Alternative Investments/Digital: Galaxy Digital Takes Aim (Again) At Bitcoin ETF Using Futures Route
Bloomberg’s senior analyst, Eric Balchunas, on the move: “As Gensler-ready as you can get.”
Enthused by a comment from Gary Gensler, the Chair of the Securities and Exchange Commission, that filing with the SEC for a futures-based bitcoin ETF stood a higher chance under the Securities Act of 1940, Mike Novogratz’s Galaxy Digital (TSE: GLXY) just took its second shot at that elusive vehicle. Note that the company previously filed for a bitcoin ETF in April 2021 under the Securities Act of 1933. (CryptoPotato)
Bitcoin futures only product
Galaxy has filed for the Galaxy Bitcoin Strategy ETF, which will invest only in bitcoin futures, and is a similar proposition to VanEck’s application for a futures-based fund under the 1940 Act.
In a tweet, Bloomberg’s senior analyst, Eric Balchunas, said: “Galaxy just filed for a Bitcoin Futures ETF registered under 1940 Act and that will ONLY invest in futures, which is as Gensler-ready as you can get.”
Gensler previously commented that he would be more comfortable with a futures-based bitcoin ETF rather than one that directly invested in, and held, the digital assets.
Gensler also reportedly said that filings under the 1940 Act stood a better chance of approval given that Act’s substantial regulatory protection for investment vehicles such as closed-end funds and mutual funds.
Bitcoin mutual fund – the Bitcoin Strategy ProFund (BTCFX)
The SEC recently approved a bitcoin futures-based mutual fund from ProShares – the Bitcoin Strategy ProFund (BTCFX).
Launched in July, the fund invests in primarily in front-month bitcoin futures contracts.
ProShares’ head of investment strategy Simeon Hyman said in a CNBC interview: “The advantage of this approach is clear. The futures market is regulated. So, you’ve got the CME [Chicago Mercantile Exchange], the CFTC [Commodity Futures Trading Commission], you’ve got the clearinghouse, and then you’re in a mutual fund that people understand well and you can get in and out every day at NAV [net asset value].”
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