A novel exchange-traded fund (ETF) focusing on companies holding cryptocurrency treasuries might soon be available on Wall Street. This fund is part of a larger initiative by GSR, a firm specializing in crypto trading and market making, which has proposed four additional ETFs.
According to a recent regulatory submission on Wednesday, GSR plans to introduce the GSR Digital Asset Treasury Companies ETF. This fund would allocate its investments to publicly traded entities that have embraced cryptocurrency, such as Strategy, a large purchaser of Bitcoin (BTC), or BitMine Immersion Technologies, which holds Ether (ETH).
This regulatory filing marks GSR’s initial entry into the ETF market and also encompasses four other funds linked to ETH and crypto staking. One of these funds aims to consolidate and mirror the price movements of Bitcoin, Ether, and Solana (SOL).
Acquiring and maintaining crypto assets for extended durations has become a common strategy among crypto treasury companies, largely due to its ability to attract substantial capital. Some companies have opted to invest in higher-risk alternative cryptocurrencies to capture investor interest. However, this approach has raised concerns among analysts, who caution against a potentially oversaturated market.
Crypto treasury ETF agnostic on holdings
In its filing, GSR specified that the crypto treasury ETF would invest in the stocks of publicly traded companies that possess crypto assets. Notably, the fund’s investment strategy does not appear to restrict it to companies holding only major cryptocurrencies like Bitcoin or Ether.
The filing states, “Under typical market conditions, the Fund will allocate at least 80% of its net assets (along with any borrowed funds used for investment purposes) to the equity securities of companies that hold digital assets within their corporate treasury.”
The fund defines its potential investments as “any company that typically maintains a significant proportion of its assets in one or more digital assets.” It also clarifies that the ETF does not impose minimum market capitalization requirements on the companies in which it invests.
Initially, the ETF aims to include “10–15 positions comprising 5 to 10 issuers.” Examples of such treasury companies could include Sui Group Holdings, which purchases Sui (SUI), and CEA Industries, which holds BNB (BNB).
GSR looks to launch three staking ETFs
The filing further outlines the GSR Ethereum Staking Opportunity ETF, the GSR Crypto StakingMax ETF, and the GSR Ethereum YieldEdge ETF, all designed to capitalize on staking rewards.
Both the Ethereum Staking and YieldEdge ETFs will employ an offshore, wholly-owned subsidiary to acquire and stake ETH on behalf of the fund. This approach is due to their filing under the Investment Company Act of 1940, commonly known as the “40 Act,” which places restrictions on the types of assets an ETF can hold.
GSR’s Ethereum Staking fund will also invest in Ether staking ETFs, primarily those based outside the United States. Meanwhile, the YieldEdge ETF will utilize an “actively managed derivatives strategy aimed at increasing yield.”
The StakingMax ETF, also filed under the 40 Act and utilizing an offshore subsidiary, will focus on investing in cryptocurrencies and securities “with particular emphasis on proof-of-stake (“PoS”) cryptocurrencies and staking strategies.”
Bitcoin, Ether, Solana bundle ETF could hold directly
The fifth ETF proposed by GSR, the GSR Crypto Core3 ETF, will aim to track the performance of Bitcoin, Ether, and Solana, and may directly hold these digital assets.
The Core3 ETF was submitted under the Securities Act of 1933, the same legislation used for the highly popular spot Bitcoin and Ether exchange-traded products that were introduced last year.
GSR stated that the ETF seeks to provide “balanced exposure to three of the most established digital assets” and intends to “maintain allocations of approximately one-third of its net assets” to each of Bitcoin, Ether, and Solana.
GSR’s filing follows the introduction of similar ETFs by other asset managers, including funds with staking features and those that track a basket of crypto tokens, as Wall Street increasingly seeks to participate in the cryptocurrency market.