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The “Volt Crypto Industry Revolution and Tech ETF” Stops Short of Crypto Investing
This week’s SEC approved “Bitcoin ETF” stops short of being a tick-for-tick alternative to owning bitcoin via the securities markets. Although the exchange-traded fund’s purpose is to provide exposure to “Bitcoin Revolution Industry Companies,” defined as entities that hold a majority of their net assets in BTC or derive a majority of their earnings from Bitcoin mining, lending, or transacting, actual investment in the crypto or derivatives are not permitted by prospectus.
The fund will trade under ticker symbol, $BTCR.
New Bitcoin ETF Details
This week the Securities and Exchange Commission approved an exchange-traded fund named Volt Crypto Industry Revolution and Tech (BTCR).
The funds intention is to track what the prospectus refers to as “Bitcoin Industry Revolution Companies.” These are defined as the supporting infrastructure and ancillary businesses to the operation and ecosystem of the crypto and companies holding a majority of their assets in $BTC.X.
Consistent with the objective of providing capital appreciation by actively managing investments in U.S. and foreign companies, the fund expects to invest at least 80% of its assets in Bitcoin-
related companies. They specifically exclude Canadian ETFs, private funds, and Grayscale (GBTC).
Principal Investment Strategies
The fund is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing a majority of its net assets in U.S. and foreign companies with exposure to bitcoin and the supporting infrastructure. The advisor applies an option overlay strategy to the Fund’s equity investments. The focus of the fund is bitcoin, and under normal circumstances the ETF managers will invest most of its assets within their definition of “bitcoin industry,” stocks and options as well as ETFs not otherwise excluded
Under normal circumstances, it will hold at least 80% of its net assets (plus any borrowings for investment purposes) in bitcoin industry companies, options on those companies, and ETFs with exposure to those companies. Of the remainder of the Fund’s assets, 15% will be allocated to tech companies, defined as companies that derive at least 50% of their revenue from software, technology hardware, and/or products or services that rely on self-developed processing chips or artificial intelligence chips.
The Fund may also invest up to 20% of the portfolio to gain broad equity market exposure, including through ETFs, to diversify the risk of the focused portfolio.
Why it’s Important
Bitcoin is still a speculative asset that poses more uncertainty than those that have a longer history. However, its growth in value has captured the attention of all classes of investors. If the “Bitcoin Revolution” continues, it’s important that participation was available to the largest number of investors and speculators.
Since the ETF invests in the industries surrounding cryptocurrency that create the infrastructure for these fintech variants to exist, the technology will still have applications should there eventually be a central bank digital currencies (CBDC) that may undermine Bitcoin’s purpose.
The success of the managed ETF and others that may follow would cause more money to be invested in the companies operating in this space. Investors that hold individual stocks of companies that are selected for this ETF and others could benefit as the manager(s) create more demand for shares.
Take-Away
The Volt ETF ($BTCR) will not invest directly in bitcoin. The SEC said recently that it is determining the best course of action on Crypto-linked ETFs. The fund will invest in companies that support bitcoin and the blockchain industry. Unlike a direct purchase of Bitcoin, investing either directly in blockchain infrastructure companies supporting the currency, or accepting the fees for a Volt managed fund could presumably allow related investors to participate in the growth of the “revolution.”
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Sources:
https://www.sec.gov/Archives/edgar/data/1508033/000150803321000003/n1a0621.htm
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