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Valkyrie Hopes to Launch ‘Innovative Balance Sheet ETF’ Backed by Companies Exposed to Bitcoin

At the end of January, the Texas-based firm Valkyrie Digital Assets filed an exchange-traded fund (ETF) registration for the “Valkyrie Bitcoin Trust” with the U.S. Securities and Exchange Commission (SEC). This month, the cryptocurrency investment manager announced it has filed a prospectus for an ETF with the SEC based on companies that hold the leading crypto asset bitcoin.

The Valkyrie Innovative Balance Sheet ETF

Bitcoin (BTC) has grown quite a lot in value in 2021 and two months ago, Valkyrie Digital Assets joined the rest of the companies aiming to launch a U.S.-based bitcoin ETF. The struggle to approve a bitcoin ETF in the United States has been real, but the recent approval of three Canadian ETFs gives people hope. Now according to a recent registration statement from Valkyrie Digital Assets, the company plans to launch another ETF based on companies that hold bitcoin (BTC) in their treasuries.

The ETF is quite similar to the filed prospectus with the SEC issued by the financial incumbent JP Morgan Chase, which is also a basket of firms exposed to bitcoin (BTC). However, Valkyrie’s registration filing for the ETF does not name any firms it plans to list. The fund, if approved, will be called the “Valkyrie Innovative Balance Sheet ETF.”

“The fund is an actively-managed exchange-traded fund that will invest principally in the securities of operating companies that have innovative balance sheets, which the Fund’s investment adviser, KKM Financial LLC (the “Adviser”), considers to be operating companies that directly or indirectly invest in, transact in, or otherwise have exposure to bitcoin or operate in the bitcoin ecosystem,” the Valkyrie ETF filing notes.

Valkyrie says the company could also invest in “bitcoin trading platforms, bitcoin miners, bitcoin custodians, digital wallet providers, companies that facilitate payments in bitcoin, and companies that provide other technology, equipment or services to companies operating in the bitcoin ecosystem.”

Companies like Microstrategy that hold bitcoin (BTC) on their balance sheets could also be considered. The Valkyrie prospectus adds:

The fund may invest in companies that invest in or have any portion of their assets accounted for by direct bitcoin holdings. The fund may invest in companies of any market capitalization. As of the date of this prospectus, the fund expects to invest a significant portion (i.e. more than 25%) of its assets in securities of companies in the information technology sector.

Crypto ETFs Are In Demand Despite Regulatory Uncertainty in the US

The “Valkyrie Innovative Balance Sheet ETF” comes at a time when bitcoin (BTC) has touched another all-time price (ATH) reaching $61,782 per unit on March 13. Additionally, there are now 42 companies holding BTC in treasuries capturing around $82 billion in value. Of course, like most SEC prospectus filings the Valkyrie registration mentions the risk involved with bitcoin and blockchain exposure.

“The technology supporting the bitcoin ecosystem is new. The risks associated with owning bitcoin or operating in the bitcoin ecosystem, therefore, may not be fully known until the ecosystem matures,” Valkyrie’s SEC filing notes.

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