The fund, called Valkyrie Innovative Balance Sheet ETF, will concentrate on the “securities of operating companies … that directly or indirectly invest in, transact in or otherwise have exposure to bitcoin or operate in the bitcoin ecosystem”.

With this ETF, Valkyrie will be able to invest into companies working directly in the Bitcoin environment, such as exchanges or miners. Moreover, it will also be able to invest into corporations exposed to Bitcoin on their balance sheets such as MicroStrategy.

Valkyrie Bitcoin ETF

The Valkyrie Innovative Balance Sheet ETF is the second Bitcoin-related SEC filing from Valkyrie in 2021. On Jan. 22, the company filed for its Valkyrie Bitcoin ETF, which will let the company gain exposure to Bitcoin directly for the fund’s investors. 

Currently, there are no Bitcoin exchange traded funds in the United States. This is not due to a lack of trying. Valkyrie and Gemini Trust are only two of the best-known examples of companies that have filed for them.

MicroStrategy Proxy

American companies wanting to gain exposure to Bitcoin are looking to MircoStrategy for workarounds. For example, Valkyrie’s Innovative Balance Sheet ETF will most likely invest in MicroStrategy. This company has over 90,000 BTC on its corporate balance sheet.

The Bitcoin holding has turned MicroStrategy’s stock into a proxy for a Bitcoin ETF. Observers have noticed that stock price now closely mirrors Bitcoin’s price. 

Moreover, MicroStrategy shared its playbook for replacing cash in its corporate treasury with Bitcoin. The company held a two day online conference on the topic. The conference was so popular that representatives from 6917 companies attended.

Catching up

By allowing an actual Bitcoin ETF, the SEC would allow U.S. investment firms to catch up with their Canadian counterparts. On Feb. 11, Canadian regulators approved the first North American Bitcoin ETF. Purpose Bitcoin Fund launched on the Toronto exchange shortly afterward. The fund saw over $400 million pour into it within two days.

Until the SEC starts approving Bitcoin-oriented ETFs, American investors will have to take what they can get. Gemini Trust is the custodian for Purpose Bitcoin Fund’s non-Canadian investors. In the meantime, Valkyrie and company will need to keep banging on the door of the Securities and Exchange Commission for permission to keep up with the neighbors.