BlockFi has filed an application with the SEC to issue its Bitcoin Strategy ETF.
Summary
How will BlockFi’s Bitcoin ETF work?
This is an actively managed ETF, which therefore aims not to faithfully replicate the price trend of Bitcoin, but capital appreciation.
This ETF will invest primarily in cash-settled Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME), but also in short-term fixed-income securities and cash. However, the fund will not invest directly in Bitcoin.
Avoiding the physical management of BTC would make this application more likely to be approved, as the SEC has already approved two similar, albeit passively managed ETFs.
The BlockFi Bitcoin Strategy ETF will not replicate an index, but will instead seek to achieve its investment objective through its own futures investments and through a cash management strategy, based on collateral instruments to generate a return for investors.
BlockFi focused on Bitcoin and cryptocurrencies
BlockFi already offers crypto products that give returns to investors, but through an ETF it could also reach many potential customers who have not yet entered the crypto market due mainly to technological barriers to entry.
This ETF was created in collaboration with Neuberger Berman, an independent investment management firm that manages portfolios of equities, private equity and hedge funds for institutional investors.
In addition, together with NB, BlockFi also plans to launch other crypto management products in the future.
The success of Bitcoin ETFs
The resounding success of Bitcoin ETFs in the US has clearly demonstrated that there is a huge market for these financial derivative products, particularly given the high barriers to entry that make it difficult for many investors to enter crypto markets directly to trade the tokens themselves.
The solution is to offer these investors the opportunity to trade with ease, using derivative financial products that can be traded directly on the platforms they already use.
BlockFi’s actively managed crypto ETF would be the first of its kind in the United States. Since it would not only allow investors to take a position on the price of Bitcoin but would also aim to generate returns. It is possible that it could be very successful.
CEO of Neuberger Berman, Peter Sterling, said:
“Digital assets are increasingly taking their place as mainstream investments and we intend for BlockFi | nb to play a key role in that effort”.
