GSR Submits ETF Proposal to US Securities and Exchange Commission
The crypto trade company GSR has submitted a proposal to the US Securities and Exchange Commission (SEC) to launch its first stock exchange fund (ETF), which will focus on companies that hold cryptocurrencies such as Bitcoin, Ether, and other digital assets on their balance sheets. This move is seen as a bold bid to tap into the appetite of Wall Street for corporate crypto bonds, despite the recent downturn in the sector.
The proposed GSR Digital Asset Treasury Companies ETF will invest in public companies that have significant holdings of cryptocurrencies, such as Strategy Inc. (MSTR), Upexi, Inc. (Upxi), Defi Development Corp. (DFDV), CEA Industry Inc. (BNC), and Sharplink Gaming (Sbet), among others. The fund will have a flexible portfolio with 10-15 positions in 5-10 issuers, mainly companies listed on US exchanges.
GSR’s Crypto Treasury ETF and Its Implications
The proposed ETF is one of five products that GSR has submitted to the SEC. The others include the Ethereum Staking Opportunity ETF, Ethereum Rendite ETF, Crypto Stakingmax ETF, and the Crypto Core3 ETF. These funds will cater to the growing demand for crypto-related investments on Wall Street.
Critics argue that the model of holding cryptocurrencies on balance sheets is becoming saturated and increasingly risky, especially when smaller players experiment with high-quality reserves to differentiate themselves. However, GSR’s move is seen as a bold bid to tap into the appetite of Wall Street for corporate crypto bonds.
Crypto Treasury Companies’ Struggles and Debt-Fueled Buybacks
Public companies that once invested heavily in Bitcoin and Ether are now struggling with market values that have dropped below the value of the tokens they hold. In response, many of these companies are turning to debt-fueled buybacks to support their falling share prices.
At least seven companies have recently announced buyback programs, with some borrowing millions of dollars to finance these purchases. Critics argue that this approach undermines the thesis that the increase in value of digital assets would increase equity value solely.
According to Adam Morgan McCarthy, Senior Analyst at Kaiko, “You borrow money to buy time, not tokens.” However, the conviction that companies can benefit from holding cryptocurrencies has not disappeared completely, as companies have acquired more Bitcoin this year than US Spot ETFs combined, and retail investors continue to accept liquidity when institutions withdraw.
ETF Market and Regulatory Environment
The ETF market is experiencing a surge in crypto-related products, with over 90 applications pending before the SEC. The regulatory authority has approved new listing standards for raw material confidence, which has optimized the approval process.
Recently, the Digital Large Cap Fund (GDLC) from Grayscale and the Rex-Orod-Dog-ETF (DOJE) have started trading, while the Tidal Financial Group has applied for an ETF with Leveraged AltSeason. The prospects for these products have improved after the SEC approved new generic listing rules.
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