Katherine Ross

Global X filed to withdraw its proposed spot bitcoin ETF weeks after a slew of ETFs were approved by the Securities and Exchange Commission.&nbsp;



The proposed ETF was not the first of its kind filed by the firm. Back in 2021, Global X pursued a <a href="https://blockworks.co/news/spot-btc-etf-applicants-status-update">similar fund</a> but was met with resistance from the SEC.



Global X first <a href="https://www.sec.gov/files/rules/sro/cboebzx/2024/34-99445.pdf">filed</a> its proposal back in August, but — like other applicants — a decision on the bitcoin ETF was delayed by the SEC. In January, the SEC issued a slew of ETF decisions but Global X was notably absent.&nbsp;



Read more: <a href="https://blockworks.co/bitcoin-etf">Bitcoin ETF Tracker</a>



Global X didn’t immediately return a request for comment.&nbsp;



The firm wasn’t on the final list of potential ETFs earlier this month after it failed to file updated documentation alongside other potential ETF issuers.&nbsp;



Global X wasn’t the only one of the bitcoin ETF hopefuls that failed to make it across the finish line. Pando Asset Management joined the race back in December and has yet to receive approval for its proposed spot bitcoin ETF.



Read more: <a href="https://blockworks.co/news/bitwise-shares-bitcoin-etf-holdings-address">Bitwise publishes bitcoin ETF holdings address after on-chain sleuths uncover BlackRock’s</a>



Similarly, 7RCC filed for a spot bitcoin ETF that would also hold carbon credit futures contracts. The proposal, <a href="https://blockworks.co/news/bitcoin-etf-environmental-impact">filed in December</a>, has yet to receive regulatory approval.&nbsp;



<a href="https://blockworks.co/news/sec-approves-bitcoin-etf">After receiving approval</a>, nearly a dozen bitcoin ETFs launched earlier this month. The funds — which include Grayscale, BlackRock and Fidelity — have seen billions in <a href="https://blockworks.co/news/jpmorgan-persisting-gbtc-outflows">outflows, mostly from GBTC.&nbsp;</a>



JPMorgan analysts, however, believe that GBTC’s outflows are slowing.



“As we’ve been seeing transaction volumes slowing this past week, we think we are perhaps seeing indication of the hype around these <a href="https://blockworks.co/tag/etfs">ETFs</a> abating and entering a perhaps more normalized flow environment,” analysts led by Kenneth Worthington said in a note Monday.&nbsp;



Outside of flows, the group has remained pretty competitive with a majority of the funds offering waivers for fees for a set amount of time or assets. On Monday, Invesco Galaxy — which offers a six-month or $5 billion in assets waiver — <a href="https://blockworks.co/news/invesco-galaxy-bitcoin-etf-fees">announced that it was cutting its fee</a> to 0.25% from 0.39%.&nbsp;



Aside from <a href="https://blockworks.co/tag/grayscale">Grayscale</a> — which has a 1.5% fee — the group has very low fees ranging from 0.19% to 0.30%.



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Global X withdraws bitcoin ETF proposal

The Securities and Exchange Commission delayed a decision on the Global X Bitcoin Trust 19b-4 rule change on Friday.



The expected delay follows <a href="https://blockworks.co/news/sec-delays-grayscale-etf-decision">a slew</a> of similar <a href="https://blockworks.co/news/sec-delays-hashdex-eth-etf">delays</a> this week. The SEC has delayed proposed rule changes for both ether and bitcoin spot ETF rule changes.



The Commission previously <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">delayed a decision</a> back on Sept. 26 due to concerns at the time of a government shutdown. The SEC had a deadline of Nov. 21 to delay, greenlight or reject the Global X filing.&nbsp;



The <a href="https://www.sec.gov/files/rules/sro/cboebzx/2023/34-98981.pdf">filing</a> opens up a comment period on the application which is expected to last 35 days after it is published in the Federal Register.&nbsp;



Bloomberg analyst James Seyffart pointed out in a post on X that the delay was “expected.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">UPDATE: <a href="https://twitter.com/GlobalXETFs?ref_src=twsrc%5Etfw">@GlobalXETFs</a> spot <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> ETF 19b-4 has been delayed *as expected*. This one wasn&#39;t due till Nov 21. Comment period should begin and last at least 35 days on this application. <a href="https://t.co/E5xsrd3Shh">pic.twitter.com/E5xsrd3Shh</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1725605987866804602?ref_src=twsrc%5Etfw">November 17, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Bloomberg analyst Eric Balchunas posted on X Friday that he was hearing “chatter SEC’s Trading &amp; Markets engaged w/ exchanges this week on spot bitcoin ETF 19b-4s, is advising them they&#8217;d like the ETFs to do cash creates (vs in-kind), and has asked them to get in amendments in next couple wks. This isn&#8217;t unexpected but good sign nonetheless.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Hearing chatter SEC’s Trading &amp; Markets engaged w/ exchanges this week on spot bitcoin ETF 19b-4s, is advising them they&#39;d like the ETFs to do cash creates (vs in-kind), and has asked them to get in amendments in next couple wks. This isn&#39;t unexpected but good sign nonetheless.&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1725559994995573086?ref_src=twsrc%5Etfw">November 17, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In a follow up post, he noted that the cash creates approach “makes sense” for these types of funds.&nbsp;



Grayscale’s ETH ETF rule change was also delayed this week, as well as Hashdex’s ETH ETF rule change and its bitcoin ETF proposal as well.&nbsp;



To continue the ETF news circus, <a href="https://blockworks.co/news/blackrock-registers-ethereum-etf">BlackRock tossed its hat in the ring</a> by filing an S-1 for its proposed spot ethereum ETF yesterday. It filed a 19b-4 for the proposed fund late last week.



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SEC delays yet another bitcoin ETF rule change

Ben Strack

ETF issuer Global X has filed for a crypto fund — albeit not a spot bitcoin ETF — marking the latest niche proposal in the absence of the approval awaited by many.&nbsp;



The company’s proposed Bitcoin Trend Strategy ETF is a different iteration of a bitcoin futures ETF, the first of which came to market in October 2021.



The proposed fund would track the CoinDesk Bitcoin Trend Indicator Index, according to a <a href="https://www.streetinsider.com/SEC+Filings/Form+485APOS+Global+X+Funds/21930732.html">filing</a> submitted to the SEC last week — which “systematically and dynamically allocates between” bitcoin futures contracts and the Global X 1-3 Month T-Bill ETF (CLIP). The idea appears to be to flip between bitcoin futures and Treasurys via risk-on or -off convictions.&nbsp;



CoinDesk created its Bitcoin Trend Indicator (BTI) — designed to measure the directional momentum and strength in bitcoin&#8217;s price — in April. The related index is not yet publicly available.&nbsp;&nbsp;



“The indicator&#8217;s ability to detect when bitcoin has strong price momentum and when it doesn&#8217;t is going to be key in deciding whether this strategy can outperform or not,” according to Sumit Roy, senior analyst at ETF.com. “Given that this is a new indicator, only time will tell whether it works.”&nbsp;



A Global X spokesperson declined to comment.&nbsp;



<h2 class="wp-block-heading">Response to “crowded” spot bitcoin ETF race</h2>



Roy said the filing is likely a result of the “extremely crowded” spot bitcoin ETF race. <a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">TradFi giants like BlackRock</a> and <a href="https://blockworks.co/news/fidelity-bitcoin-etf-refiling">Fidelity</a> — as well as half a dozen or so others — have active spot bitcoin ETF proposals in front of the SEC.



