(Bloomberg) -- Valkyrie Investments reckons it just vaulted to the front of the queue for approval from the Securities and Exchange Commission for the first U.S. Bitcoin exchange-traded fund thanks to a quirk that allows smaller issuers to file confidentially for new offerings.

The Nashville, Tennessee-based firm two months ago sought regulatory permission for a futures-based fund, likely the first company to do so before an onslaught by others following positive comments on the structure by the SEC. The request was revealed Tuesday after the Nasdaq exchange, where the Valkyrie XBTO Bitcoin Futures Fund would be listed, filed a response to the SEC. 

The application remained hidden thanks to an idiosyncrasy afforded to smaller companies, which allows them to file confidentially without fear of getting their ideas copied by bigger players, said Steven McClurg, chief investment officer at Valkyrie Investments. 

“We still thought a physical Bitcoin ETF was a little further away and with futures, the way that they’re regulated and the way they trade with CME, they’re already a regulated product,” McClurg said in a phone interview. “So it’s like the one-step, two-step way to get to a physical ETF but we thought there was a lot of opportunity with futures.” 

After SEC Chair Gary Gensler signaled that regulators may be more open to a Bitcoin ETF if it were based around futures rather than the cryptocurrency itself, bigger fund managers, including Invesco, rushed to file for such a product. It would require that investors put down a substantial amount of money on margin to trade and would be different from a Bitcoin-backed fund.

Still, being first to file does not mean Valkyrie would be the first to be approved, should an approval even come through anytime soon. 

U.S. regulators have yet to bless any crypto ETF, though at least 19 issuers are looking to launch one. Collectively, they’ve submitted over two dozen filings, according to a tally kept by Bloomberg Intelligence’s James Seyffart. Many strategists argue that being the first to receive approval could be important, as it might mean that such a fund attracts more inflows -- as happened with the first to be sanctioned by regulators in Canada.

Meanwhile, Gensler has said that an ETF that complies with the SEC’s strict rules for mutual funds could provide investors with necessary protections. Most pending ETF applications have been filed under 1930s laws that allow stock exchanges to list products. Valkyrie has applications out for a physically-backed fund as well as another futures-based one under the 1940 act, said McClurg. 

Though many crypto backers voiced concerns over a futures-based Bitcoin fund, which they said is unnecessarily complicated, McClurg doesn’t see it that way. 

“The SEC is trying to be cautious here -- which they should,” he said. “Even though I do believe the market is ready for a physically-backed ETF, I know that they’re just trying to be extra cautious before putting something in the market that can hurt retail investors and this is their way of doing that.”

©2021 Bloomberg L.P.