Grayscale Investments has filed an updated prospectus for its Bitcoin Covered Call ETF (exchange-traded fund).
This signals swift action after the Commodity Futures Trading Commission (CFTC) approved the listing of spot Bitcoin ETF options.
Grayscale Seeks Bitcoin ETF With Covered Put Option
The fund, which will offer exposure to Bitcoin and the Grayscale Bitcoin Trust (GBTC), aims to generate income through actively managed call and put options on Bitcoin exchange-traded products (ETPs). The prospectus was originally filed with the U.S. Securities and Exchange Commission (SEC) in January 2024.
According to the protocol, the ETF will achieve its objectives by providing exposure to GBTC. Additionally, it will also employ a covered call strategy. This means that it will sell call options to generate income while holding Bitcoin or GBTC as collateral.
The fund seeks to achieve its investment objective primarily through actively managed exposure to the Grayscale Bitcoin Trust (GBTC) and by buying and selling a combination of call and put option contracts that use GBTC as the reference asset, the January filing read.
James Seyffart, ETF analyst at Bloomberg Intelligence, commented on the development. In his view, Grayscale is capitalizing on the approval for Bitcoin ETF options.
“Grayscale wasted no time after approving BTC options ETFs. They have filed an updated prospectus for their Bitcoin Covered Call ETF (no ticker yet). The fund will offer exposure to GBTC and BTC while writing and/or purchasing options contracts on Bitcoin ETPs to generate income,” Seyffart commented here.
However, this comes after the U.S. Securities and Exchange Commission (SEC) approved options trading for spot Bitcoin ETFs. The regulatory milestone, announced last month, allows ETF issuers to integrate options strategies into their Bitcoin-focused funds. Among other benefits, this opens up new avenues for investment.
The Office of the Comptroller of the Currency (OCC) is also preparing to launch options trading on Bitcoin ETFs. Eric Balchunas, another ETF industry expert, emphasized the importance of the CFTC’s decision. He said it paves the way for more complex Bitcoin investment products.
With options now available, funds like Grayscale's Covered Call ETF can cater to investors seeking yield in a volatile asset class.
Grayscale’s ETF Strategy in a Broader Context
Grayscale’s filing for the Covered Call ETF is part of its larger effort to establish itself as a leader in crypto ETFs. In October, the SEC acknowledged Grayscale’s application to convert its Digital Large Cap Fund into an ETF, demonstrating the company’s commitment to diversifying its offerings.
Additionally, Grayscale has been working with NYSE Arca to secure approval to list a number of ETFs, including those focused on digital assets other than Bitcoin. These efforts reflect the company’s strategy to bring institutional-grade financial products to the cryptocurrency market.
The ability to integrate options trading into Bitcoin ETFs could mark a turning point for the crypto industry. Covered call strategies, which involve selling options on assets held, allow funds to generate steady income, a feature that could appeal to a broader spectrum of investors.
Grayscale demonstrates agility in updating the prospectus for its Bitcoin Covered Call ETF, seeking to capitalize on the growing interest in crypto options in the evolving regulatory landscape.
Grayscale Ethereum ETF. Fonte: Farside Investors
If approved, the Bitcoin Covered Call ETF could therefore pave the way for a new generation of investment products that merge TradFi strategies with innovative digital assets. Furthermore, with regulatory frameworks beginning to accommodate such innovations, the crypto investment space is poised for significant growth.
However, the company's Ethereum ETF remains plagued by redemptions, evidenced by five consecutive days of outflows since November 12.
The article Grayscale files prospectus for Bitcoin ETF appeared first on BeInCrypto Brasil.
