Approval from the SEC
Although dozens of companies, such as VanEck and Fidelity, have applied to the Securities and Exchange Commission to create the first bitcoin ETF, none have yet received approval.
Instead, the SEC has given the green light to Volt Crypto Industry Revolution and Tech ETF which offer investors access to companies with significant exposure to the world's largest cryptocurrency, rather than the ability to trade it directly.
The move comes as Bitcoin returns to the $60,000 level, as tracked by CoinDesk.
The newest Volt Equity ETF, which will trade under the ticker symbol BTCR, invests at least 80% of its net assets in "Bitcoin Revolution Companies", which are defined as those that hold the majority of their net assets in nitcoins or derive most of their revenue or profit directly from bitcoin mining, lending or transactions. The ETF also looks at indicators such as the Stock-to-Flow model, which assesses the current stock of bitcoins versus the flow of new bitcoins mined this year.
Meanwhile, the fund invests the remaining 20% in more traditional stocks to offset its risk.
Volt Equity CEO Tad Park said the fund is aimed at institutional investors, who are afraid to invest directly in bitcoins, and retail investors, who want to be exposed without going through the process of setting up a digital wallet.
According to Park, companies in the fund are narrowed down by factors such as their profit margins, how green they are, and whether their share price correlates with or even exceeds the price of bitcoin. Examples include MicroStrategy, Marathon Digital Holdings and Bitfarms.
Ultimately, Pak believes the SEC's approval came at the right time.
He also noted that the company had been considering a bitcoin futures ETF long before it got the backing of SEC chairman Gary Gensler.
While he is optimistic that there will eventually be a bitcoin ETF based solely on coins, he claims there is "almost zero chance" that it will be approved this year, citing hurdles associated with his own unusual application process, which began in early 2021. He added that he was not too worried about competition from a potential bitcoin-ETF, noting that it would not have active management and could not move to other assets such as cash.
