By
Bhushan Akolkar
April 25th, 2024
In January the asset management company also filed with the SEC for approval on a Web 3-focused ETF.
Asset management firm Simplify on Wednesday filed a registration statement with the US Securities and Exchange Commission (SEC) to list shares of an exchange-traded fund (ETF) linked to Bitcoin futures, treasury securities, and options.
Simplify Bitcoin Strategy Risk-Managed Income ETF will reportedly trade on Nasdaq under the ticker MAXI.
According to the filing, Simplify’s overlay strategy will involve buying “exchange-traded protective put options” in addition to writing “exchange-traded call options on Bitcoin futures and/or a Bitcoin related ETF or ETFs.” The income strategy will hold short-dated US Treasury paper and ETFs that mostly invest in Treasury securities.
“The core option overlay is a strategic exposure meant to partially hedge against Bitcoin futures declines and express convictions about price run-ups or about a specific Bitcoin-linked ETF’s price movement,” said the filing. “If the price of Bitcoin goes up, the Fund’s returns may underperform Bitcoin because the adviser will buy back the written call options at a likely-higher price. If the price of Bitcoin goes down, the Fund’s returns may fall less than Bitcoin because the adviser will sell the put options at a likely-higher price or exercise the put options.”
In January the asset management company filed with the SEC for approval on a Web 3-focused ETF. The ”Simplify Volt Web 3 ETF” would be listed under the ticker “WIII”.
Following remarks by SEC chairman Gary Gensler last year that he would be more receptive to crypto-based futures as opposed to direct investment, ETFs linked to Bitcoin futures such as Teucrium, Proshares VanEck and Valkrie have been approved by the commission. All applications for spot Bitcoin EFTs so far have been rejected. Digital currency investment and crypto asset management firm Grayscale are waiting on an SEC regarding its application to turn its Bitcoin Trust, GBTC, into a spot ETF.
Experts from Bloomberg last month opined that the commission could likely approve the application by mid-2023 if the proposed Exchange Act amendment was approved. The amendment would change the definition of “exchange” to include platforms “that make available for trading any type of security”.
“Once crypto exchanges are compliant, the SEC’s primary reason for denying spot Bitcoin ETFs would no longer be valid, likely clearing the way for approval,” said the analysts.