For years, we have been writing about the reluctance of the U.S. Securities and Exchange Commission to approve a Bitcoin exchange-traded fund.  See here  and here.  The stated concern of the SEC was whether the Bitcoin market was sufficiently resistant to market manipulation.  However, as we recently reported, on February 12, 2021, Canada approved such an ETF.  Indeed, it now has three:  I Galaxy Bitcoin ETF (BTCX), Purpose Bitcoin ETF (BTCC), and the Evolve Bitcoin ETF (EBIT).

There remains hope in the US that the SEC will change its mind.  NYDIG, Valkyrie Digital Assets and Vane Eck have applications pending.  And just last week, Wisdom Tree, a well-established ETF provider, filed for a Bitcoin ETF.  But now, it looks like Valkyrie is considering an alternative path as well.  On March 12, 2021 it made a filing with the SEC for the Innovative Balance Sheet ETF.  The form N-1A describes the proposed fund as follows:

The Fund is an actively-managed exchange-traded fund (“ETF”) that will invest principally in the securities of operating companies that have innovative balance sheets, which the Fund’s investment adviser, KKM Financial LLC (the “Adviser”), considers to be operating companies that directly or indirectly invest in, transact in, or otherwise have exposure to bitcoin or operate in the bitcoin ecosystem. In addition to the Bitcoin Network (as defined below), the broader bitcoin ecosystem includes, but is not limited to, bitcoin trading platforms, bitcoin miners, bitcoin custodians, digital wallet providers, companies that facilitate payments in bitcoin, and companies that provide other technology, equipment or services to companies operating in the bitcoin ecosystem. The Fund may invest in companies that invest in or have any portion of their assets accounted for by direct bitcoin holdings.

In other words, it looks like Valkyrie has a contingency plan for effectively doing indirectly what the SEC still might not permit directly.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.