Read more: <a href="https://blockworks.co/news/approved-spot-bitcoin-etf-launch-size">An approved spot bitcoin ETF could be ‘one of the largest launches in history’</a>



“Realistically, there&#8217;s only going to be, at most, a few vanilla spot bitcoin ETFs that generate significant interest from investors,” Roy told Blockworks. “Investors are going to gravitate towards the same products and an issuer with a strong brand, scale and marketing muscle like BlackRock has a good chance to dominate that space.”



Other issuers can differentiate through more niche products like Global X’s latest proposal, industry watchers said — adding that some trend-following ETFs have generated decent demand.&nbsp;



The Pacer Trendpilot US Large Cap ETF (PTLC), for example, which launched in 2015, has more than $2 billion in assets under management. Using a similar strategy, PTLC uses trend following to switch its exposure between equities and Treasury bills.



Bryan Armour, a director of passive strategies at Morningstar, told Blockworks that given its ability to flip to greater Treasury bills exposure, the ETF seems to target investors fearful of incurring big losses in bitcoin-related investments.



“A problem with quantitative tactical allocation strategies is that market timing is extremely challenging, and these strategies don’t always perform as you would expect,” Armour said. “Downside risk certainly remains, and investors may miss out on bitcoin gains if the strategy keeps them in T-Bills at the wrong time.”



<h2 class="wp-block-heading">Niche, “sometimes weird” crypto funds piling up</h2>



Neena Mishra, director of ETF research for Zacks Investment Research, said she is surprised a product like the planned Global X Bitcoin Trend Strategy ETF doesn&#8217;t already exist.



While various ETFs holding crypto- and blockchain-related equities have traded for several years, more recent products have broken new ground.



Volatility Shares last month brought to market its 2x Bitcoin Strategy ETF (BITX) <a href="https://blockworks.co/news/leveraged-btc-futures-etf-debut">the first leveraged bitcoin futures ETF</a> in the US. The fund, down about 13% since launch, has gathered $27 million in assets.



Bitwise in March launched its Bitcoin Strategy Optimum Roll ETF (BITC), which looks to present a twist on bitcoin futures funds that invest in front-month CME bitcoin futures contracts.&nbsp;



BITC is designed to select futures contracts with the lowest level of contango — when the projected price of a commodity under a futures contract is valued above the asset’s spot price.&nbsp;



“Fund providers are constantly experimenting with new products, trying to see what resonates with investors,” she said. “This is why we continue to see so many niche, interesting, and sometimes weird products.”



Global X previously tried to launch a spot bitcoin ETF — a bid blocked by the SEC last year. Scott Helfstein, Global X’s head of thematic solutions, told Blockworks last month the firm could seek to offer that type of product again “if the environment were to set up in the right way.”



Read more: <a href="https://blockworks.co/news/global-x-etf-crypto">Crypto is a ‘long-term play’ we’re building out now: Global X exec</a>



The New York-based company has 108 ETFs trading in the US with roughly $43 billion in combined assets under management, according to ETF.com.&nbsp;&nbsp;



The risk-off mechanism makes the fund different from Global X’s <a href="https://blockworks.co/news/global-x-offers-different-type-of-bitcoin-futures-etf">other bitcoin-related ETFs</a>, according to Armour.



“It could be a long time, if ever, before a spot bitcoin ETF is approved,” he said. “So Global X appears to be offering something for bitcoin-enthused investors to add to their portfolio in the meantime.”



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Bitcoin ETF creativity continues as SEC mulls spot products

Global X, an ETF issuer, is adopting a gradual approach to expanding its crypto business, aligning with the evolving use cases surrounding blockchain technology.



The company last week introduced two separately managed account (SMA) offerings based on digital assets. These SMAs will be accessible through Eaglebrook Advisors&#8217; platform, which is utilized by registered investment advisers (RIAs).



One of the indexed offerings holds the two largest crypto assets, while the other’s index gives market capitalization-proportional exposure to the 10 largest tokens, with a cap at 40%.  



“[The SMAs] are about getting into direct crypto exposure in a way that we thought was responsible,” Scott Helfstein, Global X’s head of thematic solutions, told Blockworks. “This just allows us to provide some tools and begin to build interest in what we think is a long-term play.”



The utility of crypto assets will ultimately drive their valuations, he added — a fact not necessarily true today as various use cases have not yet been realized.&nbsp;&nbsp;



“But as we talk about moving real estate onto the blockchain [and] as we talk about 3D printing and advanced fabrication where you’re transacting through Ethereum smart contracts, all of those become the use cases that ultimately set the value for these currencies,” Helfstein said. “We’re a ways away from that, but still getting to play in the space we think is important.”



The SMAs build upon Global X’s crypto and blockchain offerings. The fund group, which manages $41 billion in assets across its more than 100 US ETFs, launched its Global X Blockchain ETF (BKCH) in July 2021.&nbsp;



It unveiled <a href="https://blockworks.co/news/global-x-offers-different-type-of-bitcoin-futures-etf" target="_blank" rel="noreferrer noopener">the Global X Blockchain and Bitcoin Strategy ETF</a> (BITS), which blends investments in crypto stocks and bitcoin futures contracts, a few months later. 



The firm <a href="https://blockworks.co/news/global-x-latest-etf-issuer-to-test-out-the-metaverse" target="_blank" rel="noreferrer noopener">added a Metaverse ETF</a> (VR) to its lineup in April 2022, and <a href="https://blockworks.co/news/global-x-plots-expansion-of-crypto-products-research" target="_blank" rel="noreferrer noopener">has invested in its team and research capabilities</a> in an effort to educate investors about the sector.



“What we’re trying to do is create a full toolkit rather than saying here’s a ticker to buy,” Helfstein said. “Here’s a ticker to look into, here’s some research to help you make a decision, and by the way, there are different flavors.”



<h2 class="wp-block-heading">Asset growth slows as space matures</h2>



Despite extended periods on the market, BKCH, BITS and VR have roughly $80 million in combined assets.&nbsp;



While the ProShares Bitcoin Strategy ETF (BITO) and the Amplify Transformational Data Sharing ETF (BLOK) have gathered significant assets in their fund categories — about $460 million and $820 million, respectively — most competing offerings have not.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/blockchain-etf-issuers-success" target="_blank" rel="noreferrer noopener">Blockchain ETF issuers with ‘crypto street cred’ may come out on top</a>



While early assets into thematic ETFs are driven by retail investors, large companies — such as wirehouses Morgan Stanley, JPMorgan and UBS — drive scale later on, Helfstein said.&nbsp;



“Quite frankly, most firms are not encouraging advisers to go out and talk about blockchain and crypto as an area,” the executive noted.



That is likely to change as blockchain technology “moves up the adoption curve” and the companies involved in the space get bigger, Helfstein added.



The Global X Lithium and Battery Tech ETF (LIT), which launched in 2010 and has grown to more than $3 billion in assets under management, particularly gained traction as the electric vehicle market grew.&nbsp;&nbsp;



“That’s one where we had this sitting on our shelf for a really long time before it was a billion-dollar fund,” he said. “So if you’re going to play in the thematic space and you want to be early in the adoption cycle, you’re going to have to live with this.”



