The U.S.-based exchange-traded fund (ETF) issuer has announced that it would liquidate one of its several ETFs invested in firms exposed to Bitcoin.
Low Customer Demands Forces Liquidity
According to Valkyrie Funds LLC, its Valkyrie Balance Sheet Opportunities Fund (Nasdaq: VBB) will be delisted from the trading platform. The Nasdaq-listed Bitcoin-based digital asset has been trading since its launch in December 2021. However, the crypto asset manager revealed that the ETF would no longer be available at the end of October.
Furthermore, the fund manager revealed that it had implemented a compensation plan for redemption. A holder of the fund’s shares at liquidation is eligible for a cash redemption equivalent to the net asset value (NAV), as per the U.S. Securities and Exchange Commission (SEC) filings.
Meanwhile, Valkyrie noted that liquidation of the ETF is the best solution given the current situation. In addition, the move is part of the company’s reviews of its products to ensure they are tuned to customers’ demands.
The company revealed that it decided after consultation with its management. Therefore, the resolution from the board meeting is that Valkyrie should discontinue the issuance of the ETF.
Since its launch, customers have not expressed much interest in the ETF. The ETF is in the custody of two firms known for their large exposure to Bitcoin, MicroStrategy and Tesla.
Moreover, reports show that the total net assets under Valkyrie’s management are roughly $570,000 currently. Meanwhile, investors can continue to trade shares till the end of the trading session on October 28. Valkyrie added that it holds all expenses related to the liquidation.
Promoting Access to Digital Assets
In December 2021, the fund manager’s ETF targeted companies with exposure to Bitcoin on their balance sheets. The aim is to expand investors’ participation in the digital assets ecosystem.
Thus, the fund is also the second among several of Valkyrie’s ETFs designed to expose institutional investors to some types of cryptocurrencies.
Meanwhile, despite the crypto market correction, the fund manager is discontinuing its services when there is a growing interest in Bitcoin.
A recent study shows that over 80% of financial experts in the United States have been asked about crypto asset investments.
Furthermore, many publicly listed companies in the U.S. have a stash of Bitcoin tokens as part of their balance sheets.
More corporations, countries, and entities are joining the fray to plunge their funds into Bitcoin-based products. By investing in such companies, individuals are indirectly exposed to Bitcoin ETFs.
In another development, the Brazilian Tax Authority revealed that more than 12,000 firms hold cryptocurrency, especially Bitcoin. This shows the increasing adoption of crypto in transactions in the country.
Notably, Brazil has well-documented economic struggles, which may have contributed to the spike in the use of digital tokens. It is not all gloomy for a struggling economy, as the latest news could likely see another surge of foreign crypto firms in the country.
Alongside Argentina and El Salvador, Brazil leads Latin America in the number of cryptocurrency users.