Key Takeaways
- • Invesco and Galaxy Asset Management launched the Invesco Galaxy Bitcoin ETF (BTCO) on January 11, 2024, with trading beginning that day on the Cboe BZX Exchange, according to the firms' joint announcement via PR Newswire Canada.
- • Invesco is waiving the entire sponsor fee on the first $5 billion of trust assets for six months after launch, reducing the total expense ratio from 39 basis points to 0 basis points, with discretion to extend the waiver.
- • BTCO holds physical bitcoin, with fair market value determined by the Lukka Prime Bitcoin Reference Rate and custody provided by Coinbase.
- • Galaxy acts as execution agent, buying and selling bitcoin for cash on the fund's behalf; Galaxy Asset Management reports US$5.3 billion in AUM as of November 30, 2023, while Invesco reports over US$430 billion in AUM.
Summary
Invesco Ltd. (NYSE: IVZ) and Galaxy Asset Management, the asset management division of Galaxy Digital, have launched the Invesco Galaxy Bitcoin ETF (BTCO), a spot bitcoin exchange-traded fund that began trading on the Cboe BZX Exchange on January 11, 2024. According to the announcement, BTCO invests directly in physical bitcoin and seeks to track the market price of bitcoin as measured by the Lukka Prime Bitcoin Reference Rate.
To lower entry costs, Invesco is waiving the fund's entire fee on assets up to $5 billion for the first six months after launch, which reduces the total expense ratio from 39 basis points to zero. The firm retains discretion to extend the waiver. Invesco Global Head of ETFs Brian Hartigan described the partnership as bringing together ETF innovation and digital asset expertise, saying the structure brings bitcoin into a fully transparent and regulated market.
Galaxy serves as execution agent, buying and selling bitcoin for cash on behalf of the fund, a role the companies say may benefit the execution of creations and redemptions. Steve Kurz, Global Head of Galaxy Asset Management, cited the firms' experience managing crypto ETPs in Canada, Brazil and Europe, and a cash-creation bitcoin ETF in Canada, as the basis for what he said were low fees, strong liquidity and minimal tracking error. Galaxy Asset Management, which the release says is not affiliated with Invesco, reported US$5.3 billion in AUM as of November 30, 2023.
BTCO's bitcoin is held under a custody agreement with Coinbase in institutional-grade storage. The fund is listed on a major exchange and can be held in brokerage accounts, which the companies say removes custody and wallet management burdens for investors. Invesco, which managed US$1.49 trillion in assets as of October 24, 2023, cited its ETF track record, including the Invesco QQQ, as context for the launch.
The prospectus carries standard risk disclosures, including high volatility, the possibility of losing all or substantially all of an investment, the fund's cash-creation structure which may reduce tax efficiency, and regulatory risks that could restrict bitcoin use or trading.
To lower entry costs, Invesco is waiving the fund's entire fee on assets up to $5 billion for the first six months after launch, which reduces the total expense ratio from 39 basis points to zero. The firm retains discretion to extend the waiver. Invesco Global Head of ETFs Brian Hartigan described the partnership as bringing together ETF innovation and digital asset expertise, saying the structure brings bitcoin into a fully transparent and regulated market.
Galaxy serves as execution agent, buying and selling bitcoin for cash on behalf of the fund, a role the companies say may benefit the execution of creations and redemptions. Steve Kurz, Global Head of Galaxy Asset Management, cited the firms' experience managing crypto ETPs in Canada, Brazil and Europe, and a cash-creation bitcoin ETF in Canada, as the basis for what he said were low fees, strong liquidity and minimal tracking error. Galaxy Asset Management, which the release says is not affiliated with Invesco, reported US$5.3 billion in AUM as of November 30, 2023.
BTCO's bitcoin is held under a custody agreement with Coinbase in institutional-grade storage. The fund is listed on a major exchange and can be held in brokerage accounts, which the companies say removes custody and wallet management burdens for investors. Invesco, which managed US$1.49 trillion in assets as of October 24, 2023, cited its ETF track record, including the Invesco QQQ, as context for the launch.
The prospectus carries standard risk disclosures, including high volatility, the possibility of losing all or substantially all of an investment, the fund's cash-creation structure which may reduce tax efficiency, and regulatory risks that could restrict bitcoin use or trading.
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