The fight with the regulators to launch a Bitcoin exchange-traded fund (ETF) in the United States continues as the U.S. Securities and Exchange Commission (SEC) remains unmoved. After several institutions saw their ETF applications rejected by the financial regulator, Bitcoin-focused financial services firm New York Digital Investment Group (NYDIG) has now filed for approval to offer a bitcoin ETF.
ETFs have been considered a key to bring bitcoin to the masses via the stock market and legacy brokerage accounts. As of now, retail and institutional investors have been limited to bitcoin trusts like Grayscale’s GBTC. The demand for these trusts has skyrocketed, hinting that an ETF, which offers direct exposure to BTC without the need to pay trust premiums or invest in third-party companies, would be a popular choice among investors.
According to the NYDIG’s filing with the SEC, the firm plans on listing the ETF on the New York Stock Exchange. The underlying bitcoin would be custodied by the NYDIG Trust Company, with its initial authorized participant being investment banking giant Morgan Stanley. The investment bank will have the right to create and redeem shares of the ETF.
The ETF product would be dubbed the NYDIG Bitcoin Trust and would incur a fee of 0.5 percent per year.
Furthermore, the filing outlines how the Bitcoin protocol and network operate, stating that the flagship cryptocurrency is fungible. “Units of bitcoin are treated as fungible,” the filing reads.
The lightning network has also been mentioned in the filing, explaining the various developments surrounding bitcoin’s scalability issues. A part of the filing reads:
“Development of the Bitcoin source code has increasingly focused on modifications of the Bitcoin protocol to enhance speed and scalability. [The Lightning Network] enables increased transaction throughput and reduces the computational burden on the Bitcoin network. The Lightning Network is currently a subject of ongoing research and development and does not yet have material adoption as of January 2021.”
NYDIG is a subsidiary of Stone Ridge Asset Management, which has more than $10 billion in assets under its management. Late last year, the firm announced its own $115 million bitcoin investment.
The demand for a bitcoin ETF is on the rise and some nations have already approved their first Bitcoin ETF’s. Earlier this month, the Ontario Securities Commission (OSC) approved asset manager Purpose Investment’s Purpose Bitcoin ETF.
Prior to this, the world’s first Bitcoin ETF launched on the Bermuda Stock exchange (BSX). The ETF was brought to light by Brazil’s Hashdex along with NASDAQ.