Galaxy Digital LP, the crypto-focused merchant bank founded by Mike Novogratz, is once again filing with the US authorities to roll out a Bitcoin ETF that wouldn’t directly invest in the cryptocurrency. The US firm has tried in April to launch an ETF backed by the actual underlying asset, but the SEC is yet to approve a single BTC exchange-traded fund.
Galaxy Digital filed an application with the US Securities and Exchange Commission in order to list the Bitcoin Strategy ETF, which seeks capital appreciation. The proposed fund will be an actively managed ETF that leverages Bitcoin future contracts to provide exposure to Bitcoin.
Galaxy ETF Trust would not invest in BTC or other digital assets directly, according to a new S-1 filing.
The filing went on to say that the fund could add other ETFs, and various investment instruments related to the primary cryptocurrency to its portfolio. More specifically, the Bitcoin Strategy ETF would allow exposure through crypto ETFs listed and traded in Canada.
The latest Galaxy Digital’s bitcoin ETF filing stresses: “The Fund may invest in the securities of exchange traded funds, or “ETFs,” organized and listed for trading in Canada, or other jurisdictions, and in other pooled investment vehicles. The shares of these instruments represent an interest in a portfolio of bitcoin. The Fund may use these positions to manage inflows and outflows or to respond to unusual market conditions or increases in margin requirements. In addition, the Fund may invest in Canadian ETFs and other pooled investment vehicles if, for any reason, it is unable or it becomes impractical to obtain exposure to bitcoin futures.”
The crypto investment management firm explains that the new ETF differs from previously-filed similar proposals in that it is “non-diversified” and falls under the stricter 1940 law governing mutual funds.
Galaxy Digital now joins a growing list of firms eager to gain SEC approval for its Bitcoin ETF. Fidelity Investments, Valkyrie Digital Assets, and most recently VanEck have filed their own proposals for crypto ETFs. However, the SEC only extended the deliberation window or opened the matter to public comments to avoid reaching any decision on a proposal.
SEC Chair Gary Gensler said earlier this month that he would be open to approving a bitcoin-futures ETF, but only under certain conditions. The revelation rankled some fund managers who were hopeful of a physically backed ETF, but regulated like a normal exchange-traded fund under a 1933 law.