CoinShares, a leading European digital asset investment firm, has announced that it has acquired the rights to buy Valkyrie’s crypto exchange-traded fund (ETF) business. This deal will allow CoinShares to expand its presence in the US market and offer more products and services to its clients.
Valkyrie is a US-based company that specializes in creating and managing digital asset ETFs. It currently has two active ETFs listed on the Nasdaq: the Valkyrie Bitcoin Strategy ETF (BTF) and the Valkyrie Bitcoin Miners ETF (WGMI). BTF is the second bitcoin futures ETF to launch in the US, following ProShares, and has attracted over $200 million in assets under management in its first week of trading. WGMI is the first ETF to focus on companies that mine bitcoin or provide related hardware and software. It has an expense ratio of 0.75% and aims to capture the growth potential of the bitcoin mining industry.
CoinShares, which already operates several crypto ETPs in Europe, such as the CoinShares Physical ETPs and the XBT Provider by CoinShares, will be able to leverage Valkyrie’s expertise and infrastructure to launch new products in the US. CoinShares CEO Jean-Marie Mognetti said that the acquisition will “accelerate our ability to bring innovative and differentiated products to US investors”. He also praised Valkyrie’s team for their “vision, creativity and execution”.
The terms of the deal were not disclosed, but CoinShares said that it will pay for the transaction with a combination of cash and its own shares. The deal is expected to close in the first quarter of 2022, subject to regulatory approvals and customary closing conditions. Valkyrie’s founder and CEO Leah Wald will join CoinShares as the head of US ETFs and report to Mognetti. She said that she is “thrilled to join forces with CoinShares” and that the deal will “create a powerhouse in the digital asset space”.
The deal comes at a time when the demand for crypto ETFs is surging in the US, as investors seek exposure to the emerging digital asset economy. According to CoinShares’ latest report, the total assets under management of crypto ETPs globally reached a record high of $64 billion as of October 22, 2021. The US market, however, has been lagging behind other regions, such as Europe and Canada, due to the lack of regulatory clarity and approval from the Securities and Exchange Commission (SEC). The recent launch of the first bitcoin futures ETFs in the US has been seen as a breakthrough and a sign of growing acceptance of crypto assets by the regulators and the mainstream financial industry.
CoinShares and Valkyrie are among the many firms that have applied for a bitcoin spot ETF, which would track the price of bitcoin directly rather than through futures contracts. However, the SEC has so far rejected or delayed all such applications, citing concerns over market manipulation, custody, valuation, and liquidity. The SEC chair Gary Gensler has indicated that he prefers a futures-based approach, as it falls under the jurisdiction of the Commodity Futures Trading Commission (CFTC), which has more oversight and enforcement powers than the SEC. However, some analysts and industry experts argue that a spot ETF would be more efficient, transparent, and cost-effective for investors than a futures ETF, which involves higher fees, rollover costs, and tracking errors.
CoinShares and Valkyrie hope that their deal will strengthen their position and reputation in the US market and increase their chances of getting a spot ETF approved in the future. They also plan to launch other innovative and diversified products that will provide investors with access and exposure to the digital asset economy.