Although dozens of companies have submitted applications to the Securities and Exchange Commission to create the first Bitcoin ETF, none have received approval so far.
Instead of giving the green light to the Volt Crypto Industry Revolution and Tech ETF, which provides investors access to companies with significant exposure to the world's largest cryptocurrency, rather than the ability to buy it directly.
The move is as Bitcoin edged back to the $60,000 level, as detected by CoinDesk.
Volt Equity's newest ETF, which will trade under the ticker symbol BTCR, puts at least 80% of its assets in Bitcoin Industry Revolution Companies that are defined as those that hold a majority of their net assets in Bitcoin or derive a majority of their revenue or profits directly from bitcoin mining, lending or transacting. The ETF also looks at indicators such as the stock-to-flow model, which compares the current stock of bitcoin against the flow of new bitcoin mined that year.
In contrast, remaining 20% of the fund goes to traditional stocks to offset its risk.
Tata Sons CEO told FOX Business Digital that the fund is aimed at retail investors who are afraid to invest directly in Bitcoin and institutional investors who want exposure without going through the process of setting up a digital wallet.
I think bitcoin is less volatile if it's more palatable to investors, Park explained. Of course, there is a part of Bitcoin investing. It goes really, really crazy. We do think, however, that some people are not quite ready to stomach some of those stuff. Maybe they haven't experienced like 80% drops and these wild things that normally happen within bitcoin investing. That's why we want to try to manage some of those things within a Bitcoin-focused ETF by smoothing out some of that volatility for people. According to Park, companies on the fund are narrowed down by factors such as their profit margins, how green they are and whether their stock price correlates with or surpasses the price of bitcoin. Examples include: MicroStrategy, Marathon Digital Holdings and Bitfarms.
Ultimately, Park believes that the SEC approval was based on the right timing.
I feel like, you know, if it was two or three years ago it probably wouldn't have been possible to do an ETF like this, he said. This is the year to start it because we can actually make qualifying investments where we can do things like this. He also noted that the company was considering an SEC buy-side Bitcoin futures ETF long before it received support from Gary Gensler.
Even though this is our fifth ETF, we initially done futures angle for the ETF in January, he said. So we spent like nearly $100,000 just talking to lawyers, like if there is no law filing requirement, just talking with lawyers about a potential like Bitcoin ETF. But before Gary Gensler said anything, before he said that he was going to be more open to a futures ETF than other types of ETFs, we already were looking into that. Although he is optimistic that the ETF will eventually become a Bitcoin coin-operated, he argues that there is almost zero chance that it will be approved this year, citing the hurdles of his own unusual application process which began at the beginning of 2021. He added that he is not too concerned about the competition from a potential Bitcoin ETF, noting that it would have no active management and be unable to transition to other assets like cash.
When it comes to crypto regulation, Park says Gensler is misunderstood by investors who think he's either totally against crypto or totally for it. They don't really see the nuances of where he is coming from, and actually some concerns that he brings up about crypto regulation are valid and they're not, I think, ultimately good for the crypto industry, he added. In a very technologically advanced society it is impossible for anyone to solve the problem. Park argues that unlike China, which has explicitly banned cryptocurrencies, the U.S. government approaches it from a different angle.
I think they want to ban crypto, but not necessarily regulate it all, said he.