Galaxy Asset Management, which claims to be one of the largest digital assets and blockchain investment managers, in partnership with Invesco Ltd. (NYSE: IVZ), a global provider of exchange-traded funds (ETFs), announced the launch of the Invesco Galaxy Bitcoin ETF (BTCO).
BTCO invests directly in physical bitcoin to “allow investors to access the performance of the market price of bitcoin, as measured by the Lukka Prime Bitcoin Reference Rate through an ETF structure to provide additional safeguards and ease of trading.”
BTCO begins trading on “the Cboe BZX Exchange, removing many of the barriers to bitcoin investing.”
For the first six months after launch, Invesco is “waiving BTCO’s entire fee on assets up to $5 billion3, effectively bringing the total expense ratio of BTCO from 39 basis points to 0 basis points, with the discretion to extend the fee waiver further.”
Brian Hartigan, Global Head of ETFs Investments at Invesco, said:
“Through our partnership with Galaxy, the physically backed BTCO ETF benefits from an unparalleled level of combined knowledge and experience in ETF innovation and digital asset expertise. We have a high conviction that digital assets have the potential to be a transformative asset class and believe bringing BTCO into a fully transparent and regulated market truly helps to further democratize the asset class.”
One of the key factors that “differentiates BTCO is Invesco’s partnership with Galaxy Asset Management, an affiliate of Galaxy Digital Holdings Ltd. Galaxy’s deep knowledge of digital assets and experience in investing across all stages of the ecosystem strengthen the operational risk management of the ETF.”
Galaxy acts as the execution agent in “the buying and selling of bitcoin for cash on behalf of BTCO, bringing seasoned expertise and institutional-grade infrastructure to the process, which may benefit execution of the creation and redemption of BTCO shares.”
Steve Kurz, Global Head of Galaxy Asset Management, said:
“What sets the BTCO ETF apart from other similar products is the partnership between Invesco and Galaxy. Our collective experience managing crypto ETPs in Canada, Brazil, and Europe, and, more specifically, our direct experience managing a cash create bitcoin ETF in Canada has been instrumental in developing a product with low fees, strong liquidity, and minimal tracking error.”
Galaxy also conducts some of the most comprehensive and in-depth thought leadership and research on digital assets.
Investors can pair this research with the ETF “expertise of Invesco’s dedicated product strategy teams to stay current on important developments in the digital asset space.”
BTCO uses the Lukka Prime Bitcoin Reference Rate to “determine the fair market value (FMV) of the bitcoin it holds, reflecting the execution price of bitcoin on its principal market as determined by Lukka Inc., an independent third-party digital asset data company.”
Lukka uses institutional data quality standards, “such as AICPA Service and Organization Controls (SOC), to ensure financial calculation accuracy and completeness in its evaluation of various bitcoin exchanges, assessing factors like oversight, trading volume, and data integrity.”
By purchasing bitcoin through “an established financial vehicle, investors are relieved of some of the more difficult operational aspects of spot bitcoin, such as custodial duties and storage wallets to keep assets secure.”
BTCO offers flexible entry to and exit “from the asset class, trading on a major exchange in a familiar investment vehicle. Unlike digital assets that are directly held, BTCO can be held in investment accounts like brokerages and easily added to an investment portfolio.”
The bitcoin holdings of BTCO are “stored in institutional-grade storage through a custody agreement with Coinbase.”
Through Coinbase, bitcoin purchased “by the ETF is kept in tamper-proof hardware modules in secure data centers with enhanced security features.”
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