Strive Asset Management, co-led by DOGE Co-Chief Vivek Ramaswamy, has taken a significant step toward introducing innovative investment strategies to the U.S. financial market. On Dec. 26, Strive filed with the U.S. Securities and Exchange Commission (SEC) for the launch of the first-ever Bitcoin Bond Exchange-Traded Fund (ETF). This proposed ETF, named the Strive Bitcoin Bond ETF, aims to give investors unique exposure to Bitcoin-backed securities by focusing on convertible bonds issued by Bitcoin-centric companies, primarily MicroStrategy.
The filing was made using Form N-1A, the primary registration document for open-end management investment companies, including mutual funds and ETFs. This form, required by the SEC, provides comprehensive information about the fund’s investment strategy, risks, fees, and operational details. By filing a Form N-1A, Strive not only registers the Bitcoin Bond ETF but also seeks to ensure transparency and compliance with regulatory standards, offering potential investors a clear view of what the fund entails and how it plans to operate.
The SEC filing outlines Strive’s intention to offer an actively managed ETF that allocates at least 80% of its exposure to Bitcoin-related bonds and financial instruments. These include convertible bonds from companies like MicroStrategy, a firm renowned for holding significant amounts of Bitcoin as its primary treasury reserve asset. Convertible bonds are securities that can be converted into a company’s common stock at a specific price. By targeting such instruments, the ETF offers a way for investors to gain exposure to Bitcoin without directly purchasing the cryptocurrency.
MicroStrategy’s prominent role in the ETF’s strategy is highlighted in the filing. As of December 31, 2024, MicroStrategy is identified as the world’s largest Bitcoin treasury company. Its approach—acquiring substantial Bitcoin holdings, leveraging blockchain technology, and advocating for Bitcoin adoption—aligns closely with Strive’s focus. The ETF also plans to use derivatives, such as swaps and FLEX options, to gain synthetic exposure to MicroStrategy’s convertible notes. These strategies aim to maximize returns while navigating the complexities of direct Bitcoin investment.
The fund also incorporates derivative instruments such as swaps and FLEX options, which allow for synthetic exposure to these bonds. Swaps involve agreements with financial institutions to exchange returns on investments, while FLEX options provide customizable terms for buying or selling securities. These strategies aim to track Bitcoin’s performance while managing associated risks.
Strive’s prospectus specifies that the ETF will invest remaining funds in high-quality, short-term U.S. Treasury instruments for liquidity and collateral purposes. It also notes the fund’s classification as non-diversified, meaning it will concentrate its investments in Bitcoin-related sectors, thereby amplifying sector-specific risks.
The filing emphasizes the ETF’s risks, including exposure to Bitcoin’s price volatility, regulatory uncertainties, and the performance of underlying companies like MicroStrategy. Bitcoin’s fluctuating value, driven by factors such as adoption rates, government regulation, and technological developments, directly impacts the fund’s potential returns. The use of derivatives introduces complexities like counterparty risk, leverage, and liquidity challenges, which could further affect performance.
Additionally, as a new fund with no operational history, the Strive Bitcoin Bond ETF’s long-term success is uncertain. Concentration in Bitcoin-related industries increases exposure to sector-specific downturns, and the fund’s reliance on emerging financial instruments adds layers of unpredictability.
The filing aligns with Ramaswamy’s broader vision of challenging conventional investment approaches. As co-chief of the Department of Government Efficiency (DOGE), an advisory commission created by President-elect Donald Trump, Ramaswamy works alongside Elon Musk to overhaul government operations. DOGE’s mission includes dismantling bureaucratic inefficiencies, cutting excess regulations, and promoting entrepreneurial governance models. The department, which operates outside formal government structures, is expected to conclude its work by July 4, 2026, marking America’s Semiquincentennial.
Strive’s Bitcoin Bond ETF represents a departure from typical Bitcoin-related funds, which often involve direct cryptocurrency holdings or Bitcoin futures. By focusing on convertible bonds and derivatives, the fund seeks to mitigate some of Bitcoin’s inherent risks while still capitalizing on its potential for high returns. This approach could attract investors wary of the volatility and regulatory complexities of direct Bitcoin investments.
If approved, the Strive Bitcoin Bond ETF could pave the way for other innovative financial products, further bridging the gap between traditional finance and the cryptocurrency market.
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