In what Commissioner Hester Peircetook hailed as “a bit of progress,” the SEC cleared the decks for the launch of a bitcoin futures fund.

The SEC last week approved the launch of the futures-based NYDIG Bitcoin Strategy Fund. The regulator cleared the Form N-2 filed by Stone Ridge Trust VI on October 2 with amendments on October 16 and November 26.

The SEC greenlights futures-based NYDIG bitcoin fund proposed by Stone Ridge

Stone Ridge is a $15 billion asset management company.

The NYDIG Bitcoin Strategy Fund (NYDIG), a portfolio fund in the Stone Ridge Trust VI, will seek to purchase several Bitcoin futures so that the total value of the Bitcoin underlying the Bitcoin futures held by the Fund is as close to 100% of the net assets of the Fund (the “Target Exposure”), as it is reasonably practicable to achieve,” the filing by Stone Ridge said.

Further, the Stone Ridge NYDIG will only invest in cash-settled futures, currently available for trading by CME only. It is a close-ended fund open only to institutional investors. Therefore, the fund will not allow daily trades – instead, investors can periodically sell shares back to the fund every quarter. The first repurchase is planned for May 2020. As the fund will only take positions in bitcoin futures, it will not need to make any custodial arrangements for any physical bitcoin assets.

The offer price of NYDIG is $10 per share. Moreover, the fund will not list its shares on any exchange. It should be noted that it is not a bitcoin ETF.

Dalia Blass, Director of the SEC’s Division of Investment Management, gives NYDIG a leg-up

At the 2019 ICI Securities Law Developments Conference last Tuesday, Blass referred to the fund (she did not name it) as “a prime example” of industry engaging with the agency on new types of products.

In a significant remark, the Director said the NYDIG bitcoin futures fund had taken steps to address issues relating to potential manipulation in the digital asset markets.

The steps included:

• Prominent risk disclosures
• Offering NYDIG through RIAs
• Limiting the size and future growth of the fund, with an initial cap of $25 million

[Related Story: Grayscale Bitcoin Trust to Add SEC Legitimacy: Files Form 10 (It’s Not an ETF) ]