The <a href="https://blockworks.co/news/metaverse-beauty-week-coming" target="_blank" rel="noreferrer noopener">metaverse space</a> is also in its very early stages. 



Though a blockchain-powered Web3 has a chance to improve upon Web2, players in the space have their work cut out for them to prove out the value proposition, Helfstein said.&nbsp;



“People ask what replaces Google?” he added. “I don’t know that it goes away, but the environment changes when I can own my private data in a digital wallet and I can either trade it for access to my gmail or they have to pay me for it. That’s a very different ecosystem.”



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Crypto is a ‘long-term play’ we’re building out now: Global X exec

<div id="highlights-block_62c4712f8f69d" class="highlights">
 <ul>
 <li>21Shares has seen small outflows despite recent losses, firm’s director of ETP product told Blockworks</li>
 <li>Seven of the 15 worst-performing US ETFs in June were crypto-related funds</li>
 </ul>
 
</div>



The worst-performing European ETPs last month were all crypto products, and digital asset-focused ETFs in the US also notched some of the worst returns during the month.&nbsp;



The highest negative returns during the month in Europe went to the 21Shares Aave ETP, which yielded -52.6% in June, according to Morningstar data.



“These are abysmal returns,” ETF.com Senior Analyst Sumit Roy told Blockworks. “As volatile as crypto is, to see 50% declines in one month is truly astounding. It just speaks to how treacherous the current crypto market is.”



The firm’s Bitcoin Cash ETP, Ethereum ETP and Bitcoin Suisse ETP also made the list of top 15 worst-performing ETPs (exchange-traded products) during the month, with returns of -47.5%, -46.5% and -40.5%, respectively.



“As we’ve experienced turbulent markets, we’ve stayed in close communication with our clients and seen very little outflows as investors hold strong for the long-term,” Arthur Krause, 21Shares’ director of ETP product, told Blockworks in an email.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“In fact, we’ve seen inflows as investors buy the dip.”</blockquote>



The 21Shares Bitcoin ETP and Ethereum ETP recorded the biggest inflows in the European market in June, Krause added, with $20 million and $10 million in net new assets, respectively. The company launched the first ETP within its <a href="https://cms.blockworks.co/21shares-vying-to-build-out-crypto-winter-suite/" target="_blank" rel="noreferrer noopener">planned “crypto winter” suite</a> last week in an effort to help investors navigate the challenging market environment.&nbsp;



Crypto ETPs have been among the worst-performing products each month this year, aside from March, Morningstar Investment Specialist Valerio Baselli told Blockworks in an email. The entire crypto ecosystem is under pressure, as evidenced by bitcoin&#8217;s fall to below the $20,000 mark at the end of the month, he added.



Bitcoin’s price was about $19,620 at 12:30 pm ET, according to data compiled by Blockworks — down roughly 0.5% from 24 hours ago and down about 34% from a month ago.



“As usual, the debate is highly polarized,” Baselli said. “Crypto skeptics think this is the moment the bubble bursts and are relishing the daily lurches downwards, while true believers are exhorting other zealots to keep the faith, ride this wobble out, and even add to their holdings.”



June was the worst month since 2011 for bitcoin, Baselli said, noting that the asset — originally thought to be uncorrelated to equity markets — plunged in parallel with US equities. The second quarter of 2022 was the worst since 1970 for the S&amp;P 500, while the Nasdaq recorded its weakest half-year since 1998, he added.



“The asset class is firmly entrenched in a deep bear market, and these returns are a reflection of that,” Roy said. “It&#8217;s a reminder that crypto and crypto ETPs are extremely high risk, with a similar risk profile to speculative tech stocks.”



As for US ETFs, seven of the 15 worst-performing funds in June were crypto funds, according to Morningstar Direct data obtained by Blockworks.



VanEck’s <a href="https://www.vaneck.com/us/en/investments/digital-assets-mining-etf-dam/" target="_blank" rel="noreferrer noopener">Digital Assets Mining ETF</a> (DAM) saw the lowest monthly returns within the category, at -43%. The asset manager’s <a href="https://www.vaneck.com/us/en/investments/digital-transformation-etf-dapp/" target="_blank" rel="noreferrer noopener">Digital Transformation ETF</a> (DAPP) endured a total return of -41% over the span.&nbsp;



Bitcoin futures ETFs saw similar returns, with such products by ProShares, Valkyrie Investments and VanEck also yielding roughly -41%. Global X’s <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">Blockchain and Bitcoin Strategy ETF</a>, which invests in a mix of equity securities of blockchain companies and US-listed bitcoin futures, performed only about a half percentage point better.



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Crypto ETPs Saw ‘Abysmal’ Returns in June

<div id="highlights-block_62a1de3c35103" class="highlights">
 <ul>
 <li>Firm could look to bring crypto products focused on yield or volatility management, digital assets product head Adam Sze says</li>
 <li>Sze seeks to combine experience in traditional finance and crypto ETPs at the thematic ETF issuer</li>
 </ul>
 
</div>



A new head of digital asset products at Global X is hoping to bring his traditional finance and crypto ETP background to build out educational resources and add to the company’s thematic product lineup.



The New York-based fund group <a href="https://cms.blockworks.co/global-x-poaches-21shares-exec-to-lead-digital-assets-product-push/" target="_blank" rel="noreferrer noopener">brought aboard</a> Adam Sze last month from Swiss ETP (exchange-traded product) issuer 21Shares. Before that, he worked for more than a decade at New York Life Investments, including as the firm’s director of product development.&nbsp;



Sze began learning about crypto in late 2017, and though New York Life considered launching products within the space, he said, the company ultimately decided against it.



The executive jumped ship to 21Shares in August 2021 and spent the latter half of his 10-month tenure there as director of ETPs. Sze led the design, implementation and launch of more than a dozen physically-backed <a href="https://cms.blockworks.co/21-shares-expands-crypto-etps/" target="_blank" rel="noreferrer noopener">crypto ETPs</a> for the company, which manages more than $2 billion in assets.



“At 21Shares, I was able to combine my professional pursuits and my personal interests into a single role…I learned a lot about structuring digital asset products and also got a deeper education in the space,” he told Blockworks. “Now that I’m at Global X, I have the opportunity to get even more involved in the strategic planning and implementation for the firm’s digital asset initiative.”



Global X has 93 ETFs trading in the US with combined assets of roughly $40 billion, according to ETF.com. Its Global X Blockchain ETF (BKCH), which tracks a market cap-weighted index of companies in the blockchain space, launched last July and has about $60 million in assets.



The firm brought to market its Blockchain and Bitcoin Strategy ETF (BITS), which blends investments in crypto stocks and bitcoin futures contracts, last November. That actively managed fund oversees about $10 million.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“While it’s nice to have single-asset ETPs…I think where we’re truly going to make an impact and make a win is bringing out innovative solutions that address specific client needs, whether that’s yield or volatility management,” Sze said.&nbsp;</blockquote>



In addition to addressing such needs, the company seeks to offer exposure to certain sectors of the digital asset space through index-based products, though Sze declined to share specific segments the firm could target.&nbsp;



Matt Hougan, Bitwise Asset Management&#8217;s chief investment officer, noted during a panel at last month’s Permissionless event that he expects the share of indexing in the crypto space to rise from below 1% to 20% or 30% in the next 10 years.



