commission's latest rejection, two market analysts told CNBC's "ETF Edge" on Monday.

The SEC rejected VanEck's filing for a physical bitcoin ETF on Friday, saying it still lacked confidence that the bitcoin market was free of manipulation and fraud to approve the product.

Two bitcoin futures ETFs — the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF) — began trading in late October. VanEck's Bitcoin Strategy ETF, the cheapest such offering yet, begins trading Tuesday under the ticker XBTF.

After pulling its bitcoin futures ETF application because of a possible erosion in performance, Invesco is now looking ahead to the pure-play version, Anna Paglia, its head of ETFs and indexed strategies, said in the Monday interview.

"I hope that 2022 is going to be the year for that product," Paglia said, acknowledging that her timeline could be "wishful thinking."

"I wasn't surprised that the SEC rejected the application last week. Issues like price manipulation and fraud have not been addressed yet. I do think that some more regulation is something that the SEC is expecting before approving the next application, but I'm counting on 2022 as the year for a pure-play ETF."

However, it could take a while to regulate the market to the SEC's liking, ETF Trends' Dave Nadig said in the same interview.

"Until we get clear regulation of the underlying coin markets themselves for U.S. investors, I just don't think we're going to cross that hurdle," said the firm's chief investment officer and director of research.

"I think a real solid physical bitcoin ETF is probably at least a year off at this point."

In the meantime, investors should exercise caution with the newly available bitcoin futures products, he said.

Disclosure: Invesco is the sponsor of CNBC's "ETF Edge."

ETF Edge: Bitcoin ETF bust
ETF Edge: Bitcoin ETF bust