California Asset Management Firm ‘Reality Shares’ Files Partial Bitcoin ETF Application

Tom Lee of Fundstrat lauded the idea of a currency diversified fund with a … cryptocurrency as an asset class by including virtual currency in an ETF.

Reality Shares, an asset management firm based in California is looking to obtain approval from the United States Securities and Exchange Commission (SEC) for a partial Bitcoin ETF.

Some industry stakeholders applaud the ingenious approach noting that the company’s approach might stand a realistic chance of sailing through, offering an investment vehicle closely suited to the Commission’s standards.

Reality Shares

Details of the Partial Bitcoin ETF

The asset management firm submitted the application via a prospectus filed with the SEC on Monday (February 11, 2019). Titled “The Realities Shares Blockforce Global Currency Strategy ETF,” the fund seeks to invest 15 percent in Bitcoin futures offered by both the Chicago-based CME and Cboe.

A portion of the prospectus reads:

“The Fund is an actively managed exchange-traded fund (“ETF”) that is designed to provide investment exposure to global currencies, both fiat and virtual currencies, that have been widely adopted for use (e.g., as store-of-value, international remittance, foreign-exchange trading) throughout the world (“Significant Global Currencies”).”

Unlike other Bitcoin ETF applications to the SEC, Reality Shares’ filing puts a “limited Bitcoin ETF” as part of a much larger ETF. According to the prospectus, the fund will invest in a portfolio that contains both fiat and virtual currencies.

Partial Bitcoin ETF Offers Reduced Risk

Concerning the cryptocurrency aspect of the fund, the filing document states that there are plans to invest in other Bitcoin futures contracts apart from those offered by CME and Cboe. While the fund can, in theory, invest as much as 25 percent of its asset value in BTC futures, there are modalities in place that will limit notional exposure to 15 percent of the fund’s net asset value.

This limited exposure might put the application in good stead with U.S. regulators. The SEC has consistently maintained a position of not wanting to approve BTC ETFs based on several issues surrounding volatility, market manipulation, and absence of institutional-grade custody. Investors in the proposed ETF will not have full exposure to the risks regulators say are attached to the Bitcoin and cryptocurrencies in general.

Meanwhile, the hunt for an SEC-approved BTC ETF continues. Earlier in the year, Bitwise filed another application with the Commission. The VanEck/SolidX proposal originally withdrawn by Cboe during amid the shutdown has also been refiled. Speaking recently, Robert Jackson Jr., an SEC Commissioner declared that an approved BTC ETF was inevitable.

Possible On-Ramp for Institutional Investors

Since the news became public there been a slew of positive comments regarding the innovative approached used by the company. Tom Lee of Fundstrat lauded the idea of a currency diversified fund with a Bitcoin component in a tweet published on Monday.

Other commentators seemed partial to the idea of moving the narrative towards recognizing cryptocurrency as an asset class by including virtual currency in an ETF. For Reality Shares CEO, Eric Ervin, the move represents a viable on-ramp for wary institutional investors based on the limited exposure to BTC in the ETF.

Currently, the cryptocurrency space is abuzz with positive developments on the institutional investment front. Two pension funds based in Virginia have become the first in the U.S. to invest in a cryptocurrency investment fund. The fund, established by Morgan Creek Digital focuses is presently worth $40 million with investments in notable companies like coinbase and Bakkt.


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Another Potential Bitcoin ETF Effort Emerges

Reality Shares, the firm behind two blockchain exchange traded funds, is looking to launch a bitcoin ETF. A recent filing with the Securities and …

Reality Shares, the firm behind two blockchain exchange traded funds, is looking to launch a bitcoin ETF.

A recent filing with the Securities and Exchange Commission provides details about the Reality Shares Blockforce Global Currency Strategy ETF.

The filing is conjunction with the New York Stock Exchange. While the SEC has consistently rejected efforts to bring bitcoin ETFs to market, data indicate investors remain enthusiastic about the prospect of the largest digital currency by market value and the ETF structure coming together.