Despite a focus on index-based products, Global X is mulling whether to re-apply for its proposed spot bitcoin ETF, Sze said, which the SEC rejected earlier this year.



Sze added that education is paramount for increasing adoption of digital asset investment products. While Global X aims to bolster its thought leadership to help financial advisers educate their clients on the space, the firm also intends to make its research available to retail investors.



The ongoing downturn in crypto markets won’t impact how Global X thinks about new crypto products, Sze said. Still, he explained, the drawdown — coupled with macro headwinds such as elevated inflation, rising interest rates, and supply chain issues — could affect the adoption timeline of such offerings.



“I think in the near term, there’s likely going to be muted interest in not only digital assets but risk assets as a whole as investors flock to safety,” he said. “But longer term, I think digital assets remain very compelling.”



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Global X Plots Expansion of Crypto Products, Research

<div id="highlights-block_6273fecacca45" class="highlights">
 <ul>
 <li>Adam Sze spent more than a decade at New York Life Investment Management before his time at 21Shares</li>
 <li>Global X launched bitcoin and ether ETPs in Europe in March and more recently brought to market a metaverse ETF</li>
 </ul>
 
</div>



Asset manager Global X has poached an executive from the company with the world’s largest crypto ETP suite to be its head of digital assets product.&nbsp;



Adam Sze most recently worked as director of ETPs (exchange-traded products) for Switzerland-based 21Shares, where he led the team in the design, implementation and launch of more than a dozen physically-backed crypto ETPs.



New York-based Global X offers more than <a href="https://www.globalxetfs.com/explore/" target="_blank" rel="noreferrer noopener">90 ETF strategies</a> and has assets under management of roughly $40 billion.&nbsp;



The hire comes about two months after Global X launched its first physically backed crypto ETPs in Europe. The products, listed on Deutsche Börse Xetra in Germany, invest directly in bitcoin and ether.



Global X had filed in July 2021 <a href="https://cms.blockworks.co/global-x-adds-to-stack-of-bitcoin-etfs-proposed-to-sec/" target="_blank" rel="noreferrer noopener">to launch a bitcoin trust</a>, though the SEC has not yet approved such a product.



&#8220;The digital asset space has scaled from a decentralized currency to a digital economy, and the use case for digital assets has expanded to allow for the creation of applications that leverage the advantages of blockchain technology,&#8221; Global X Head of Product Development Alex Ashby said in a statement.&nbsp;



Before working at 21Shares, Sze held senior-level roles on product teams at New York Life Investment Management, covering traditional and alternative investment assets. He worked at the company for more than 12 years, according to his LinkedIn profile.&nbsp;



He joins Global X as the company is looking to expand its lineup of crypto thematic products and bolster its suite of crypto ETPs in Europe, Sze said in a statement.



A spokesperson for the firm declined to comment on specific potential future products, but noted that the company “is committed to cryptocurrency as an asset class.”&nbsp;



Global X has already launched several crypto-related ETFs in the US, including its Blockchain ETF (BKCH), which it brought to market last July. Its <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">Blockchain and Bitcoin Strategy ETF</a> (BITS) and its <a href="https://cms.blockworks.co/global-x-latest-etf-issuer-to-test-out-the-metaverse/" target="_blank" rel="noreferrer noopener">Metaverse ETF</a> (VR), began trading in November and April, respectively.



Though a 21Shares spokesperson did not immediately comment on Sze’s departure, the company last week announced the hire of former Uber executive Karan Chawla as its vice president of product.&nbsp;



Chawla will focus on 21Shares’ product roadmap to offer investors access to DeFi protocols, according to a company statement, and will seek to further drive institutional adoption of digital assets.



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Global X Poaches 21Shares Exec To Lead Digital Assets Product Push

<div id="highlights-block_61fd9e58430af" class="highlights">
 <ul>
 <li>The proposed fund would primarily invest in securities within a Global X-developed index</li>
 <li>Planned ETF joins similar products recently filed by First Trust, ProShares and Fidelity Investments</li>
 </ul>
 
</div>



Exchange traded fund-specialist Global X filed to launch a metaverse fund Friday, becoming the latest fund issuer dabbling in the digital space.



The New York-based firm’s Metaverse ETF will primarily invest in the securities of its own metaverse index, which consists of companies positioned to benefit from the development and commercialization of the metaverse, according to the <a href="https://www.sec.gov/Archives/edgar/data/1432353/000143235322000028/a485a-metaverse.htm" target="_blank" rel="noreferrer noopener">regulatory filing</a>.



Global X defines the metaverse as “a set of virtual, three dimensional, real-time rendered spaces and simulations that can be experienced simultaneously by users regardless of the users’ physical location.”



The document did not indicate a ticker or expense ratio.



A Global X spokesperson did not immediately return a request for comment.



Global X has about 90 ETFs trading in the US, with combined assets of roughly $40 billion. It launched its <a href="https://www.globalxetfs.com/funds/bkch/" target="_blank" rel="noreferrer noopener">Blockchain ETF (BKCH)</a> in July, which has grown to about $85 million in assets.



The firm also <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">brought to market</a> its Blockchain &amp; Bitcoin Strategy (BITS) in November. Unlike other bitcoin futures-based products launched in October by ProShares and Valkyrie Investments, BITS invests in both bitcoin futures contracts and stocks of blockchain companies.



Global X’s proposed fund joins others recently filed by <a href="https://www.sec.gov/Archives/edgar/data/0001364608/000144554621006106/etf2_485a.htm">First Trust</a>, <a href="https://cms.blockworks.co/proshares-files-for-metaverse-etf/">ProShares</a> and <a href="https://cms.blockworks.co/fidelity-plots-crypto-etfs/">Fidelity Investments</a>.



Metaverse ETFs available in the US include Roundhill Investments’ Roundhill Ball Metaverse ETF (META), which leads the segment with $820 million in assets, and Subversive Capital’s Metaverse ETF (PUNK), <a href="https://cms.blockworks.co/new-metaverse-etf-launches/">which launched last week</a>.



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Global X Latest ETF Issuer to Test Out the Metaverse

<div id="highlights-block_61de0e61f8817" class="highlights">
 
</div>


<div id="highlights-block_61de0e74f8818" class="highlights">
 <ul>
 <li>WisdomTree recently added bitcoin futures contracts to its Enhanced Commodity Strategy Fund and its Managed Futures Strategy Fund</li>
 <li>Adding exposure to bitcoin futures helps funds from a marketing perspective, according to Morningstar’s director of global ETF research</li>
 </ul>
 
</div>



Investors in mutual funds and ETFs may be getting exposure to crypto without even noticing, as fund managers have increasingly expanded their mandates to allocate to bitcoin futures contracts and other crypto-related investments.



ETF issuer WisdomTree, which has 75 ETFs trading in the US with nearly $50 billion in combined assets, now offers exposure to bitcoin futures contracts within its actively managed commodity and managed futures strategies.&nbsp;



BlackRock, the world’s largest asset manager, began allowing two of its funds with $70 billion in assets to offer crypto exposure a year ago and has also been allocating to bitcoin futures.



<h3 class="wp-block-heading">Crypto exposure in ETFs</h3>



WisdomTree’s Enhanced Commodity Strategy Fund (GCC), which may invest up to 5% of its net assets in bitcoin futures contracts, added a 3% allocation to bitcoin futures in October, a firm spokesperson told Blockworks. The fund has $225 million in assets.



