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United States-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 firm said in a Jan. 14 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 investment, such as managing wallets or keys. The fund carries a management fee of 0.49%, making it one of the lowest-cost solutions of its kind.
As of January 7, 2025, OBTC managed approximately $186.7 million in assets, with each share representing about 0.000326 Bitcoin.
The decision to convert OBTC into an ETF comes after the termination of a proposed asset purchase agreement with Bitwise. Announced in August 2024, the deal 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, forcing both parties to walk away.
The trust started exploring various strategic options, which included the aforementioned Bitwise deal, after OBTC began trading at a noticeable discount to the value of its underlying Bitcoin assets, raising concerns among shareholders.
If approved, Osprey will join the expanding U.S. ETF market, which now includes 32 Bitcoin ETFs. Of these, 11 spot Bitcoin ETFs collectively manage around $109 billion in assets as of Jan. 15, just a year after the first approval.
Franklin Templeton and Hashdex have also launched ETFs offering exposure to Bitcoin and Ether indices, appealing to investors seeking diversified strategies. Meanwhile, Bitwise has proposed an ETF focused on publicly traded companies holding over 1,000 BTC in their corporate treasuries.
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