Jack Kubinec

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Toronto-based Cypherpunk Holdings <a href="https://blockworks.co/news/lightspeed-newsletter-sol-strategies-rebrand">rebranded as Sol Strategies</a> and announced it would be accumulating Solana three months ago. It’s gotten busy since then.&nbsp;



The holding company has acquired two separate validator operations, accumulated over 142,000 SOL worth roughly $27 million at current prices, hired Kraken’s former senior director of engineering to be its head of staking, and applied to be listed on the Nasdaq. Just this week, it signed a credit facility with its board chair to buy $17.3 million worth of SOL tokens and announced a private placement deal with ParaFi Capital worth roughly $19 million.



MicroStrategy CEO Michael Saylor is fond of saying that “there is no second best” crypto behind bitcoin. If there is a second-best version of MicroStrategy’s corporate <a href="https://blockworks.co/news/microstrategy-btc-purchase-recap">crypto purchasing playbook</a>, it just might be the one Sol Strategies is running.&nbsp;



Like Saylor’s firm, Sol Strategies is focused on acquiring crypto as a treasury asset. The difference, CEO <a href="https://www.youtube.com/watch?v=GyWjoGcaeO0">Leah Wald</a> told me, is that Sol Strategies also runs a validator business and invests in Solana ecosystem projects, making its approach “more dynamic.”



Following Sol Strategies’ two validator acquisitions, it now is responsible for a combined 1.5 million staked SOL, which makes it roughly the 65th largest Solana validator. Wald declined to say which ecosystem projects Sol Strategies has taken positions in, if any.&nbsp;



Wald came to Cypherpunk Holdings in July 2024 after a four-year run at the helm of US-based crypto management firm Valkyrie, which had its ETF business <a href="https://blockworks.co/news/coinshares-buys-valkyrie-fund-business">acquired by CoinShares</a> in March. Wald had been a board member at Cypherpunk since October 2021.



Charged with taking over a company that had seen its stock trade sideways for years, Wald — who was among the first to file for and issue <a href="https://blockworks.co/news/valkyrie-plots-bitcoin-futures-etf">bitcoin futures ETFs</a> — saw a new opportunity. <a href="https://blockworks.co/news/lightspeed-newsletter-solana-bull-run">Solana was hot</a>, but it lacked ETFs that investors could trade on traditional stock exchanges. So far, the SOL strategy appears to be working out.&nbsp;



Since debuting as Sol Strategies in September, the company’s stock price is up more than 1,700% — and that’s while a Nasdaq listing is still pending approval.



There’s probably a storm approaching Sol Strategies’ parade in the form of Solana ETFs. Currently, Sol Strategies is one of just a <a href="https://www.thenew.money/trend/solana-holders">few</a> publicly-traded companies giving investors <a href="https://blockworks.co/news/bitwise-ceo-solana-ncredible-emerging-asset">regulated exposure</a> to Solana’s price action by virtue of holding the asset in its treasury.&nbsp;



If Solana ETFs get approved, the market would gain competitors offering a similar service (although whether or not those ETF <a href="https://blockworks.co/news/grayscale-sol-etf-filing">issuers include staking rewards</a> will be key to watch). Sol Strategies will hope the market treats it like a bitcoin mining stock in that case.



But for now, Wald and Sol Strategies’ big bet is paying big dividends.



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Meet Sol Strategies: The MicroStrategy of Solana

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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ICYMI, Sol Strategies <a href="https://www.newsfilecorp.com/release/236287">announced</a> that it was investing CAD $25 million ($17.4 million) in the Solana ecosystem earlier this week.&nbsp;



CEO Leah Wald told me ahead of the new year that Sol Strategies was focused on building up the “next level” of its business strategy.&nbsp;



Obviously, given Sol’s focus, the firm is gonna be bullish on the ecosystem, but Wald noted how pleasantly surprised she was at the amount of developer activity and overall enthusiasm for Solana right now.&nbsp;



She is skeptical, however, about a solana ETF being approved in the US “anytime soon.”



“I think there&#8217;s quite a while until a SOL ETF gets approved. During that time, as a former issuer, I know that you have a long time where you&#8217;re working with the staff and you&#8217;re working on education. That gives [potential issuers] a year…to educate the staff and make sure that everybody&#8217;s up to speed on what you know SOL actually is, and the merits and benefits, and provide…that additional timeline for maturity,” she explained.&nbsp;



But she does think that Canada is likely to approve a SOL ETF from <a href="https://pages.3iq.io/solana">3iQ</a> before we see a slew of US products because the Canadian issuer is “always ahead of the US.”



