First Trust files for Bitcoin buffer ETF

2023-12-15 15:30:15

Financial services firm First Trust submitted the Bitcoin buffer filing ETF to the United States Securities and Exchange Commission on Dec. 14

The filing, Form N1, outlines the firm’s intention to introduce a new Bitcoin-linked product named the First Trust Bitcoin Buffer ETF.

Exposure to Bitcoin’s performance

According to the filing, the newly proposed fund will mirror the positive price returns of the Grayscale Bitcoin Trust or another exchange-traded product (ETP), offering exposure to Bitcoin’s performance before factoring in fees and expenses.

Differing from a spot Bitcoin ETF, which directly tracks Bitcoin’s performance, the buffer ETF will employ options to pursue a specific investment outcome. According to Bloomberg Intelligence analyst James Seyffart, the benefit is that this type of fund is said to shield investors from losses in the event of market downturns by imposing a buffer or limit on a stock’s growth within a defined period

Seyffart states that the community should expect other entrants with different strategies for Bitcoin exposure in the next couple of weeks.

Cash-only redemptions

This news came on the same day that Valkyrie Funds, a spot Bitcoin ETF race player, submitted a new S-1.

In alignment with Bitwise and Invesco, this move underscored a focus on cash-only creations and redemptions, with shared anticipation for transitioning to in-kind transactions where regulations allow.

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