Simplify’s Bitcoin ETF to Invest in US Stocks and Grayscale’s Trust

The reluctance of the US Securities and Exchange Commission (SEC) for giving approval to a Bitcoin exchange-traded fund (ETF) doesn’t appear to have discouraged issuers nowadays. One such example is that of Simplify Asset Management, which seems to have gone ahead with finding ways of structuring its products. The company plans on rolling out a Bitcoin product that wouldn’t be completely focused on Bitcoin. This makes a lot of sense because the regulators are still not ready to trust the crypto sector. A filing has been made by Simplify with the financial regulator for its Equity PLUS Bitcoin ETF. 

As per the details of the filing, around 15% of the assets of the Simplify US Equity PLUS Bitcoin ETF will be invested in cryptocurrencies. This will be done either ‘solely or directly’ via the Grayscale Bitcoin Trust. The remaining funds would then be invested in US stocks. The asset custodian and the ETF administrator would be BNY Mellon. If the ETF is granted approval, it would be traded on the Nasdaq exchange. It should be noted that Simplify is not the only company that has been working on coming up with creative ways for structuring its products in the United States. 

Recently, a filing was also made by investment giant JPMorgan with the SEC for launching their own ‘Crypto Exposure Basket’. Simplify’s decision to purchase shares of the Grayscale Bitcoin Trust will provide the company with access to the price movements in the largest cryptocurrency, without actually having to purchase Bitcoin physically. As the name indicates, Grayscale Bitcoin Trust has been designed solely for investing in Bitcoin. For a number of years, the concept of Bitcoin ETFs has been rejected in the United States. The SEC has appeared to be a brick wall when it comes to all the proposals of a Bitcoin ETF that have been submitted so far, from VanEck to the Winklevoss twins. 

It doesn’t appear that the story has changed much in the last few years. All attempts of approving a Bitcoin ETF have been drowned by the regulators and they have cited reasons like the volatility of the bitcoin market, the fact that it can be easily manipulated and that it is lacking in sufficient surveillance. While US regulators continue to reject issuers of Bitcoin ETFs, the Canadian financial regulator, the Ontario Securities Commission (OTS) has given approval for two ETF issuers to make direct investments in Bitcoin and other cryptocurrencies. 

These are the Evolve Bitcoin ETF (EBIT) and the Purpose Bitcoin ETF (BTCC), which have been listed on the Toronto Stock Exchange. The Galaxy Digital Holdings by Mike Novogratz have also launched another Bitcoin ETF known as the CI Galaxy Bitcoin ETF and it can also be found on the Toronto Stock Exchange. If it receives approval, it would become the third Bitcoin ETF to be found in North America. While the US regulators continue to move carefully, crypto enthusiasts and market participants are optimistic that a full-fledged ETF could be introduced, with Canada leading the way. 

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