Out of curiosity, and given Wald’s experience, I pushed her on why she thinks a potentially crypto-friendly regulator wouldn’t look to get an ETF that holds SOL out the door. She told me part of her reasoning was exactly because of the changing leadership at the SEC.&nbsp;



If the new SEC chair “came in and said, ‘okay, all crypto ETFs are approved overnight,’ I think that that&#8217;s dangerous, actually,” she explained. It would be better to see a regulator who’s willing to put in the work to understand the differences between something like Solana and Ripple and speak to potential issuers prior to just greenlighting ETFs.



I guess we’ll have to make do with the crypto ETFs we have at home.



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SOL ETFs unlikely to be approved in US ‘anytime soon’

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Toronto-based holding company Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach, the firm disclosed today.



Following the rebrand, Sol Strategies will begin focusing on staking Solana and investing in the Solana ecosystem’s projects and infrastructure, the company said in a press release. The strategy shift was unanimously approved by the company’s board of directors at its July 30 shareholder meeting, Sol Strategies said in a press release.



Cypherpunk Holdings has been scaling up its Solana exposure for months now — particularly since ex-Valkyrie CEO Leah Wald took over the top job in early <a href="https://x.com/LeahWald/status/1810685437687525423">July</a>. When it disclosed its holdings on March 31, Cypherpunk held zero SOL. By July 16 — a week after Wald took over — Cypherpunk had 63,000 SOL. On Aug. 1 — two days after Cypherpunk internally finalized its strategy shift — that figure had swelled to 86,300 SOL, worth some $11.6 million at current prices.&nbsp;



Still, rebranding the company around just one blockchain ecosystem is pretty eye-catching. The revamped <a href="https://solstrategies.io/">website</a> reads that Sol Strategies’ “edge” is investing “in the Solana ecosystem.” Sol Strategies will also operate a Solana validator node through a third party service provider, the company said in a press release.



The company, which began dealing in crypto in 2018, trades on the Canadian Securities Exchange and OTC market.



In comments shared with me today, Wald said the strategy shift wasn’t “predetermined” when she took over as CEO, adding that Solana is a “high-growth” investment opportunity that seemed to be the “next logical step” for Cypherpunk Holdings.



At first blush, the mental model for this rebrand could be that Sol Strategies is offering an upgraded version of a spot SOL ETF. Investors in the company’s stock get compliant, regulated exposure to not only the price of SOL with staking and validator revenue included, but to the success of Solana ecosystem projects as well.&nbsp;



Wald told me a version of this today: ETFs are just passive spot funds, she said, adding: “Our approach goes beyond passive exposure as we are actively engaged in staking and exploring strategic investments.”&nbsp;



Plus, something that Ethereum ETF issuers are <a href="https://blockworks.co/news/education-required-to-spur-eth-etf-outflows">learning the hard way</a> is that demand for regulated crypto investment products only runs so deep. In March 2024, Cypherpunk Holdings <a href="https://solstrategies.io/wp-content/uploads/2024/09/cypherpunk_q2fs_05292024.pdf">reported</a> roughly $23 million in assets. In the institutional investment world, that isn’t very much money.&nbsp;



Perhaps Wald — who had been a Cypherpunk Holdings board member since 2021 before stepping in as CEO — is making the bet that Sol Strategies can differentiate itself from its larger competitors by being the best possible regulated investment in a certain niche.



“As the only publicly traded company in North America focused on the Solana ecosystem, we are providing exposure to Solana’s growth and innovation prior to Solana-specific ETFs [being] approved in either the US or Canada,” Wald said.



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A publicly-traded holding company is all-in on Solana

Ben Strack

Valkyrie Investments has laid off 30% of its staff in recent months and has closed a fund as the crypto ETF issuer tries to stay agile amid tough market conditions.&nbsp;



The cuts amount to six people in the firm’s sales and marketing division — the company now has 16 full-time employees, Valkyrie CEO Leah Wald told Blockworks.&nbsp;



The layoffs weren’t made all at once, she added, as the company started staff cuts in June.&nbsp;



“Like many other companies in our industry, cuts needed to be made and ours were limited to sales and marketing,” Wald told Blockworks in a message. “We have also taken a hard look at our product mix and will be launching a new product offering soon.”



