Goldman Sachs has filed with the Securities and Exchange Commission (SEC) for a new fund that would give investors exposure to Bitcoin (BTC), but with significantly less volatility and a built-in income stream.
In a Form N-1A Registration Statement, the bank says its Goldman Sachs Bitcoin Premium Income ETF will invest at least 80% of its net assets in investments that provide exposure to Bitcoin.
Rather than holding Bitcoin directly, the fund will purchase shares of Spot Bitcoin ETPs, or exchange-traded products that track the real-time spot price of Bitcoin and trade on regulated securities exchanges. The fund will also sell call options on those positions. The fund will collect premiums for call option sales, giving investors a steady source of income regardless of BTC’s market trend.
The filing notes that the fund will route a portion of its holdings through a wholly owned subsidiary organized under the laws of the Cayman Islands, the Goldman Sachs Bitcoin Premium Income Portfolio CFC, due to US federal tax law requirements applicable to registered investment companies. Neither the fund nor the Cayman subsidiary will invest directly in Bitcoin.
The product is designed for investors who want meaningful Bitcoin exposure but are unwilling or unable to absorb the full force of the cryptocurrency’s historically sharp price swings. The downside is that investors will not fully capture Bitcoin’s price ascent during uptrends.
Bloomberg senior ETF analyst Eric Balchunas says the ETF is structured to target Goldman’s client base.
“This is a ’40 Act filing, so it has to use a Cayman Subsidiary to get around regulatory limitations regarding holding commodities. BlackRock, meanwhile, has a ’33 Act product that is similar. Goldman may sense an opportunity to leapfrog them and/or is probably hearing from their clients they want Bitcoin but with less volatility and happy to give up some upside for lower downside and income aka Boomer Candy.”
Balchunas adds that the move caught him off guard.
“I can’t say I saw this coming. I kinda just thought JP Morgan and Goldman Sachs would sit crypto out in favor of competing in other categories.”
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