“The 3% allocation to bitcoin futures was made from the fund’s position in gold, motivated by the view that bitcoin is often compared to digital gold,” WisdomTree Global CIO Jeremy Schwartz told Blockworks in an email.&nbsp;



As of Jan. 10, GCC reported a 9.4% allocation to gold, and its allocation to bitcoin shrunk slightly from October to about 2%, according to WisdomTree’s website.



The WisdomTree Managed Futures Strategy Fund (WTMF), which has $163 million in assets, gained the ability to allocate up to 5% bitcoin futures exposure on Jan. 1. It added a roughly 1.5% allocation to bitcoin futures contracts on Jan. 6, according to a firm spokesperson.



The low historical correlation between bitcoin futures and other asset classes bodes well for enhancing the risk-adjusted return profile, Schwartz explained.



“We are not in a full position based on the short-term pull-back we’ve experienced but also think the long-term trends represent an attractive entry point for our starter position in this strategy,” Schwartz added. “The weighting is more tactical and will evolve as the market evolves.”



Both GCC and WTMF are actively managed ETFs, which allows them to adapt to markets quicker than indexes with stakeholders with concerns trading of crypto futures, the WisdomTree executive explained.&nbsp;&nbsp;



“We expect, in time, even futures-based index strategies will see the diversifying appeal of bitcoin futures and look to add it to commodity strategies,” Schwartz said, “and we like being an early leader in this vein.”



Crypto-related investments have also been packaged within equity ETFs.&nbsp;&nbsp;



Simplify ETFs launched its US Equity PLUS GBTC ETF (SPBC) in May. The fund, which has $114m in assets, primarily invests in US equities while also offering investors a 10% exposure to bitcoin through the Grayscale Bitcoin Trust (GBTC).



Fund group Global X <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">brought to market</a> its Blockchain &amp; Bitcoin Strategy ETF (BITS) in November. The fund invests in global issuers that the firm believes are positioned to benefit from further advances in blockchain technology, as well as long positions on US-listed bitcoin futures contracts.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">Some are skeptical about the benefit of adding crypto exposure to funds, however. “Whether there is investment merit in adding exposure to bitcoin futures is debatable; there is no debate that it helps boost these funds’ marketing,” Ben Johnson, director of global ETF research for Morningstar, told Blockworks. “It is in many ways akin to how you see processed food marketed. ‘Now with Bitcoin!’ is becoming the ‘Now with Omega 3s’ of the asset management industry.”</blockquote>



Asset managers have one of three views of crypto, according to David Snowball, publisher of the Mutual Fund Observer.&nbsp;



“The first group avoids crypto and occasionally wonders about how to profit from the coming disaster,” Snowball explained. “The second group imagines adding a 5% position as a hedge to a traditional portfolio. The third group uses it as a marketing gimmick … or as a tool to goose lackluster returns.”



<h3 class="wp-block-heading">BTC exposure in mutual funds&nbsp;</h3>



BlackRock revealed in January 2021 filings that its Strategic Income Opportunities Fund (BASIX) and its Global Allocation Fund (MDLOX) could invest in cash-settled bitcoin futures traded on commodity exchanges registered with the Commodity Futures Trading Commission (CFTC).&nbsp;&nbsp;



According to a report obtained by Blockworks from BlackRock, the Strategic Income Opportunities Fund had long positions on 123 exchange-traded bitcoin futures contracts, as of June 30, which were set to expire on July 30, 2021. A separate report showed that the Global Allocation Fund had long positions on 80 bitcoin futures contracts, as of April 30, which were set to expire on May 28.



A BlackRock spokesperson declined to comment on the reasoning behind its bitcoin futures allocation levels or if the firm intends to allow more of its funds to make such investments.&nbsp;&nbsp;&nbsp;&nbsp;



<a href="https://cms.blockworks.co/neuberger-berman-begins-offering-exposure-to-crypto/" target="_blank" rel="noreferrer noopener">Neuberger Berman revealed</a> in an Aug. 11 <a href="https://www.sec.gov/Archives/edgar/data/0001317474/000089843221000598/nbaf-20210224.htm" target="_blank" rel="noreferrer noopener">SEC filing</a> that its Commodity Strategy Fund (NRBAX) would offer exposure to cryptocurrency investments and digital assets through crypto derivatives, such as bitcoin futures and ether futures, as well as investments in bitcoin trusts and ETFs.



The fund’s allocation to crypto-related investments was 0.88%, as of Nov. 30, according to a Neuberger Berman spokesperson.



Morningstar Analyst Bobby Blue said in a November <a href="https://www.morningstar.com/articles/1068472/article" target="_blank" rel="noreferrer noopener">research note</a> that 47 mutual funds and separately managed accounts held the Grayscale Bitcoin Trust as of September, which is the most of any crypto investment product.



Morgan Stanley <a href="https://cms.blockworks.co/morgan-stanley-funds-add-more-than-2-64m-shares-of-gbtc-in-q3/" target="_blank" rel="noreferrer noopener">bought millions of additional shares of GBTC</a> for a few of its funds during the third quarter of 2021.



Stone Ridge Asset Management revealed <a href="https://www.sec.gov/Archives/edgar/data/0001559992/000119312521055278/d129263d485apos.htm" target="_blank" rel="noreferrer noopener">in a February filing</a> that its Diversified Alternatives Fund (SRDAX) would look to generate returns by selling put options on bitcoin, bitcoin futures contracts and ETFs that invest in bitcoin futures or the crypto asset directly.



The $312 million fund had invested in 80 bitcoin futures contracts, which were set to expire on Nov. 28, 2021, according to an annual report released on Oct. 31.



Though a handful of managers that modified their funds to enable them to add investments such as bitcoin futures have begun allocating to crypto-related investments, others have not yet, Mutual Fund Observer’s Snowball noted. He added that prospectuses often contain strategies that managers have no intention of using.



“Large funds and ETFs are not known for being bold or innovative; their greater impulse is to retain assets, which is easier with calm mediocrity than with explosive moves,” Snowball said. “If one or two large funds … make dramatic gains in assets through crypto exposure, I would expect the herd to soon follow.”



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Which Mutual Funds, ETFs Are Making Crypto-related Investments?

<div id="highlights-block_61c36e84b351b" class="highlights">
 <ul>
 <li>The ProShares Bitcoin Strategy ETF (BITO) underperformed spot bitcoin by 2.34% from its launch on Oct. 19 to Dec. 21, according to Bloomberg Intelligence Analyst James Seyffart</li>
 <li>BITO’s December inflows total roughly $50 million so far, compared to $1.2 billion in October, FactSet data shows</li>
 </ul>
 
</div>



The underperformance of the US’s first bitcoin futures ETF relative to the crypto asset’s spot price in its first two months of trading limit the types of investors interested and ultimately its asset growth, according to industry professionals.&nbsp;



But offerings that include a smaller allocation to bitcoin futures contracts could see more demand in 2022, some argued, particularly among longer-term investors.



