Four months after filing for a Bitcoin Exchange-Traded Fund (ETF) supported by a real asset, Galaxy Digital will try again, this time with a Bitcoin-linked investment vehicle.
According to Tuesday’s submission by the US Securities and Exchange Commission (SEC), the Galaxy Bitcoin Strategy ETF is seeking to register under the 1940 Investment Company Act.
Another Application for a Bitcoin ETF
The new fund does not directly invest in Bitcoin, but rather seeks to appreciate money mainly via active management of future Bitcoin contracts. The Chicago Mercantile Exchange (CME) is now the sole regulated commercial platform providing such agreements.
Galaxy Digital is the latest asset management to apply for a Bitcoin futures ETF, the latest option to establish a regulated investment cryptographic vehicle in the US.
The SEC must not yet approve an ETF linked to the real Bitcoin by citing potential market manipulation and asset volatility. However, the President of the Commission, Gary Gensler, said earlier this month that the regulator would prefer ETFs linked to Bitcoin trading in CME futures.
What is an ETF?
An ETF is a type of investment comprised of a collection of assets, such as shares, that follow an underlying index, while at the same time engaging or using diverse tactics in a number of sectors.
Although ETFs are comparable in many respects to mutual funds, they are traded on exchanges, which operate throughout the day like common stocks. An ETF is a securities package that sells on a stock market, comparable to a portfolio.
Unlike mutual funds that trade just once a day at the end of the market, the share values of ETF vary throughout the day they are bought and sold. ETFs may have a variety of assets, such as stocks, commodities, and bonds; some ETFs hold US assets exclusively, while others hold international assets only.
ETFs are cheaper than direct sales of stocks that have reduced distribution expenses. The SPDR S&P 500 ETF is a famous example (SPY). ETFs may have a number of assets, including equities, commodities, inventories, or a mix of asset types. A bursary fund is marketable security since it has a premium that can be readily purchased and sold.
An ETF, including shares, is categorized as a bursar fund since it is traded on a bond. The price of an ETF stock varies throughout the day as stocks are purchased and sold across the industry.
Unlike hedge funds that are not marketed on a stock exchange and are only traded once a day, index funds are not exchanged on a stock exchange. On the other side, reciprocal funds are often more volatile and less liquid than ETFs. On the other side, Bitcoin ETFs are also accessible in Canada (with a lot of success) and Bermuda.