Wald said the firm is focused on launching risk-managed products but declined to comment further. <a href="https://cms.blockworks.co/news/valkyrie-adds-crypto-smas-as-institutions-eye-digital-assets/">Valkyrie unveiled separately managed accounts</a> (SMAs) last month for financial professionals looking to offer crypto exposure to clients.



The SMAs expanded a product suite that also includes two ETFs trading in the US — the Valkyrie Bitcoin Strategy ETF (BTF) and the Valkyrie Bitcoin Miners ETF (WGMI).&nbsp;



BTF was the second bitcoin futures ETF to launch in the US — a few days behind ProShares’ Bitcoin Strategy ETF (BITO) — in October 2021. The Valkyrie fund has about $18 million in assets under management, while BITO has nearly $600 million.&nbsp;&nbsp;



The firm closed its Balance Sheet Opportunities ETF (VBB) last month. The fund, which launched last December, invested in public companies with exposure to bitcoin.



Industry watchers have said <a href="https://cms.blockworks.co/news/more-delistings-of-blockchain-etfs-could-be-coming/">the delisting of several crypto-related ETFs in Australia</a> earlier this month could become a global trend as the so-called crypto winter trudges on.&nbsp;



“We are not considering closing any other ETFs at this time,” Wald said. “The Balance Sheet Opportunities ETF did not receive the traction Valkyrie had hoped for given the many competitor copycat funds that also entered the market.”



The fund closure and cuts have come during a bear market amplified recently by the collapse of crypto exchange FTX, which <a href="https://cms.blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing/">filed for bankruptcy</a> last week. In its latest bankruptcy filing, published Monday, FTX lawyers said the bankruptcy estate <a href="https://cms.blockworks.co/news/ftx-doom-draws-dozens-of-federal-state-international-agencies/">may have as many as 1 million creditors</a>.



Though various cryptoasset managers <a href="https://cms.blockworks.co/news/funds-with-ftx-exposure-have-7-to-12-of-aum-trapped-report/">had direct exposure</a> to FTX or its native token, FTT,&nbsp; <a href="https://twitter.com/valkyriefunds/status/1591101462549233664?s=46&amp;t=RQG-VZJo459wRu9u9BIObg">Valkyrie said in a tweet on Nov. 11</a> that it did not engage with FTX or Alameda Research and that client assets were secure.



“The same controls that kept us from being exposed to this liquidity crunch also spared us from the fallout of Celsius, Voyager Digital or Three Arrows Capital,” the firm added.



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Valkyrie Shrinks Staff to 16 People After Latest Cuts

<div id="highlights-block_62e05c6841312" class="highlights">
 <ul>
 <li>Wald calls Grayscale’s lawsuit against the SEC “egregious and aggressive” as Valkyrie continues pursuing spot bitcoin ETF</li>
 <li>Institutions are showing more interest in venture investing within the space amid the volatility</li>
 </ul>
 
</div>



Cryptoasset manager Valkyrie is “cooking up a lot” on the product side, according to the firm’s CEO, as it seeks to build out its offerings and relationships with institutions during the bear market.



“The climate now definitely has a negative on us or any of the other issuers in the market that have crypto-adjacent or crypto products, but we just try to use this opportunity to keep our heads down and build,” Valkyrie CEO Leah Wald told Blockworks in an interview.&nbsp;



Wald noted that the firm is interested in launching more actively managed strategies and continues to pursue the “holy grail” spot bitcoin ETF. The company last week launched <a href="https://valkyrieinvest.com/press/introducing-valkyrie-ventures/" target="_blank" rel="noreferrer noopener">its venture arm</a>, led by <a href="https://www.linkedin.com/in/llu%C3%ADs-pedragosa-a129a1/" target="_blank" rel="noreferrer noopener">Lluis Pedragosa</a>, which is set to make early-stage investments in blockchain technology. 



Valkyrie launched its bitcoin futures ETF (BTF) last October and brought to market its Balance Sheet Opportunities ETF (VBB) and its bitcoin mining ETF (WGMI) in December and February, respectively.&nbsp;&nbsp;



But benture investing can be more attractive to institutions who are not as interested in exposure to volatile digital assets, the CEO noted. BNY Mellon and WedBush Financial Services were among the institutional players that participated in <a href="https://cms.blockworks.co/valkyrie-raises-11m-in-push-to-offer-more-crypto-funds/" target="_blank" rel="noreferrer noopener">Valkyrie’s $11 million funding round</a> last month. 



“Studies have shown in the past that venture investing tends to realize the best returns in a bear market,” Wald said. “In bear markets you see builders, and we’ve seen that time and time again, not just in traditional markets but definitely in the past crypto winters as well.”