Earlier this year, Bitwise Asset Management, a provider of cryptocurrency indexes and funds, filed plans with the SEC for a bitcoin ETF and VanEck recently revised a proposal to the SEC for the VanEck SolidX Bitcoin ETF.

The Reality Shares filing indicates the proposed Reality Shares Blockforce Global Currency Strategy ETF would not be exclusively comprised of bitcoin. Rather, the fund, if it comes to life, would include “high-quality, short-term sovereign debt instruments listed for trading on U.S. exchanges and denominated in U.S. dollar, euro, British pounds sterling, Japanese yen and Swiss francs,” as well as bitcoin futures, money market mutual funds and/or other cash equivalents,” according to the filing.

Last year, Reality Shares introduced two blockchain ETFs: the Reality Shares Nasdaq NexGen Economy ETF BLCN, +1.36% and the Reality Shares Nasdaq NexGen Economy China ETF BCNA, +1.55% Those ETFs have a combined $76.92 million in assets under management.

The Reality Shares Blockforce Global Currency Strategy ETF’s bitcoin exposure will come via futures trade on the CBOE or CME.

“The Fund expects to obtain exposure to Bitcoin Futures by investing up to 25% of its total assets, as measured at the end of every quarter of the Fund’s taxable year, in a wholly-owned and controlled Cayman Islands subsidiary,” according to the filing.

The proposed fund will be actively managed. The filing did not include a ticker or expense ratio, indicating that like other proposed bitcoin ETFs, the Reality Shares Blockforce Global Currency Strategy ETF is not close to coming to market.

California-based Reality Shares sponsors seven ETFs, including the aforementioned pair of blockchain funds.

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Pacific Global Asset Management Announces Launch of Pacific Global ETFs

Pacific Global US Equity Income ETF (Ticker: USDY), listed on the NYSE … depends on the performance of individual securities that the Fund holds.

NEWPORT BEACH, Calif.–(BUSINESS WIRE)–Pacific Global Asset Management announced today the launch of Pacific Global US Equity Income ETF, a new actively-managed equity fund focused on income and capital appreciation.

“We see an exciting opportunity to help clients address their income and growth needs through the simplicity and transparency of exchange traded funds,” said Head of ETF Product Development, Anthony J. Dufault. “To accomplish this, we balance the 150-year-old investment expertise of our parent company, Pacific Life, with a modern and agile approach to building client investment solutions that stand the test of time.”

Pacific Global US Equity Income ETF (Ticker: USDY), listed on the NYSE Arca, actively invests in U.S. companies with above average or improving dividends. “USDY offers investors value and access to an experienced portfolio management team, making it an ideal complement to a passively managed dividend strategy.”

Affiliated asset manager Cadence Capital Management, the fund’s sub-adviser, brings expertise in factor-based equity investing. In 2019, Pacific Global ETFs expects to offer additional equity & fixed-income focused ETFs, which will enable investors to build customized investment portfolios tailored to specific income and capital appreciation investment goals.

For more information about the Pacific Global ETFs, visit: www.pacificglobaletfs.com.

Pacific Global Asset Management LLC

Pacific Global Asset Management has approximately $16billion in assets under management, as of December 31, 2018, across investment strategies that include fixed income, equity, and alternatives solutions. Investment teams include Pacific Asset Management, Cadence Capital Management, Pacific Private Fund Advisors and Pacific Global Advisors. Core investment strategies include: bank loans, income funds, high yield, equity solutions, and private equity. Pacific Global Asset Management LLC is a wholly-owned subsidiary of Pacific Life Insurance Company (“Pacific Life”).

Cadence Capital Management LLC

Cadence Capital Management is a global equity manager specializing in factor-based equity investment strategies. Founded in 1988, Cadence Capital Management manages approximately $2.9billion of assets, as of December 31, 2018, for institutions, fund sponsors, family offices, investment platforms, and financial advisors. Cadence is a wholly-owned subsidiary of Pacific Global Asset Management LLC, and an indirect subsidiary of Pacific Life.

