Valkyrie Capital CEO Steven McClurg stated that the firm's innovative "out-of-the-box" cryptocurrency exchange-traded fund (ETF) applications represent a deliberate strategy to engage with assets that possess significant potential and unmet market demand.
In an exclusive interview with CryptoSlate, McClurg elaborated on the rationale behind the company's series of filings, from the groundbreaking Litecoin (LTC) ETF to the first fund designed to offer exposure to a non-fungible token (NFT) collection in the United States.
He explained:
“If you’re a giant firm like BlackRock, you can afford to take chances. If you’re a smaller firm like us, we don’t do anything unless we truly believe we can actually get it done. […] We’re very deliberate with our time and capital, and we want to make sure that everything we’re doing is something that is viable.”
On October 16, Valkyrie Capital filed an S-1 form to list the first spot Litecoin ETF, diverging from the trend of spot Solana (SOL) and XRP ETF filings by other firms at the time.
McClurg explained that the decision followed Valkyrie's observation that former U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler had previously identified Bitcoin (BTC), Ethereum (ETH), and Litecoin as non-securities.
He added:
“Since the SEC had previously approved Bitcoin and Ethereum ETFs, and we saw a couple of people file for Solana, we decided to look at opportunities that we believed would potentially get approved under the current regime. And we think that one [Litecoin] had really great odds.”
Furthermore, McClurg mentioned that the firm believed the LTC foundation's structure was unlikely to be classified as a securities offering, reinforcing their decision to pursue an ETF.
On November 12, less than a month after filing the first Litecoin ETF and bucking the trend, Valkyrie filed the first spot Hedera (HBAR) ETF.
Analysts were surprised by the move, as HBAR is not among the top 20 cryptocurrencies by market cap. Additionally, Hedera has only $111 million in total value locked (TVL) on its network as of February 27, significantly lower than major Layer-1 blockchains.
McClurg said that Valkyrie filed for the ETF because it identified HBAR as a great token with demand that had not yet been on the radar of other ETF issuers. He added that the firm's goal is to find such opportunities before they become market trends. In his words:
“We want to find the potential that exists one year from now, two years from now, because if we are early to the party, then we will get those flows when everybody else is scrambling to file.”
McClurg also noted that Valkyrie believed, similar to LTC, HBAR's structure was unlikely to be classified as a security and that the filing would “do well” under the current SEC administration.
The price of HBAR surged by approximately 470% within a month after the ETF filing, rising from $0.065 to $0.368 on December 6, 2024, before retracing some of its gains during the recent market downturn.
HBAR was trading at $0.192 as of press time, up nearly 200% since Valkyrie's filing in November of last year.
Another of Valkyrie's moves diverging from major trends was the filing for a spot Axelar (AXL) ETF on February 5.
The filing follows a similar thesis of preemptive positioning and also surprised the crypto market, as AXL is not considered to be among the top 100 cryptocurrencies by market capitalization.
McClurg said that Axelar has received little mainstream attention but is widely integrated into developer environments and protocol infrastructure.
He added:
“I was at ETHDenver, I was at a couple of other places, and I started talking to protocols. Every single one of them is working with Axelar behind the scenes. I do mean every single protocol I speak to is working with Axelar in some way. And I thought that was quite compelling, that’s pretty broad adoption.”
He contrasted Axelar’s behind-the-scenes interoperability functionality with early high-profile projects like Polkadot (DOT), noting that Axelar appears to be executing more effectively in practice.
This forward-looking move extends to the firm's views on the broader ETF landscape. Valkyrie is also the first issuer to file for a Sui ETF, the 18th-highest crypto by market cap and the 8th-highest blockchain by total value locked in decentralized applications.
McClurg criticized a common reactive strategy among ETF issuers, which tends to follow trends already in motion. He said that Valkyrie's approach instead focuses on the early identification of demand and the development of products ahead of shifting investor focus.
Valkyrie also filed for an ETF linked to the Pudgy Penguins NFT collection. While McClurg declined to elaborate on that specific filing, he offered context around the company's thinking on NFT-backed investment products.
He highlighted his background in intellectual property management, ranging from fine art to real estate rights, and the shift in regulatory stance that has opened the door for tokenized digital collectibles.
Following public statements from SEC officials indicating that NFTs and memecoins are not to be classified as securities, Valkyrie saw a viable path to introduce NFT-backed ETFs.
The firm chose Pudgy Penguins over other collections, such as Bored Apes or CryptoPunks, due to its intellectual property (IP) expansion beyond digital borders, including physical merchandise and media content.
McClurg noted that while he has never personally held NFTs, Pudgy Penguins’ strategy made it a more viable asset from a liquidity and IP standpoint.
“[Pudgy Penguins have] done a better job of developing their brand and IP.”
He added that this expansion into retail and animation supports the asset's viability within a regulated investment vehicle.
As the co-founder of asset manager Valkyrie, McClurg worked on the firm's Bitcoin ETF, which was approved later than expected. He said the experience has made him cautious about timelines for altcoin ETFs, and he is hesitant to make a firm prediction.
Nevertheless, McClurg said he wouldn't be surprised if up to four single-asset altcoin ETFs are approved this year, considering the evolving regulatory landscape under the SEC's new leadership.
He concluded:
“I think a lot of them will probably be approved next year.”
