Valkyrie has announced in a press release the launch of their cryptocurrency-related ETF, the Valkyrie Bitcoin Strategy ETF (BTF), which began trading today on the Nasdaq and is the second bitcoin futures ETF to launch this week.
With 21 million Americans already owning crypto, the digital asset market is set to continue its growth. A survey by Gemini that included 3,000 investors and potential crypto consumers estimates that the number of people investing in crypto will hit 51 million in the next year, a growth to more than twice the current number.
“This Bitcoin Strategy ETF is a major leap forward for this asset class,” said Leah Wald, CEO of Valkyrie, in the press release. “It enables investors to participate in the digital asset markets through a regulated, transparent product that trades on a trusted, reliable exchange and can be bought and sold as easily as any other investment currently available.”
BTF is an actively managed fund that invests in bitcoin futures and has no direct exposure to bitcoin itself. The fund offers dual protections for investors via the CFTC regulation of the futures markets as well as the protections built into the fund itself as a 1940 Act ETF. BTF only deals in cash-settled, “front month” bitcoin futures contracts when possible, or else the next nearest expiration date.
The sub-advisor of BTF is Vident Investment Advisory, and the futures contracts are invested in indirectly through a Cayman Islands subsidiary so as to circumvent the need for a K-1 for tax purposes for investors, a common practice. The fund also utilizes collateral investments to attain liquidity; these include cash, cash-like instruments, or high quality securities such as money market funds, U.S. bonds, and other sources.
“The approval of ETFs based on CME Bitcoin futures is a positive development for the broader bitcoin ecosystem, and a reflection of the strong growth and client demand for exposure to bitcoin via our transparent, deeply liquid and regulated futures contracts,” said Tim McCourt, CME Group’s global head of equity index and alternative investment products in the press release. “The introduction of funds, like the Valkyrie Bitcoin Strategy ETF, mark an important milestone for crypto derivatives, and will be highly complementary to futures, creating new opportunities for a broad array of institutional and retail investors.”
The launch marks the second time ever that the SEC has approved an ETF focused solely on cryptocurrencies, even adjacently via the futures markets; issuers have been filing since 2013, but it wasn’t until recent remarks by SEC Chair Gary Gensler gave an indication as to what the Commission wanted that there has been any headway made. It joins the ProShares Bitcoin Strategy ETF (BITO), which has experienced historic performance since its launch on Tuesday.
Valkyrie is the first issuer to garner SEC approval that deals solely in digital asset investing and currently offers six cryptocurrency-specific trusts for investors seeking exposure to certain tokens in addition to BTF.
BTF carries an expense ratio of 0.95%.
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