Bloomberg Intelligence ETF Analyst James Seyffart noted in a Twitter post on Wednesday that the ProShares Bitcoin Strategy ETF (BITO) underperformed spot bitcoin by 2.34% from its launch on Oct. 19 to Dec. 21.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The first <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> futures ETF &#8212; <a href="https://twitter.com/search?q=%24BITO&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BITO</a> &#8212; is trailing spot by 2.34% with just about two months of data. Extrapolating that out: it will underperform spot by 13-14% in it&#39;s first year&#8230; <a href="https://t.co/2saAfp20u0">pic.twitter.com/2saAfp20u0</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1473652943689863173?ref_src=twsrc%5Etfw">December 22, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Extrapolated out over 12 months, Seyffart added, BITO would trail spot bitcoin by between 13 and 14% in its first year on the market.&nbsp;&nbsp;



“That’s a pretty big gap between bitcoin and your fund,” Bloomberg Intelligence ETF Analyst Eric Balchunas told Blockworks, noting that many financial advisors likely would not invest in the offering on behalf of clients. “That said, I think BITO is a great trading tool, and I think it will continue to be used for short-term exposure. It tracks great short-term, and its correlation is awesome.”



Though BITO was the first bitcoin futures ETF to launch in the US, the Valkyrie Bitcoin Strategy (BTF) launched three days later. It currently has about $55 million in assets under management, according to Valkyrie Investments’ website.



The VanEck Bitcoin Strategy ETF (XBTF) and the Global X Blockchain and Bitcoin Strategy ETF (BITS) launched in November. XBTF and BITS have $17 million and $9 million in assets, respectively.



Unlike the other three bitcoin futures products, BITS also invests in ​​US companies that directly own digital assets and may gain access to blockchain companies indirectly through ETFs.



Industry professionals <a href="https://cms.blockworks.co/a-futures-based-bitcoin-etf-could-be-suboptimal-heres-why/" target="_blank" rel="noreferrer noopener">have labeled roll costs</a> as one of several downsides to bitcoin futures ETFs. Maintaining a smaller allocation to bitcoin futures allows the firm to be “nimbler” to potentially find better value and reduce roll costs, Global X Research Analyst Matt Kunke <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">told Blockworks last month</a>.



“I’m going to be watching it next year to see if it gets any looks,” Balchunas said of <a href="https://www.globalxetfs.com/introducing-bits-the-case-for-blockchain-equities-and-bitcoin-futures/" target="_blank" rel="noreferrer noopener">the Global X offering</a>.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“BITS just seems like it’s one of those ETFs that could be palatable enough to an advisor given that small roll [cost], but at the same time have more kick than a blockchain stock ETF.”</blockquote>



<h3 class="wp-block-heading">Remaining demand for bitcoin futures ETF?</h3>



BITO notched inflows of more than $1.2 billion from its launch until the end of October, according to FactSet Data. Flows into the product have slowed, as they totaled $542 million in November and $50 million so far in December.&nbsp;



“Obviously it has completely plateaued, as all of the people who wanted to buy BITO have bought it basically,” Balchunas said. “Maybe those flows trickle in for the next couple months.”



Dave Nadig, CIO and director of research for ETF Trends and ETF Database, said that investors, particularly those who have invested in commodities, understand the deficiencies of futures versus spot.



“The funds really target a small Venn diagram of people who want crypto exposure on a fairly short-term basis but are unwilling or unable to access the crypto markets directly,” he told Blockworks. “I would not expect the [assets under management] to move significantly, as I suspect these funds will be trading vehicles.”



Though Nadig added he does not expect any new “plain-vanilla” bitcoin futures ETFs, other types of products, such as WisdomTree’s Enhanced Commodity Strategy Fund (GCC), could make allocations to bitcoin futures.



GCC, an actively managed ETF seeking to provide broad exposure to a diversified basket of commodities, <a href="https://cms.blockworks.co/wisdomtree-plans-to-launch-more-crypto-offerings-in-2022/" target="_blank" rel="noreferrer noopener">became the first ETF</a> to add bitcoin futures in October.



<h3 class="wp-block-heading">Still no spot bitcoin ETF</h3>



The US Securities and Exchange Commission (SEC) has rejected a variety of <a href="https://cms.blockworks.co/when-will-the-sec-approve-a-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">spot bitcoin ETF proposals</a>, while regulators in Europe, Canada and other regions have allowed such products to trade.



“The SEC is unlikely to approve a spot Bitcoin ETF in 2022, we believe, leaving US investors reliant on less-efficient futures, trusts and themed equity ETFs for fund exposure,” Seyffart wrote in a Dec. 9 research note, adding that Ethereum futures ETFs could reach US exchanges before a spot bitcoin product.&nbsp;



As part of its <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">denial of VanEck’s planned spot bitcoin fund</a>, the SEC said in a letter that the Cboe BZX Exchange, on which the ETF’s shares would have traded, “has not met its burden” that the proposal meets the requirements of the Securities Exchange Act of 1934.



“The SEC cannot have been much more clear in their guidance. Any approval would be a shocking surprise,” Nadig said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I give essentially zero odds to a pure Bitcoin ETF in 2022.”</blockquote>



Balchunas said he always expected the ProShares Bitcoin Strategy ETF to be used by traders more than long-term investors, noting that his optimism for an ETF that invests directly in bitcoin remains strong.&nbsp;



“I think a spot bitcoin ETF, and ultimately different takes on it — like a spot Ethereum, a crypto picking active ETF, a crypto basket…S&amp;P of crypto — is going to fly off the shelves,” he said, “and be the big category that we all are expecting.”



<hr class="wp-block-separator">
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<hr class="wp-block-separator">

What Does Demand For Bitcoin Futures ETFs Look Like in 2022?

<div id="highlights-block_6193c8373a99e" class="highlights">
 <ul>
 <li>The Global X Blockchain &amp; Bitcoin Strategy ETF (BITS) has a fee of 65 basis points, compared to the 95bps fee of ProShares and Valkyrie bitcoin futures products</li>
 <li>Fund launch comes on the same day as the VanEck Bitcoin Strategy ETF, though blended nature of fund differentiates the offering from the three other US bitcoin futures-focused ETFs, Bloomberg Intelligence ETF analyst says</li>
 </ul>
 
</div>



Global X’s latest ETF is set to join other recently launched bitcoin-linked offerings in the US market Tuesday, though the firm’s product goes beyond just investing in futures contracts.



In addition to long positions on US-listed bitcoin futures contracts, the Global X Blockchain &amp; Bitcoin Strategy ETF (BITS) invests in the equity securities of global issuers that the firm believes are positioned to benefit from further advances in blockchain technology.&nbsp;



These include companies that derive, or expect to obtain, at least half of their revenues, operating income or assets from digital asset mining or blockchain-related applications, transactions, integration and hardware, according to <a href="https://www.sec.gov/Archives/edgar/data/1432353/000143235321000530/a497k-blockchainbitcoinstr.htm" target="_blank" rel="noreferrer noopener">the fund’s summary prospectus</a>.&nbsp;



BITS may also invest in US companies that directly own digital assets and may gain access to blockchain companies indirectly through ETFs, the filing notes.



&#8220;As blockchain technologies advance and digital assets see increased adoption, we believe there will be winners across both equities and digital assets themselves, and therefore we want to maintain exposure to both pieces of the theme’s ecosystem,&#8221; Global X Research Analyst Matt Kunke told Blockworks.