Keep reading for more excerpts from Blockworks’ interview with Wald.



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Blockworks: How is the firm thinking about its pursuit of a spot bitcoin ETF?



Wald: We absolutely are still working toward our goal of bringing the holy grail — a spot bitcoin ETF — to market, especially when considering how much demand bitcoin futures ETFs have seen.



We still think that until a crypto exchange registers with the SEC, we’re not going to see spot bitcoin ETF approval. So we’re definitely, unfortunately, in a holding pattern there waiting for an exchange.



Exchanges can take 12 to 18 months for approval once registering with the SEC. Unfortunately, that’s probably a realistic timeline.



Blockworks: Fellow spot bitcoin ETF hopeful Grayscale Investments decided to <a href="https://cms.blockworks.co/grayscale-faces-uphill-battle-with-lawsuit-against-sec/" target="_blank" rel="noreferrer noopener">sue the SEC</a> last month. How do you see that playing out for them and other issuers, like Valkyrie, who chose not to go that route? 



Wald: We think it’s quite awful that Grayscale is trying to go against the SEC with such an aggressive approach when it’s clearly been proven throughout history that working with regulators and collaborating has always been successful for trying to get regulated assets approved, especially in the ETF wrapper.&nbsp;



So we do not think this is prudent, and unfortunately are definitely not holding our breath for a positive outcome for Grayscale or the broader market while these types of honestly egregious and aggressive activities are being pursued. I think unfortunately it does shine a negative light on our industry and on the issuers, although I do think if the rest of us continue to collaborate and pursue education with the regulators, then we can probably get to that outcome that we want of that spot bitcoin ETF approval.



It could be seen as a positive in the long-term, because again, working with the SEC is a marathon, not a sprint.



Blockworks: What are your thoughts on the mining industry as those companies endure the tough market conditions?



Wald: We’re very bullish on miners and the mining industry. We definitely see a continued push for renewable energy — more sources like wind, hydro, solar — and we think that’s really because of the strategic advantage of being environmentally friendly, which has proven to have higher margins.



It’s a great industry where builders definitely prove themselves during the bear markets, and we’re nowhere close to that break-even point where miners will start to shut off. We’re not even close.



We really think that larger firms with more capital are going to be buying up more miners and strengthening their positions, and we’ll continue to see more innovative lending facilities in order to realize some of these investment opportunities. There are miners with very strong balance sheets that can take advantage of this opportunity by themselves without even needing a joint venture or partnership with a larger institution or firm. And those with weaker balance sheets are far more likely to be acquired rather than going out of business.



Blockworks: ProShares launched the first bitcoin futures ETF and has the lion’s share of assets. Being the second to market with such a product, how do you seek to build that fund up?



Wald: Notoriously, second-movers do see that type of smaller demand. Demand definitely could be more robust, but even the [Volatility Index] (VIX) futures took years to gain traction. We definitely expect demand to eventually support more than one fund, if not three, and hopefully we see other structures that are approved in the future, such as the bitcoin spot ETF.



But in the interim…it does just come down to educating institutions for longer-term relationships — getting on the platforms and just being that preferred asset manager to any institutions that look to allocate in the future after this volatility has moved out.



Blockworks: What have been some takeaways from your conversations with institutions with regard to Valkyrie’s products?



Wald: Large investors — institutions, sovereign wealth funds, pensions, endowments — they can take years to perform due diligence. So I think that people in our industry forget that just because something is an interesting buy doesn’t mean that a professional money manager or an institution is allowed to buy yet. It needs to pass through their investment committee, it needs a thesis that they can back up…and someone to champion that. And it also needs to sit within their risk parameters.



I think that the longer these funds are in the market, the better opportunity there will be when the markets start to reverse, because that will have provided that fund life and a trust with the managers and issuers in the market, so they can buy when they want to buy.



Blockworks: What is the firm monitoring from a macro perspective?



Wald: Like all other bitcoiners, we’re definitely constantly monitoring and concerned about the inflation issues, not just in the US, but globally.



As we’ve seen throughout history, there’s a great correlation between the equity market and the crypto market, so as long as we’re seeing downward pressure in traditional finance markets, we think it’s unfortunately going to continue in crypto markets as well.



At the FOMC meeting this week, we’re expecting a 75 [basis points] hike, so that should go as planned. We expect the market to remain flat and go maybe a small amount higher.



