Galaxy files for ETF that provides indirect exposure to bitcoin

Galaxy has filed with the Securities and Exchange Commission (SEC) for an exchange-traded fund that will invest in products with indirect exposure to bitcoin.

The Galaxy Bitcoin Strategy ETF won't provide any direct exposure to cryptocurrencies, according to its N-1A.

"The Fund does not invest in, or seek direct exposure to, the current “spot” or cash price of bitcoin. Investors seeking direct exposure to the price of bitcoin should consider an investment other than the Fund."

The SEC has been reluctant to approve structured products with direct exposure, meaning ETFs with more indirect methods could have an easier time within the approval process. SEC Chair Gary Gensler previously said he and his staff are looking forward to reviewing bitcoin ETF applications, "particularly if those are limited to these CME-traded Bitcoin futures."

As Eric Balchunas, senior ETF analyst at Bloomberg noted, a futures-only offering is "as Gensler-ready as you can get," considering it proposes to do just that. 

The Galaxy submission is the fifth crypto futures product offering to reach the desks of SEC officers. It plans to pool cash-settled bitcoin futures contracts traded on exchanges registered with the Commodity Futures Trading Commission (CFTC), with Treasury bills, repurchase agreements and Canadian ETFs. Canada has approved a number of crypto-based products, and the Galaxy fund would seek exposure through them as well, saying:

"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."

Galaxy has acted as a subadvisor for Canada's CI Financial ETH-based ETF.