The fund comes after the launch of the first bitcoin futures ETF in the US — the ProShares Bitcoin Strategy ETF (BITO), which hit the market on Oct. 19. Valkyrie Investments’ Bitcoin Strategy ETF (BTF) launched three days later.&nbsp;



BITS is being listed the same day as <a href="https://cms.blockworks.co/vanecks-bitcoin-futures-etf-set-to-launch-tuesday/" target="_blank" rel="noreferrer noopener">VanEck’s Bitcoin Strategy ETF (XBTF)</a>. These two funds charge a fee of 65 basis points — lower than the 95bps fee of the ProShares and Valkyrie offerings.



BITO, BTF and XBTF primarily invest in bitcoin futures contracts.



Targeting roughly 50% bitcoin futures exposure should enhance the Global X fund’s capacity, given futures position limits at the CME, Kunke explained. Maintaining a smaller allocation to bitcoin futures also allows the firm to be &#8220;nimbler&#8221; to potentially find better value and reduce roll costs, he added.



&#8220;Many of the existing products today are designed to be access vehicles for bitcoin futures, which we believe are more geared to shorter-term investors,&#8221; Kunke explained. &#8220;BITS takes a distinct approach focused more thematically on the bitcoin and digital assets, which believe is more relevant to long-term investors.&#8221;



Bloomberg Intelligence ETF Analyst James Seyffart noted that the Global X fund’s focus on blockchain companies makes it more similar to crypto thematic equity funds than the bitcoin futures ETFs already on the market.&nbsp;



“There&#8217;s obviously demand for products like this with high correlation to bitcoin and crypto more broadly,” he told Blockworks.&nbsp;



The largest blockchain fund in the US is Amplify Investments’ Transformational Data Sharing ETF (BLOK). That fund launched in January 2018 and currently has about $1.7 billion assets under management.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“While Global X is a little late here, I think if they can provide solid outperformance alongside very high correlation and beta to the bitcoin and crypto market it may find a solid lane for itself among advisors and investors who aren&#8217;t ready or who are not allowed to fully jump into holding cryptocurrency directly,” Seyffart explained.</blockquote>



Founded in 2008, Global X has 88 ETFs trading in the US with combined assets of roughly $44 billion, according to <a href="https://www.etf.com/channels/global-x-etfs" target="_blank" rel="noreferrer noopener">ETF.com</a>.&nbsp;



Though Global X’s newest ETF is actively managed, the firm launched an index-based <a href="https://www.globalxetfs.com/funds/bkch/?utm_source=Twitter&amp;utm_medium=cpc&amp;utm_content=BKCH" target="_blank" rel="noreferrer noopener">Blockchain ETF (BKCH)</a> in July. The fund, which has an expense ratio of 50 basis points, has returned 25.6% in the trailing three months, as of Nov. 11, according to data by FactSet.&nbsp;



BKCH’s top five holdings are Marathon Digital, Coinbase, Riot Blockchain, Hut 8 Mining and Voyager Digital.



Global X <a href="https://cms.blockworks.co/global-x-adds-to-stack-of-bitcoin-etfs-proposed-to-sec/" target="_blank" rel="noreferrer noopener">also proposed</a> to the US Securities and Exchange Commission (SEC) in July to launch a bitcoin trust, which would hold the crypto asset directly. <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">The SEC denied</a> VanEck’s planned spot bitcoin ETF last week, and many other similar products await regulatory approval.



This story was updated on Nov. 16, 2021, at 12:45 p.m. ET.



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

Global X Offers Different Type of Bitcoin Futures ETF

<div id="highlights-block_611fdf86be34b" class="highlights">
 <ul>
 <li>Proposed fund will invest in companies involved in digital asset mining, applications, transactions, hardware and integration, as well as up to 25% in bitcoin futures</li>
 <li>Limiting the futures allocation could be an attempt by Global X to get to market quicker, says Morningstar’s director of global ETF research</li>
 </ul>
 
</div>



As many fund firms have launched or filed for products focused on investing in blockchain companies or bitcoin futures, <a href="https://www.googleadservices.com/pagead/aclk?sa=L&amp;ai=CQstg-sQfYcD2PODUvdMP89GWgA787Iy5ZPrbicLRC8PA5bLeCAgAEAEguVRgybaJh8yjwBegAYTZpNYDyAEByAPYIKoEQE_Qeiec_l9qTJF84orSizDMDykc47EbsTIG54vio4tCXH8gxmq7-kyanKlU_NIgkw9sY7vg-TAlDndmniTqLh3ABJGTuILVAYAFkE6gBmaAB-Sm2ymIBwGQBwGoB6a-G6gHuZqxAqgH8NkbqAfy2RuoB_PRG6gH7tIbqAf_nLECqAfK3BuwCAHSCAUQAiCEAZoJHGh0dHBzOi8vd3d3Lmdsb2JhbHhldGZzLmNvbS-xCQd4_utctTTiuQkHeP7rXLU04vgJAYoKNGh0dHBzOi8vZ28uZ2xvYmFseGV0ZnMuY29tL2wvNzUwNTQzLzIwMjAtMDUtMTMvMjVwcXSYCwHgCwGqDAIIAbgMAYgUAsgUi4GD28O_h_dg0BUBmBYB-BYBgBcBkhcJEgcIARADGJsB&amp;ae=2&amp;ved=2ahUKEwiPu7Kb8L_yAhVRBs0KHShzCAoQ0Qx6BAgCEAE&amp;dct=1&amp;dblrd=1&amp;sival=AF15MEB68h0N3pGv6RtNn8GCe142t7Z-7YG8vR5_cDKPfN6sjnb6RDHvtoQobVNb2RScHJQe372jpkCbwdjD92ZPbKd2oyeUFc8teO-isuN_BY_tMjylJ_LBuEjMsiFcS5OQJ_2GaltAu75_KzF8HipZ5qCuzAOgwkp_N0tU8uSwTbmi_S3WgVw&amp;sig=AOD64_1tilT8vWu5GrxD1jFwX2JvbiHzpg&amp;adurl=https://www.globalxetfs.com/%3Futm_source%3Dgoogle%26utm_medium%3Dcpc%26utm_content%3Dbrand" target="_blank" rel="noreferrer noopener">Global X</a> revealed plans on Thursday to bring to market a product that does both.



The Global X Blockchain &amp; Bitcoin Strategy ETF will primarily invest at least 80% of its net assets in blockchain companies and digital asset funds, as well as in long positions on US-listed bitcoin futures contracts, according to an Aug. 19 <a href="https://www.sec.gov/Archives/edgar/data/1432353/000143235321000425/a485a-blockchainbitcoinfut.htm" target="_blank" rel="noreferrer noopener">SEC disclosure</a>.&nbsp;



The document did not indicate a ticker or expense ratio for the planned offering. A Global X spokesperson declined to comment beyond the filing.&nbsp;



Such companies and funds in which the ETF will invest include those that directly own “a material amount” of digital assets, the document notes, or derive at least half its revenue, or operating income from digital asset mining or blockchain applications, transactions, hardware and integration.



Like other funds investing in bitcoin futures, the actively managed Global X ETF seeks to gain exposure to these instruments and certain digital asset funds through investments in a subsidiary organized in the Cayman Islands. But the fund may not invest more than 25% of the fund’s total assets in the subsidiary at each quarter-end of its fiscal year, the filing states.



“Limiting the futures allocation may allay any concerns the SEC would have regarding capacity, given the limits on how much of a given futures contract the fund could own,” Ben Johnson, Morningstar’s director of global ETF research, told Blockworks. “It might be a play to get to market more quickly than those ETFs that have filed to own some combination of futures, trusts and Canada-listed ETFs.”