Risks and other Important Information

ETF shares are not individually redeemable from the Fund. Shares may only be redeemed directly from the Fund by Authorized Participants in creation units only.

Authorized Participant Concentration Risk. The Fund has a limited number of institutions that act as Authorized Participants. To the extent that these institutions exit the business or are unable to proceed with creation and/or redemption orders with respect to the Fund and no other Authorized Participant is able to step forward to create or redeem Creation Units, Fund shares may trade at a discount to NAV and possibly face trading halts and/or delisting.

The Fund faces numerous market trading risks, including disruptions to the creation and redemption processes of the Fund, losses from trading in secondary markets, the existence of extreme market volatility or potential lack of an active trading market for Shares, which may result in Shares trading at a significant premium or discount to NAV. The market prices of Shares will fluctuate in accordance with changes in NAV and supply and demand on the Exchange. If a shareholder purchases Shares at a time when the market price is at a premium to the NAV or sells Shares at a time when the market price is at a discount to the NAV, the shareholder may sustain losses.

The Fund is subject to limited history of operations risk since it is a new ETF and has a limited history of operations for investors to evaluate. The Fund is an actively managed exchange traded fund (ETF) and, thus, does not seek to replicate the performance of a specified index. Instead, investment decisions are made based on investment views and there is no guarantee that the investment views will produce the desired results or expected returns, which may cause the Fund to fail to meet its investment objective or to underperform its benchmark index or funds with similar investment objectives and strategies.

While the Fund may hold securities of companies that have historically paid a high dividend yield, it is subject to dividend-paying stock risk, as those companies may reduce or discontinue their dividends, reducing the yield of the Fund. The net asset value of the Fund will fluctuate based on changes in the value of the U.S. equity securities held by the Fund. Equity prices can fall rapidly in response to developments affecting a specific company or industry, or to changing economic, political or market conditions. The Fund is subject to issuer risk, as fund performance depends on the performance of individual securities that the Fund holds. Changes in the financial condition or credit rating of an issuer of those securities may cause the value of the securities to decline. The Fund is also subject to large capitalization company risk, which is the possibility that larger, more established companies may be unable to attain the high growth rates of successful, smaller companies during periods of economic expansion. Overall market risks may affect the value of the Fund. Factors such as U.S. economic growth and market conditions, interest rate levels and political events affect the securities markets. Sector risk is the possibility that securities held by the Fund that are within the same group of industries will decline in price due to sector-specific market or economic developments. If the Fund invests more heavily in a particular sector, the value of its shares may be especially sensitive to factors and economic risks that specifically affect that sector.

Shares of the Fund are not insured by the FDIC or any federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or bank affiliate.

Before investing, Investors should carefully read the prospectus/summary prospectus and carefully consider the Investment objectives, risks, charges and expenses.For this and more complete information about the fund call (866) 933-2398 or visit www.pacificglobaletfs.com for the prospectus/summary prospectus.

Shares of the Fund are distributed by Foreside Fund Services, LLC.

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Reality Shares Bitcoin Futures ETF ‘Moves Ball Forward’ For Crypto

“The Fund is an actively managed exchange-traded fund… that is designed to provide investment exposure to global currencies, both fiat and virtual …
ball bitcoin etfNews

Esther Kim

Esther Kim| Feb 12, 2019 | 07:00


Cryptocurrency advocates have reacted warmly to an effort by asset manager Reality Shares to gain approval for a ‘partial’ Bitcoin ETF from US regulators.


Less Exposure, Less Rejection?

Announced in a prospectus filed with the US Securities and Exchange Commission (SEC) February 11, Blockforce Global Currency Strategy ETF aims to invest 15 percent of funds into CME Group and Cboe’s Bitcoin futures.

“The Fund is an actively managed exchange-traded fund… that is designed to provide investment exposure to global currencies, both fiat and virtual currencies, that have been widely adopted for use (e.g., as store-of-value, international remittance, foreign-exchange trading) throughout the world,” the prospectus summarizes.

