Avalon Labs is setting its sights on launching the industry’s first Bitcoin-backed debt public fund.
The company announced on February 12, 2025, that it is in the preliminary stages of submitting an application to the U.S. Securities and Exchange Commission (SEC) for a Bitcoin-backed Debt Exchange Traded Fund (ETF).
The proposed fund would allow investors to gain exposure to Bitcoin’s performance through a debt instrument. Under this structure, Bitcoin would be held as collateral for debt securities.
Avalon Labs stated this move is targeted at facilitating easier access to more Bitcoin-based financial products for mainstream investors.
“Our vision is to unlock Bitcoin DeFi yield for everyone, creating a product so intuitive that even your non-crypto friends, family, and colleagues can understand and benefit from it,”
the firm wrote in its X post.
Some industry stakeholders have suggested that if approved, this new fund could mark a pivotal moment for Bitcoin as it would integrate it even more deeply into traditional capital markets.
Avalon Labs is known in the space to be building a Bitcoin-focused ecosystem, and some of its offerings include BTC-backed lending, a Bitcoin-backed stablecoin, yield-generating accounts, and a credit card. The ecosystem’s total value locked (TVL) peaked at $2.05 billion on January 31; it is currently at $1.77 billion as of press time, according to data from DeFiLlama.
Avalon is not the only entity looking to introduce more Bitcoin-based products. In January 2025, Vivek Ramaswamy’s Strive Asset Management filed for a Bitcoin-backed corporate bond ETF to provide investors with exposure to companies that use bond proceeds to invest in Bitcoin. Also, in December 2024, a group of asset managers, including Calamos Investments, Grayscale Investments, and First Trust Portfolios, submitted applications for Bitcoin ETFs specifically designed for risk-averse investors. The funds are intended to reduce investors’ exposure to the downsides of the asset’s volatility using “buffered” mechanisms.
The crypto market continues to see increased institutional interest, particularly following the SEC’s approval of spot Bitcoin ETFs in 2024. While the regulator’s stance on crypto-based ETFs has been uncertain, Trump’s re-election as U.S. president has fueled speculation that regulatory policies may become more favourable. Notably, the SEC recently acknowledged asset manager Bitwise’s application for a Solana-based ETF, hinting at a shifting regulatory landscape.
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