US-based Osprey Funds is gearing up to convert its Bitcoin trust into an exchange-traded fund after an acquisition deal with Bitwise fell through.
The investment management company said in a Jan. 14 post statement that it would file a Form S-1 with the U.S. Securities and Exchange Commission “as soon as practicable” to convert the Osprey Bitcoin Trust (OBTC) into an ETF.
Launched in February 2021, OBTC offers investors exposure to Bitcoin without the complexities of direct investments, such as managing wallets or keys. The fund has a management fee of 0.49%, making it one of the cheapest solutions of its kind.
As of January 7, 2025, OBTC managed approximately $186.7 million in assets, with each share representing approximately 0.000326 Bitcoin.
The decision to convert OBTC into an ETF comes after the termination of a proposed asset purchase agreement with Bitwise. The deal, which was announced in August 2024, aimed to transfer OBTC’s assets into Bitwise’s portfolio, giving shareholders exposure to Bitcoin through Bitwise Bitcoin shares.
However, when the December 31 regulatory deadline passed without the necessary approvals, the deal fell through fell throughforcing both parties to walk away.
The trust began exploring various strategic options, including the aforementioned Bitwise deal, after OBTC began trading at a noticeable discount to the value of the underlying Bitcoin assets, raising concerns among shareholders.
If approved, Osprey will join the growing US ETF market, which now includes 32 Bitcoin ETFs. Of these, 11 spot Bitcoin ETFs collectively manage approximately $109 billion in assets as of January 15, just one year after initial approval.
Franklin Templeton and Hashdex have also launched ETFs that provide exposure to Bitcoin and Ether indices, appealing to investors looking for diversified strategies. Meanwhile, Bitwise has proposed an ETF that focuses on publicly traded companies that hold more than 1,000 BTC in their corporate bonds.