I guess we’ll see what happens with the GDP numbers that come out this week. They’re likely to confirm a recession, and that doesn’t help anyone.



Blockworks: What do you see as the silver lining to this bear market?



Wald: Having been through a couple cycles now, I think what’s most interesting to me that I also think we’ll see is just all the innovation that comes out of bear markets. There’s always a cleansing that happens of companies that were not well-suited from a foundational level that were not strong and that were fads, not trends.



There will be teams like Valkyrie who have their heads down and will be building and we’ve seen by conversations with our venture fund, there are great firms out there that are doing that, especially within this middleware, infrastructure level of the industry.



So we’ll see various blockchains come out stronger than ever, and they’ll have more of a differentiated placement in everybody’s minds, rather than what I feel for the past year has been an undifferentiated understanding in the retail market of ‘crypto’ encompassing everything. There will be more of an understanding of who is strong, who needs to be watched and who wants to be a part of which ecosystem and why.



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Valkyrie CEO: Firm, Industry to Emerge Stronger After Crypto Winter

<div id="highlights-block_62a0c1c2c1d5a" class="highlights">
 <ul>
 <li>Valkyrie seeks to hire developers and sales and distribution professionals to handle demand for crypto ETFs, trusts</li>
 <li>The company is prepping launches of private funds and separately managed accounts and plans to file for more ETFs</li>
 </ul>
 
</div>



Crypto-focused asset manager Valkyrie Investments has raised roughly $11 million as part of a strategic round that will help the firm hire more people and add to its product lineup.&nbsp;



Despite crypto companies such as <a href="https://cms.blockworks.co/coinbase-latest-crypto-firm-to-cut-costs-amid-market-downturn/" target="_blank" rel="noreferrer noopener">Coinbase</a> and <a href="https://cms.blockworks.co/gemini-joins-growing-list-of-crypto-exchanges-cutting-staff-amid-downturn/" target="_blank" rel="noreferrer noopener">Gemini</a> revealing plans to slow hiring or make staffing cuts, Valkyrie continues to make hires on a rolling basis, a spokesperson said.



“We are actively hiring both developers and sales and distribution [professionals], both of which we need in order to handle the significant inbound interest in our ETFs and protocol trusts, our hedge funds and our venture fund,” Valkyrie Chief Investment Officer Steven McClurg told Blockworks.



BNY Mellon, which added Valkyrie to its <a href="https://www.bnymellon.com/us/en/about-us/newsroom/company-news/bny-mellon-welcomes-the-accelerator-program-class-of-2022-innovation-through-collaboration.html" target="_blank" rel="noreferrer noopener">Accelerator Program</a> in April, participated in the funding round. A spokesperson at the company declined to comment on the investment. 



Other investors included Coinbase Ventures, Wedbush Financial Services, Clearsky, Zilliqa Capital, C Squared Ventures, Belvedere Strategic Capital and SenaHill Partners.



Nashville-based Valkyrie will also seek to build out its offerings following the fresh funding. It has three ETFs trading in the US with combined assets under management of roughly $30 million, according to ETF.com.&nbsp;



The Valkyrie Bitcoin Strategy ETF (BTF), which became the US’s second ETF to invest primarily in bitcoin futures contracts when it launched last October, holds about 90% of those managed assets. The firm also has a Balance Sheet Opportunities ETF (VBB) and a Bitcoin Miners ETF (WGMI), which Valkyrie brought to market in December and February, respectively.&nbsp;



Valkyrie is working to offer another bitcoin futures ETF — this one filed under the Securities Act of 1933 — and plans to file for other crypto ETFs soon, McClurg noted. The firm declined to share specifics on potential future products.



“We have a few additional private funds and [separately managed accounts] set to launch, and we are also building out the proprietary technology needed for larger institutional clients, such as fund administration and reporting,” McClurg added.



Valkyrie unveiled <a href="https://cms.blockworks.co/valkyrie-launches-its-first-multi-coin-trust/" target="_blank" rel="noreferrer noopener">its first multi-coin trust</a> for accredited investors in April, following up that launch by offering its first <a href="https://cms.blockworks.co/crypto-asset-manager-valkyrie-launches-avalanche-trust-for-accredited-investors/" target="_blank" rel="noreferrer noopener">Avalanche-focused investment vehicle</a>. 



The SEC has rejected the company’s spot bitcoin ETF proposals, but the firm, along with others, continue to engage with the regulator about launching such a fund.



“The race to be first to market will not be for the faint of heart, and we embrace this challenge,” Valkyrie CEO Leah Wald told Blockworks in March.



