Just months after launching its Bitcoin Fund, CI Global Asset Management (CI GAM) is proposing to merge it with an ETF.
In December 2020, CI GAM announced the launch of the CI Galaxy Bitcoin Fund, a closed-end fund that raised US$72 million in its initial public offering. Then, in February 2021, the company announced it had filed a preliminary prospectus for a the CI Galaxy Bitcoin ETF.
On Friday, CI GAM announced its intention to merge the two funds.
“We believe that our ETF is the preferred way for investors to access [Bitcoin] versus a closed end fund, as our ETF will better reflect changes in the value of Bitcoin while delivering greater convenience and cost-efficiency,” said Kurt MacAlpine, CEO of CI Financial, parent company of CI GAM, in a release.
The ETF will be managed by CI GAM and sub-advised by New York-based Galaxy Digital Capital Management LP. The ETF will invest directly in Bitcoin with its holdings priced using the Bloomberg Galaxy Bitcoin Index, which is designed to measure the performance of a single Bitcoin traded in U.S. dollars.
The proposed ETF has a management fee of 1%, as compared to the 1.8% fee for CI GAM’s closed-end fund.
This news was followed by Ninepoint Partners LP’s announcement that it plans to convert its own Bitcoin Trust into an ETF. In a news release on March 3, Ninepoint said unitholders will be asked to approve the conversion at a special meeting in April.
CI GAM and Ninepoint’s news comes amid a flurry of activity in the crypto fund space. Now, the race is on for the first Ether ETF.
CI GAM was first out the gate last week with a preliminary prospectus for the CI Galaxy Ethereum ETF. Evolve and 3iQ followed suit this week with their own preliminary prospectuses for Ether ETFs.
Ether is the second largest cryptocurrency by market capitalization after Bitcoin and runs on the Ethereum blockchain.
Evolve’s Ether ETF will invest in the cryptocurrency on a passive basis, meaning the holdings will not be actively managed and will not be hedged, seek exposure through derivatives or pay regular cash distributions. The ETF’s portfolio will be priced based on the ETHUSD_RR, a once-a-day benchmark index price for Ether in U.S. dollars.
The 3iQ Ether ETF will invest directly in the cryptocurrency and will be managed by 3iQ, which also has a closed-end Ether fund.
“Ethereum is a network of decentralized financial applications transforming the financial world as we know it today,” said Fred Pye, chairman and CEO of 3iQ, in a release. “With the success of our Ether closed end fund, it is a natural progression for us to file for a physical Ether ETF to enhance our product suite in the growing digital asset space.”
Arxnovoum Investments Inc. is also looking for a place on the Ether ETF shelf, having filed a preliminary prospectus for the Arxnovoum Ether ETF.