Asset manager Simplify has filed a registration statement with the United States Securities and Exchange Commission to list shares of an exchange-traded fund linked to Bitcoin futures, Treasury securities, and options.
In a Wednesday filing, Simplify applied with the SEC for an investment vehicle based on a Bitcoin (BTC) futures strategy, an income strategy, and an option overlay strategy. The Bitcoin Strategy Risk-Managed Income ETF, to be listed under the ticker MAXI on Nasdaq, is a series of exchange-traded funds from the asset management company.
The fund will indirectly invest in BTC using crypto futures and, as part of its income strategy, hold short-term U.S. Treasury securities and ETFs that invest in Treasury securities. For its option overlay strategy, Simplify said it would purchase “exchange-traded protective put options" and write "exchange-traded call options on Bitcoin futures and/or a Bitcoin related ETF or ETFs.”
“The core option overlay is a strategic exposure meant to partially hedge against Bitcoin futures declines and express convictions about price run ups or about a specific Bitcoin-linked ETF’s price movement,” said the filing. “If the price of Bitcoin goes up, the Fund’s returns may underperform Bitcoin because the adviser will buy back the written call options at a likely-higher price. If the price of Bitcoin goes down, the Fund’s returns may fall less than Bitcoin because the adviser will sell the put options at a likely-higher price or exercise the put options.”
The SEC has approved many ETF applications linked to BTC futures from financial firms and asset management companies in the last year following chair Gary Gensler hinting he would be more open to accepting ETFs based on crypto futures rather than through direct exposure. In January, Simplify also filed to list shares of an investment vehicle tracking the performance of certain web3 firms, the Simplify Volt Web3 ETF.
In October 2021, ProShares and Valkyrie became two of the first firms to launch exchange-traded funds linked to BTC futures in the United States. However, the SEC has rejected all spot Bitcoin ETF applications as of the time of publication. Grayscale is currently awaiting a decision from the regulatory body on whether an application to convert its Bitcoin Trust into a spot BTC ETF for a public listing will be accepted.