Osprey Funds to Convert its Bitcoin Trust into ETF After Bitwise Talks End

U.S. based asset management firm Osprey Funds is preparing to convert its Bitcoin trust into an exchange-traded fund (ETF) following the collapse of its acquisition deal with Bitwise.

In a statement on January 14, the firm announced its intention to file a Form S-1 with the U.S. Securities and Exchange Commission at the earliest opportunity to transform the Osprey Bitcoin Trust (OBTC) into an exchange-traded fund (ETF).

Launched in February 2021, OBTC provides investors with a straightforward way to gain Bitcoin exposure without the need for managing wallets or keys. With a management fee of just 0.49%, it stands as one of the most cost-effective options in its category.

The move to convert OBTC into an ETF follows the cancellation of a planned asset acquisition deal with Bitwise. Osprey Funds and Bitwise announced that they had entered into an Asset Purchase Agreement, allowing Bitwise to acquire the assets of the Osprey Bitcoin Trust (OBTC).

As part of the deal, OBTC unitholders will receive shares of the Bitwise Bitcoin ETF (BITB) through a liquidating distribution while existing BITB holders will see no changes to their shares or the ETF’s operations. The transaction was intended to be tax-free for OBTC unitholders, with additional details to be disclosed in a Registration Statement filed with the SEC. However, the deal fell through as the December 31 regulatory deadline passed without the necessary approvals, causing both parties to walk away.

In another ETF-related development, Calamos Investments has launched the world’s first 100% downside-protected Bitcoin ETF, CBOJ. Set to list on the CBOE on January 22, 2025, CBOJ offers regulated Bitcoin exposure with built-in risk protection, using Treasuries and options tied to the CBOE Bitcoin US ETF Index. The ETF has a 0.69% annual expense ratio and resets annually to adjust its upside cap and downside protection. It targets investors seeking Bitcoin exposure without volatility risks. CEO John Koudounis and Head of ETFs Matt Kaufman emphasized its appeal to diverse investors.

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