Following SEC’s suggestion, the Invesco Bitcoin Strategy ETF won’t be directly investing in BTC but rather in other BTC-linked private instruments or exchange-traded products (ETPs).
Earlier this week, SEC Chairman Gary Gensler suggested the possibility of getting a Bitcoin ETF in the market. He noted that the regulator can approve a Bitcoin ETF if it follows SEC’s strict mutual fund rules. Besides, he showed openness for a Bitcoin ETF product that tracks Bitcoin futures offered by the CME Group. Atlanta-based investment firm Invesco is hopping right into this opportunity. Thus, Invesco seeks to launch a Bitcoin exchange-traded fund (ETF) that doesn’t invest directly into BTC.
On Wednesday, August 4, Invesco filed an application with the US Securities and Exchange Commission (SEC) for listing a new investment product dubbed Bitcoin Strategy ETF. The filing mentions that the Invesco Bitcoin Strategy ETF shall attain its investment objective by “all or substantially all of its assets” in Bitcoin futures and exchange-traded products (ETPs).
Besides, it will also invest in Bitcoin-linked private instrument trusts such as the Grayscale Bitcoin Trust (GBTC). The filing notes that the fund can also invest in Bitcoin ETFs listed outside the US A number of Bitcoin ETFs are already trading in North America, especially Canada.
Investing in Cash-like Instruments
The Invesco Bitcoin Strategy ETF will invest its remaining assets into cash, cash-like instruments along with other high-quality securities as part of its collateral investment.
These securities as part of collateral include the US government securities like notes and bonds, bills, money market funds, and other corporate debt securities. In its filing, Invesco noted:
“The collateral is designed to provide liquidity, serve as margin or otherwise collateralize the subsidiary’s investments in Bitcoin futures”.
The filing for the Invesco Bitcoin Strategy ETF falls under the 40 Act. The filing mentions that the strategy fund shall be non-diversified. Thus, it doesn’t need to meet the diversification requirements as under the Investment Company Act of 1940.
This is not the first time that investment giant Invesco is delving into crypto-related investment vehicles. Back in June 2021, the company launched two crypto-backed investment ETFs.
Furthermore, in 2019, Invesco launched a blockchain ETF on the London Stock Exchange targeting a total of 48 companies involved in this space. Since its inception, the blockchain fund has amassed more than $1 billion as of date.
As the regulatory environment in the US continues to mature, we can see more ETF applications coming ahead. Lack of proper investor protection is the biggest reason for the SEC to reject Bitcoin ETF applications in the past.
It will be interesting to see whether if the SEC considers Invesco’s Bitcoin Strategy ETF.