Valkyrie Investments refiled an amended Form S-1 with the Securities and Exchange Commission on Thursday for its Valkyrie Bitcoin Fund, adding more precise rules around custody, valuation, seed investments, and risks as the cryptocurrency investment vehicle awaits regulatory approval to trade on Nasdaq.
The new filing updates the index used to value the fund’s Bitcoin from Lukka Prime to the CME CF Bitcoin Reference Rate – New York Variant, which calculates the reference rate as of 4 PM Eastern Time rather than 4 PM London time. It also shrinks the fund’s basket size from 50,000 shares down to 5,000 shares for creating and redeeming the Valkyrie Bitcoin Fund’s shares.
More notable are the details on how the fund will hold its Bitcoin assets. Valkyrie specified that all private keys are now kept in offline cold storage with the fund’s custodian, Coinbase. It also outlined the prime brokerage arrangement that allows fund assets to be held in Coinbase’s hot and cold omnibus storage.
Risk and custody
The amended filing came with a lengthy new section on risks, citing Coinbase’s battle with the SEC, which filed civil charges this summer over allegations that Coinbase was illegally operating as an unregistered exchange.
Other tweaks include adding a cash custodian, specifying how the fund’s principal market for Bitcoin is determined for accounting purposes, and reserving the right for Valkyrie to change the fund’s Bitcoin valuation methodology without shareholder say-so.
The new particulars around custody, valuation, and regulatory risk come as the market awaits the SEC’s ruling on whether to allow the Valkyrie Bitcoin Fund to trade on public markets.
If approved, the Bitcoin fund would expose retail investors to the original cryptocurrency through shares trading on Nasdaq under the “BRRR” ticker. Until then, the wait for an investment vehicle tied to direct Bitcoin ownership continues.
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