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Valkyrie Raises $11M in Push To Offer More Crypto Funds

<div id="highlights-block_6271adcc07ecb" class="highlights">
 <ul>
 <li>New vehicle joins firm’s existing single-asset trusts focused on bitcoin, algorand, polkadot, dash, TRON and Zilliqa</li>
 <li>The trust will soon begin staking AVAX to generate additional returns</li>
 </ul>
 
</div>



Two weeks after launching its first multi-coin trust, Valkyrie Investments has added its first Avalanche-focused investment vehicle.



The Valkyrie Avalanche Trust (VAVAX), which will invest solely in the blockchain’s native token AVAX, is available to accredited investors. It carries a management fee of 2% and imposes a $25,000 minimum investment.



The price of Avalanche (AVAX) was about $61 on Wednesday morning, according to data compiled by Blockworks — down about 11% from a week ago. AVAX’s market capitalization of nearly $16 billion is the 14th highest among crypto coins.&nbsp;



AVAX adoption is growing rapidly due in part to its “blazing fast” transaction speeds, Valkyrie Chief Investment Officer Steven McClurg said in a statement. Avalanche is the fastest smart contracts platform as measured by time-to-finality and has the most validators securing transactions of any proof-of-stake protocol, according to the company.



“By launching this trust, we are able to give qualified investors exposure to a protocol that they have been increasingly asking about as [decentralized finance] projects, [non-fungible token] platforms and many other projects have increasingly begun to build on the Avalanche blockchain,” McClurg said.



The trust will soon begin staking AVAX to generate additional returns.



Based in Nashville, Valkyrie reached $1 billion in assets under management in February. The trust launch is Valkyrie’s second this year as the firm seeks to offer exposure to a wider universe of digital assets. Its six other single-asset trusts focus on bitcoin, algorand, polkadot, dash, TRON and Zilliqa.&nbsp;



“With the launch of the Avalanche Valkyrie Trust, institutions will have another reliable avenue to tap into the innovation happening across the community,” Ava Labs President John Wu said in a statement.



Valkyrie <a href="https://cms.blockworks.co/valkyrie-launches-its-first-multi-coin-trust/" target="_blank" rel="noreferrer noopener">launched its first multi-coin trust</a> last month, which represents the firm’s “highest-conviction plays” in the crypto space. Upon launch, 10% of fund capital was allocated to AVAX.



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Crypto Asset Manager Valkyrie Launches Avalanche Trust for Accredited Investors

<div id="highlights-block_62605d9d486dd" class="highlights">
 <ul>
 <li>Industry at an “inflection point” where family offices and high-net-worth individuals are seeking multi-asset exposure, Valkyrie CIO says</li>
 <li>Trust currently invests in eight assets, including AVAX, BNB and ATOM</li>
 </ul>
 
</div>



Valkyrie Investments has launched its first multi-coin trust, as the product was designed to offer diversified exposure to protocols and pass along staking yields to investors.



The actively managed <a href="https://valkyrieinvest.com/trusts/valkyrie-multi-coin-trust/" target="_blank" rel="noreferrer noopener">Valkyrie Multi-Coin Trust</a> is focused on investing in blockchain networks and tokens that the firm believes are well-positioned to expand market share. It is for accredited investors only and has a minimum investment of $100,000.



The trust, which carries a management fee of 2.5%, was launched after discussions with potential investors looking for a product that represented the firm’s “highest-conviction plays” in the space, said Valkyrie Chief Investment Officer Steven McClurg.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We launched this fund now because we believe the industry is at an inflection point where family offices, high-net-worth individuals and others are keen to enter the space and are looking for opportunities that go beyond just buying and holding a single asset,” he told Blockworks.</blockquote>



The trust currently allocates 10% of the fund’s capital to each of Avalanche (AVAX), Binance (BNB), Cosmos (ATOM), Helium (HNT), Terra (LUNA), Polygon (MATIC), and Zilliqa (ZIL), plus a 30% allocation to the Gemini USD (GUSD) stablecoin. The investments can change over time as crypto markets evolve.



“We believe that these protocols all have a bright, bullish future, and should see increased adoption and engagement in the coming years,” McClurg added, noting that the firm believes in the protocols’ founding teams and the projects being built on them.



Focusing on these coins also enables the firm to return staking yield to investors, he said, referring to the inflation rewards earned for participating in a network’s <a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/" target="_blank" rel="noreferrer noopener">proof-of-stake</a> consensus. The trust seeks to target an annual yield of four to six percent, and the fund’s custodian is Copper Technologies.



