Strive Asset Management, a company co-founded by Vivek Ramaswamy, announced plans for an exchange-traded fund on Thursday that would seek exposure to convertible securities issued by companies investing in Bitcoin BTC/USD.
What Happened: The proposed ETF, named the Strive Bitcoin Bond ETF, aims to expose investors to the growing “Bitcoin bond” market, leveraged by companies like MicroStrategy Inc. MSTR to fund Bitcoin acquisitions, an SEC filing showed.
“Under normal circumstances, at least 80% of the notional exposure of the Fund (through securities and financial instruments) will be to Bitcoin Bonds,” the filing read.
Strive said that the fund will treat convertible debt as equity securities, despite the instruments having some attributes of debt securities.
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Why It Matters: The filing comes amid a growing trend of companies issuing convertible bonds to support their Bitcoin purchase strategy. Michael Saylor-led MicroStrategy has been the market leader, issuing these bonds at 0% interest.
A convertible note is a hybrid instrument that can be exchanged for equity in the company at a later date. The conversion feature of these notes eventually helps the debt holders to benefit from the equity upside on conversion.
The strategy has drawn a fair share of criticism, with analysts pointing out the risks of debt buyers not converting to shares before maturity.
Meanwhile, popular cryptocurrency analyst James Van Straten noted that Strive’s filing meant “more vested interest” for Bitcoin to do well under the Trump administration.
Strive founder Ramaswamy was appointed by President-elect Donald Trump to lead the new Department of Government Efficiency along with tech mogul Elon Musk.
Ramaswamy’s involvement in the cryptocurrency sector isn’t new. During his run for the Republican presidential nomination, Ramaswamy advocated for reducing the Securities and Exchange Commission’s reach and providing clarity in cryptocurrency regulation.
Price Action: At the time of writing, Bitcoin was exchanging hands at $96,007.97, down 2.65% in the last 24 hours, according to data from Benzinga Pro.
Photo: Gage Skidmore on flickr
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