The SEC Sets a Deadline to File Comments for or Against Bitcoin ETF Applications

The move comes as the SEC continues to adopt a highly risk-averse stance on the cryptocurrency ETF market.

As Bitcoinistreported, multiple rejections of launch applications preceded ongoing to-and-fro correspondence between operators and the regulator, with deadlines repeatedly pushed back.

In January, the applicants behind the VanEck/SolidX ETF withdrew their application due to the US government shutdown, resubmitting it when conditions improved.

Fundstrat Eyes Institutional Appeal

Last week, the SEC’s only Democratic commissioner said that the appearance of a regulated ETF was nonetheless inevitable.

“Getting the stamp of approval from the deepest and most liquid capital markets in the world is hard, and it should be,” Robert J. Jackson Jr. said in an interview.

Reality Shares began offering ETFs tracking blockchain companies last year, and appears keenly aware of the need to avoid too significant an exposure to Bitcoin markets under current conditions.

“The Fund will not invest directly in bitcoin,” it stressed.

Commentators nonetheless appeared buoyed by the news.

“The idea of currency diversified fund holding (Bitcoin) is brilliant and likely attractive to institutional and retail investors. And when approved, moves the ball forward for crypto as an asset class,” Fundstrat Global Advisors senior analyst Tom Lee wrote in response to the application.

What do you think about the Blockforce Global Currency Strategy ETF? Let us know in the comments below!


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New Proposed ETF Would Encompass Bitcoin Futures Alongside Sovereign Debt Instruments

“The Fund may gain most of its exposure to Bitcoin Futures through its investment in the Subsidiary, which invests in Bitcoin Futures. To the extent the …

Reality Shares ETF Trust — a unit of crypto-focused fintech firm Blockforce Capital — has filed a proposal for an exchange-traded-fund (ETF) that would invest in a portfolio which includes both sovereign debt instruments and Bitcoin (BTC) futures.The ETF filing was submitted to the United States Securities and Exchange Commission (SEC) Feb 11.

ETFs are securities that track a basket of assets proportionately represented in the fund’s shares. They are seen by some as a potential ‘holy grail’ that would herald the widespread adoption of cryptocurrencies as a regulated and passive investment instrument.

The proposed fund, to be listed on NYSE Arca, is designed to “provide investment exposure to global currencies, both fiat and virtual currencies, that have been widely adopted for use (e.g., as store-of-value, international remittance, foreign-exchange trading) throughout the world.”

In regard to BTC futures, the fund would initially — if successful — invest via a wholly owned Cayman Islands-registered subsidiary in the cash-settled BTC futures that are currently traded on CBOE Futures Exchange (CFE) and the Chicago Mercantile Exchange (CME).

The filing notes that CFE and CME BTC futures positions will thus be valued “at their respective futures cash settlement values as published […] at the close of each trading day.” It also proposes that the fund may evolve to invest in BTC futures that are traded on other exchanges in the future, but emphasizes that the fund “will not invest directly in [B]itcoin.” The filing adds:

“The Fund may gain most of its exposure to Bitcoin Futures through its investment in the Subsidiary, which invests in Bitcoin Futures. To the extent the Fund invests in such instruments directly, it will seek to restrict its income from such instruments to a maximum of 10 percent of its gross income […] to comply with certain qualifying income tests necessary for the Fund to qualify as a regulated investment company.”

In addition to Bitcoin futures, the proposed fund will also allocate larger investments to more traditional “high-quality, short-term sovereign debt instruments listed for trading on U.S. exchanges and denominated in U.S. dollar, euro, British pounds sterling, Japanese yen and Swiss francs.”

As previously reported, a separate Bitcoin-related ETF by investment firm VanEck and financial services company SolidX — for listing on CBOE’s BZX Equity Exchange — is currently making a circuitous route through various filings with the SEC.

With multiple actors — including the Winklevoss twins — either failing or continuing to await the SEC’s approval of their BTC-related ETFs, crypto entrepreneur and CNBC analyst Brian Kelly has recently claimed there is “no shot” for a crypto ETF to get the regulatory greenlight in 2019.

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