The filing is one of many to be filed in recent weeks, as some industry watchers have grown more pessimistic about the SEC approving an ETF that would physically hold bitcoin by the end of the year. Venture capitalist <a href="https://cms.blockworks.co/kevin-oleary-bitcoin-etf-wont-be-approved-until-at-least-2023/" target="_blank" rel="noreferrer noopener">Kevin O’Leary recently told Blockworks</a> that he didn’t expect the SEC to approve a bitcoin ETF until 2023.



Global X’s disclosure comes after the New York-based fund group last month launched its <a href="https://www.globalxetfs.com/funds/bkch/?utm_source=google&amp;utm_medium=cpc&amp;utm_content=bkch&amp;utm_campaign=search&amp;gclid=Cj0KCQjwpf2IBhDkARIsAGVo0D05nH-riAhJAsYXBNptatm66tLIWfsr9vTXbCSsqF0CWY2NeVQbGF0aAiVBEALw_wcB" target="_blank" rel="noreferrer noopener">Blockchain ETF (BKCH)</a>. Later in July, the firm filed for <a href="https://cms.blockworks.co/global-x-adds-to-stack-of-bitcoin-etfs-proposed-to-sec/" target="_blank" rel="noreferrer noopener">an ETF that would hold bitcoin</a>, joining about a dozen others awaiting approval from the SEC. 



SEC Chairman Gary Gensler’s comments about potentially favoring ETFs limited to bitcoin futures have led many issuers to apply for products that do just that in the meantime.&nbsp;



<a href="https://cms.blockworks.co/invesco-proshares-plan-to-launch-bitcoin-futures-based-etfs/" target="_blank" rel="noreferrer noopener">Invesco and Proshares</a> were the first to file for bitcoin futures products following Gensler’s remarks, and <a href="https://cms.blockworks.co/valkyrie-plots-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">Valkyrie</a>, <a href="https://cms.blockworks.co/vaneck-files-for-bitcoin-strategy-etf/" target="_blank" rel="noreferrer noopener">VanEck</a> and <a href="https://cms.blockworks.co/galaxy-adds-to-stack-of-bitcoin-futures-etf-filings/" target="_blank" rel="noreferrer noopener">Galaxy Digital</a> all followed suit. 



ProShares parent company ProFunds several weeks ago <a href="https://cms.blockworks.co/profunds-launches-bitcoin-futures-strategy/" target="_blank" rel="noreferrer noopener">brought to market</a> the first publicly available US mutual fund or ETF designed to provide investment results that generally correspond to the performance of bitcoin.



“It would also be less messy from a tax perspective relative to a futures-focused product,” Johnson said of Global X’s latest proposed ETF. “My best guess is that this is a speed-to-market play on their part &#8211; similar to what we’ve seen with the recent mutual fund launches.”



Want more investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a>&nbsp;September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

Global X Opts to Try to Bring Blended Crypto ETF to Market

<div id="highlights-block_60f9cc661bb2a" class="highlights">
 <ul>
 <li>Thematic fund manager’s filing follows Ark’s similar proposal, SEC’s postponement on decisions of bitcoin ETF approvals.</li>
 <li>ETF research director at Zacks Investment Research says first-mover advantage could be wide if bitcoin ETFs not approved on same day.</li>
 </ul>
 
</div>



The SEC’s hesitation in greenlighting a bitcoin ETF is not stopping issuers from filing to launch them.



Global X, a New York-based fund group with more than $35 billion in assets under management across about 80 ETFs, is looking to bring to market the Global X Bitcoin Trust, according to <a href="https://www.sec.gov/Archives/edgar/data/1874070/000093041321001317/c102050_s1.htm" target="_blank" rel="noreferrer noopener">a July 21 SEC disclosure</a>.



The proposed ETF, which plans to hold bitcoin, would trade on the Cboe BZX Exchange, the filing states. There is no ticker or expense ratio yet listed for the product.



The fund becomes the latest such product added to the stack of proposed offerings that US regulators are considering. Ark Invest partnered with Switzerland-based 21Shares to file for a bitcoin ETF last month. The SEC has delayed its decision in recent weeks on the bitcoin ETF applications of earlier registrants, such as <a href="https://cms.blockworks.co/sec-delays-approval-of-vaneck-bitcoin-etf-again/" target="_blank" rel="noreferrer noopener">VanEck</a>, <a href="https://cms.blockworks.co/sec-postpones-decision-on-valkyrie-bitcoin-etf-to-august/" target="_blank" rel="noreferrer noopener">Valkyrie Digital Assets</a> and WisdomTree Investments.



Global X’s plans come a week after the firm launched its <a href="https://www.globalxetfs.com/introducing-the-global-x-blockchain-etf-bkch/" target="_blank" rel="noreferrer noopener">Blockchain ETF (BKCH)</a>. The fund seeks to invest in companies involved in digital asset mining, blockchain transactions and applications, digital asset hardware and blockchain integration.



At the time of launch, Coinbase Global was BKCH’s top holding, at about 13%, with Marathon Digital Holdings and Riot Blockchain following at about 11%. Voyager Digital carries a nearly 10% weighting in the fund.



“Sponsors continue to file for bitcoin ETFs and some like Global X and VanEck are doing both [bitcoin and blockchain],” Mishra said. “In case a bitcoin ETF is not approved, then at least they have one product which can have indirect exposure to crypto to their clients.”



<h3 class="wp-block-heading">When could it be approved?</h3>



Optimism around the SEC approving a bitcoin ETF in 2021 led to firms filing to launch such a product, said Neena Mishra, director of ETF research for Zacks Investment Research.



Though the SEC this year added commissioner Gary Gensler, who has a background in blockchain technology, Gensler’s recent comments around the lack of investor protections on crypto exchanges have led some to believe a bitcoin ETF won’t be greenlit until 2022, Mishra added.



“I would never have imagined that I would be in this situation where we would not yet have approved one and other countries are moving ahead,” SEC Commissioner <a href="https://cms.blockworks.co/bitcoin-etf-money-laundering-concerns-at-center-of-b-word-event-regulatory-panel/" target="_blank" rel="noreferrer noopener">Hester Peirce said</a> during <a href="https://www.thebword.org/c/the-b-word" target="_blank" rel="noreferrer noopener">The B-Word</a>’s regulatory panel on Wednesday. “We should view it as trying to give people the widest range of options possible.”



Several bitcoin ETFs hit the market in Canada earlier this year, and the first ETF in Latin America with 100% exposure to bitcoin <a href="https://cms.blockworks.co/brazil-bitcoin-etf-follows-similar-launches-in-canada/" target="_blank" rel="noreferrer noopener">launched in Brazil</a> last month.



Mishra noted that issuers in the US also continue to file for bitcoin ETFs in the hope that the SEC will approve them all at the same time. If not, the first fund or funds will have a significant “first-mover advantage” above the others, she added, with the exception of Ark, which she said will likely be attractive to investors no matter when it launches.&nbsp;



Canada’s first bitcoin ETF by Purpose Investments, which launched in February has gathered $890 million in assets (CAD). Meanwhile Evolve Fund Group’s bitcoin ETF, which launched a day later, holds about $68 million.&nbsp;



“I think [the SEC] would want to appear impartial since they have been delaying and postponing the applications for such a long time,” Mishra said.