BlockFi and Neuberger Berman join forces for crypto fund as Bitcoin ETFs explode

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Cryptocurrency lender BlockFi partners with investment manager Neuberger Berman to launch a series of crypto investment products, like exchange-traded funds (ETFs), which are taking the digital currency market by storm .

Just a few weeks ago, BlockFi filed with the Securities and Exchange Commission the list of its “BlockFi Bitcoin Strategy ETF,” which initiates a 75-day regulatory approval process. As proposed, the fund will hold Bitcoin futures (BTC-USD), similar to the ETFs listed last week by ProShares and digital asset manager Valkyrie.

In preparation for a targeted release from mid-December to the end of December, BlockFi and New York-based Neuberger have formed a separate legal entity, BlockFi nb LLC.

The joint venture will own BlockFi’s ETF, in addition to other products, in the hope that there will be more demand to be reaped from a growing wave of institutions looking to invest their assets in market-friendly crypto products. American capital.

“Currently, in the markets, we are seeing a huge shift in investor sentiment towards digital assets, as well as a demand for partnership with trusted companies with proven crypto expertise, institutional rigor. and leadership in asset management “, Greg Collet, president of the new joint venture. , BlockFi | nb, said Yahoo Finance.

As the first ETF to hold Bitcoin futures contracts, ProShares (BITO) raised over $ 1 billion in assets in just a few days, making it the second most traded ETF.

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At the same time, the amount of BTC futures that the fund can hold is already on the verge of reaching its monthly limits, raising fears that the ETF will have to invest more and more of its assets in futures. with longer expiration dates. This result could have an impact on the monitoring of returns obtained by investors who directly hold Bitcoin.

Still, Valkyrie CEO Leah Wald told Yahoo Finance last week that buyer demand for Bitcoin ETFs is so strong that at least “two or three” new fund products could earn the same total. assets under management (AUM).

Additionally, VanEck’s Today’s Bitcoin Strategy ETF (XBTF) listing and others are slated to launch in November, highlighting growing competition for market share.

Collett suggested the partnership fund would build on “cost effective and convenient access” benefits. VanEck’s management fee of 0.65%, is already lower than ProShares and Valkyrie at 0.95%, raising the question of whether BlockFi would take an even lower cut.

While BlockFi and Neuberger declined to comment on the fee structure, a BlockFi spokesperson pointed to pension funds such as the recent $ 25 million deployed by the Houston Firefighters Pension Fund. This is a recent example of how larger, more cautious institutions are starting to look for opportunities to invest in crypto.

A September report from financial broker Fidelity also highlighted this trend. According to their findings, U.S. pension funds surveyed, such as employee benefit plans and endowments, show increased interest in crypto.

However, many of the funds surveyed still have a “pretty negative view of digital assets,” mainly due to the volatility of alternative assets, according to Christine Sandler, head of sales and marketing for Fidelity.

“US institutional investors we interviewed indicated a greater propensity for investment products in digital assets than for direct ownership of cryptocurrencies. From our study, we also know that pension funds and defined benefit plans, like many other segments of institutional investors surveyed, promote the active management of an investment product containing digital assets, ”said Sandler told Yahoo Finance.

David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers.

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