Cryptocurrency exchange Gemini has been appointed as the custodian for Evolve Funds’ newly launched leveraged Bitcoin (LBIT) and Ethereum (LETH) exchange-traded funds (ETFs), which debuted on the Toronto Stock Exchange (TSX) on Tuesday.
These ETFs offer retail investors modestly leveraged exposure to BTC and ETH, aiming for 1.25x returns through cash borrowing rather than derivatives.
In a March 20 blog post, Gemini emphasized that these ETFs stand out from traditional leveraged products, which typically use derivative strategies. Instead, Evolve’s approach leverages cash borrowing to enhance returns while optimizing cost efficiency. The company highlighted the pioneering nature of these offerings, describing them as Canada’s first modestly leveraged crypto ETFs accessible to retail investors.
As the official custodian, Gemini has assured investors of its strict security measures. The exchange noted that its custody services have undergone SOC 1 Type 2 and SOC 2 Type 2 security examinations conducted by Deloitte. Additionally, Gemini stated that all assets will be kept separate on its internal ledger to protect the owners’ funds.
The partnership comes amid speculation surrounding Gemini’s potential public listing, with reports indicating that the exchange is working with Goldman Sachs and Citigroup on the process. While no final decision has been made, the listing could occur as early as this year.
Meanwhile, Gemini recently avoided enforcement action from the U.S. Securities and Exchange Commission (SEC). Co-founder Cameron Winklevoss revealed that the SEC decided against pursuing the case nearly 700 days after launching its investigation and 277 days after issuing a Wells Notice.
The SEC had been investigating Gemini and Genesis Global Capital over their Earn program, which allowed users to lend crypto for yield. The program collapsed when Genesis halted withdrawals during the 2022 bear market. While the case had closed, the SEC did not exonerate the companies, leaving the possibility of future actions open.
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