Based in Nashville, Valkyrie reached $1 billion in assets under management in February. The company currently offers six single-asset trusts focused on bitcoin, algorand, polkadot, dash, TRON and Zilliqa.&nbsp;&nbsp;&nbsp;



The firm also has three ETFs trading in the US, including a bitcoin miners ETFs and a <a href="https://cms.blockworks.co/valkyries-btf-trades-10m-in-first-5-minutes/" target="_blank" rel="noreferrer noopener">bitcoin strategy fund</a> that invests in futures contracts.



McClurg said Valkyrie has more ETFs and trusts in the works, but declined to share specifics. The company is one of a handful of issuers seeking to launch a spot bitcoin ETF, which the SEC <a href="https://cms.blockworks.co/crypto-execs-read-the-tea-leaves-on-spot-bitcoin-etf-approval/" target="_blank" rel="noreferrer noopener">has not yet approved</a>.



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Valkyrie Launches its First Multi-coin Trust

<div id="highlights-block_623ddfe02ffb2" class="highlights">
 <ul>
 <li>The proposal to broaden the definition of an exchange could help spot bitcoin ETF approval by mid-2023, according to Bloomberg Intelligence analysts</li>
 <li>Bitwise Asset Management Chief Investment Officer Matt Hougan says there is a pathway to approve a spot bitcoin ETF without this change</li>
 </ul>
 
</div>



ETF issuers in the US continue vying to launch a fund that would invest in bitcoin directly, but Bloomberg Intelligence analysts predict one won’t be approved until crypto platforms are forced to comply with Securities and Exchange Commission (SEC) rules.



A rule change proposed by the SEC could be the key to a spot bitcoin ETF approval by the middle of 2023, Eric Balchunas and James Seyffart said in a research note published Thursday.&nbsp;



The SEC proposed to broaden the definition of an exchange in the Securities and Exchange Act of 1934 to include “systems that offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities,” according to a <a href="https://www.federalregister.gov/documents/2022/03/18/2022-01975/amendments-regarding-the-definition-of-exchange-and-alternative-trading-systems-atss-that-trade-us" target="_blank" rel="noreferrer noopener">January 26 filing</a>. 



“Expanding the definition of an exchange could eliminate the agency&#8217;s primary objection to the products by bringing cryptocurrency platforms under the SEC&#8217;s regulatory framework,” the Bloomberg Intelligence ETF analysts wrote.



The SEC most recently delayed its decision to rule on the proposed bitcoin ETFs by NYDIG and Global X earlier this month.



“The commission has consistently required that the listing exchange have a comprehensive surveillance-sharing agreement with a regulated market of significant size related to bitcoin, or demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement,” the SEC wrote in its March 10 decisions on the NYDIG and Global X applications. “The listing exchange has not met that requirement here.”



The SEC won’t approve a spot bitcoin ETF without new regulation or surveillance agreements between traditional and crypto exchanges, Balchunas and Seyffart explained.



“Traditional exchanges such as the NYSE would find it almost impossible to secure such accords with every exchange that offers bitcoin trading absent official regulation,” they added.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The proposal to broaden the definition of an exchange would force crypto platforms to comply with SEC rules, potentially satisfying the agency&#8217;s oversight concerns.”</blockquote>



The Bloomberg analysts expect the change to be finalized sometime between November 2022 and May 2023.



<h3 class="wp-block-heading">Fund groups weigh in&nbsp;</h3>



Leah Wald, CEO of Valkyrie Funds, said that based on her company’s interactions with regulators, it makes sense that this would be the final hurdle to overcome.



“They have said all along that they would be hesitant to put an unregulated product into a regulated fund wrapper,” she told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Bringing digital asset exchanges into the fold would remove that objection and likely clear the path for a spot bitcoin ETF.”</blockquote>



Wald said that while it is tough to predict when the SEC could approve such a fund, she does not expect the agency to do so before next summer.



But Matt Hougan, chief investment officer of Bitwise Asset Management, argued that while the redefinition of an exchange could have big implications, there is a pathway to approve a bitcoin ETF without this change.



The SEC&#8217;s rules do not require that the market for the underlying spot commodity be regulated and subject to surveillance agreements prior to approving an exchange-traded product (ETP), he explained. Instead, the agency requires that there is a “regulated market of significant size&#8221; that can be surveilled as a way of gaining proxy surveillance of the market as a whole.



