Simplify Applies to US SEC to Launch Bitcoin Strategy Risk-Managed Income ETF

Asset manager Simplify has filed a registration statement with the U.S. Securities and Exchange Commission to list shares of an exchange-traded fund tied to bitcoin futures, treasury bonds and options.

In a Wednesday filing, Simplify filed with the SEC for an investment vehicle based on bitcoin (BTC) futures strategies, income strategies and options-covered strategies. The Bitcoin Strategy Risk-Managed Income ETF, which will list on Nasdaq under the ticker symbol MAXI, is a family of exchange-traded funds owned by the asset manager.

The fund will invest indirectly in BTC using cryptocurrency futures and, as part of its income strategy, hold short-term U.S. Treasury bills and ETFs that invest in Treasury bonds. For its options coverage strategy, Simplify said it would buy “exchange-traded protective puts” and sell “exchange-traded calls on bitcoin futures and/or bitcoin-related ETFs or ETFs.”

“Core option coverage is a strategic exposure designed to partially hedge against declines in bitcoin futures and express a belief in rising prices or price fluctuations in a specific bitcoin-related ETF,” the document states. “If the price of bitcoin rises, the fund’s Returns may be lower than Bitcoin because the advisor will buy back the written call option at a potentially higher price. If the price of Bitcoin falls, the fund's return may be lower than Bitcoin because the advisor will sell it at a potentially higher price put option or exercise put option."

Through the newly filed “Bitcoin Strategy Risk-Managed Income ETF,” symbolized $MAXI, the firm will hold bitcoin futures and yield-generating bonds while selling puts and calls on the bitcoin ETF.

— Eric Balchunas (@EricBalchunas) April 20, 2022

Last year, the SEC approved a number of BTC futures-linked ETF applications from financial firms and asset managers after Chairman Gary Gensler hinted that he would prefer to accept ETFs based on cryptocurrency futures rather than direct exposure. In January, Simplify also applied to list shares in the Simplify Volt Web3 ETF, an investment vehicle that tracks the performance of certain web3 companies.

In October 2021, ProShares and Valkyrie became the first two companies to launch exchange-traded funds linked to BTC futures in the United States. However, as of the time of publication, the SEC has rejected all spot bitcoin ETF applications. Grayscale is currently awaiting a decision from regulators on whether to accept an application to convert its Bitcoin trust into a spot BTC ETF for a public listing.