Investment management company Stone Ridge is trying to register a new Bitcoin (BTC) futures offering with the United States Securities and Exchange Commission (SEC).
The new fund is called NYDIG Bitcoin Strategy Fund and describes itself as “a non-diversified, closed-end management investment company that continuously offers its shares,” with an objective to achieve capital appreciation by investing in BTC futures contracts, according to an Oct. 2 filing.
Cash-settled BTC futures only
Detailing its investment strategy, the company noted that the fund will only invest in cash-settled BTC futures traded on commodity exchanges registered with the U.S. Commodity Futures Trading Commission, avoiding direct investments in Bitcoin and other digital currencies. The file explained:
“‘Cash-settled’ means that when the relevant future expires, if the value of the underlying asset exceeds the futures price, the seller pays to the purchaser cash in the amount of that excess, and if the futures price exceeds the value of the underlying asset, the purchaser pays to the seller cash in the amount of that excess.”
The proposed maximum offering price per the fund’s share is $10, while its initial capital is $25 million. The fund does not provide assurance that its investments in BTC futures will appreciate in value or on average, as well as that changes in the value of the fund’s BTC futures will track the changes in Bitcoin’s price, the filing notes.
Industry players exploring BTC futures
In late September, Bakkt’s much-anticipated, physically settled Bitcoin futures trading went live for trading on the Intercontinental Exchange (ICE). The platform was the first of its kind to receive approval from United States regulators and is a product of ICE, the operator of the New York Stock Exchange.
That same month, major cryptocurrency exchange Binance launched two futures testnet platforms — inviting users to participate in a 10,000 Binance Coin (BNB) trading competition.
Meanwhile, the Chicago Mercantile Exchange Group is adding options to its Bitcoin futures contracts in the first quarter of 2020, pending regulatory review. Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products, said:
“Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk.”