“We and other applicants believe that the CME bitcoin futures market is a ‘regulated market of significant size,’ and believe we have demonstrated this in our applications,” Hougan told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I continue to think the SEC can and will approve a bitcoin ETF prior to redefining what an exchange is.”</blockquote>



Valkyrie and <a href="https://cms.blockworks.co/bitwise-tries-once-more-for-spot-bitcoin-etp/" target="_blank" rel="noreferrer noopener">Bitwise</a> are among the swathe of issuers that have not been able to get their proposed bitcoin ETPs approved. The SEC, however, has approved several ETFs investing in bitcoin futures contracts, including one from Valkyrie.



Executives at several fund groups <a href="https://cms.blockworks.co/will-bidens-executive-order-speed-up-spot-bitcoin-etf-approval/" target="_blank" rel="noreferrer noopener">recently told Blockworks</a> they thought President Biden’s <a href="https://cms.blockworks.co/whos-in-charge-of-what-breaking-down-the-crypto-executive-order/" target="_blank" rel="noreferrer noopener">executive order</a> on digital assets could be a bullish indicator for spot bitcoin ETF approval.



Grayscale Investments is trying to convert its Bitcoin Trust (GBTC) to an ETF. <a href="https://cms.blockworks.co/support-for-spot-bitcoin-etf-revs-up-as-agency-holds-course/" target="_blank" rel="noreferrer noopener">Public comments</a> have rolled in from investors and crypto companies executives, many of which supporting the move. The SEC is expected to rule on the conversion by July, after a 240-day review period.



The biggest impact of the redefinition of an exchange, if it occurs, would be on the prospects for non-bitcoin crypto ETFs, Hougan said.&nbsp;



“If Coinbase were regulated and if it could have surveillance techniques in place,” he noted, “you could build ETPs on a wide variety of crypto assets, or crypto index ETFs.



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Is a Change to ‘Exchange’ Definition Key to Bitcoin ETF Approval?

Casey Wagner

<div id="highlights-block_621663856bc17" class="highlights">
 <ul>
 <li>Valkyrie Investments has launched a treasury management service for crypto companies looking to offload balance sheet responsibilities</li>
 <li>Its first client will be the NEM/Symbol protocols, which recently announced their merger </li>
 </ul>
 
</div>



Digital asset investment firm Valkyrie is out to help cryptocurrency companies manage their balance sheets.



Valkyrie has launched a protocol treasury management service that will help companies in the crypto space handle cash flow management, advanced reporting and other services, the company announced Wednesday.



“Treasury management becoming the norm is the natural evolution of a rapidly growing industry,” Leah Wald, CEO of Valkyrie Investments, said. “It was inevitable that someone would offer it, and we’re excited to be the first to do so.”



Companies in the blockchain space often work with funds in the hundreds of millions, Wald said, and offloading financial management tasks will be an ongoing trend as the space continues to grow.&nbsp;



“[Treasury management] enables founders and developers to work on what they do best, building and expanding, while outsourcing financial matters to experienced money managers,” Wald said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Projects who choose to work with a fiduciary to oversee their assets build even more trust with their communities, backers and outsiders because they bring a level of transparency and rigor to this process that others may not have considered.”&nbsp;</blockquote>



The first protocol to partner with Valkyrie on its treasury management offering is NEM/Symbol, two layer-1 protocols that announced their merger in 2021 with a $700 million token treasury. Treasury management has been a challenge for the NEM Protocol in the past, which is one of the reasons for the merger, according to <a href="https://www.coindesk.com/business/2022/01/28/wall-street-crypto-firm-valkyrie-is-holding-a-700m-protocol-treasury/" target="_blank" rel="noreferrer noopener">reports</a>. The NEM Foundation was just one month away from running out of funds when it was restructured according to a <a href="https://forum.nem.io/t/nem-foundation-message-to-the-community/21753" target="_blank" rel="noreferrer noopener">forum post</a> from January 2019.



“Throughout the course of our discussions with their core team, it became clear that they and many other founders and developers are spending far too much time worrying about managing money, and it takes away from their ability to effectively lead and expand at the pace they’d like,” Wald said.



The launch of the new service comes shortly after Valkyrie became the <a href="https://cms.blockworks.co/valkyries-btf-trades-10m-in-first-5-minutes/" target="_blank" rel="noreferrer noopener">second issuer</a> to list a futures-based bitcoin ETF in the US, which helped the company secure $1 billion in assets under management earlier this month.



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