Osperey Funds to Convert Bitcoin Trust into ETF after Acquisition Deal Falls Through

Osprey Funds, a US-based investment management firm, is set to convert its Osprey Bitcoin Trust (OBTC) into an exchange-traded fund (ETF) following the termination of a proposed acquisition deal with Bitwise.

The decision to convert OBTC into an ETF was announced in a statement on January 14, with Osprey Funds stating that it would file a Form S-1 with the US Securities and Exchange Commission (SEC) “as soon as practicable”. This move aims to provide investors with exposure to Bitcoin without the complexities associated with direct investment.

About the Osprey Bitcoin Trust

Launched in February 2021, the Osprey Bitcoin Trust offers investors a low-cost solution for gaining exposure to Bitcoin, with a management fee of 0.49%. As of January 7, 2025, OBTC managed approximately $186.7 million in assets, with each share representing about 0.000326 Bitcoin.

Background of the Decision

The decision to convert OBTC into an ETF comes after the termination of a proposed asset purchase agreement with Bitwise. The deal, announced in August 2024, aimed to transfer OBTC’s assets to Bitwise’s portfolio, providing unitholders with exposure to Bitcoin through Bitwise Bitcoin shares. However, as the December 31 regulatory deadline passed without the necessary approvals, the deal fell through.

Osprey Funds Joins the Expanding US ETF Market

If approved, Osprey Funds will join the expanding US ETF market, which currently includes 32 Bitcoin ETFs. Of these, 11 spot Bitcoin ETFs collectively manage around $109 billion in assets as of January 15, just a year after the first approval. Other investment firms, such as Franklin Templeton and Hashdex, have also launched ETFs offering exposure to Bitcoin and Ether indices.

Tips for Investors

When considering investing in Bitcoin ETFs, keep the following in mind:

  • Low-cost solutions: Look for ETFs with low management fees to minimize costs.
  • Diversified strategies: Consider ETFs that offer exposure to multiple cryptocurrencies or indices.
  • Regulatory approvals: Ensure that the ETF has received necessary regulatory approvals before investing.

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