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Novogratz Positions Firm at Center of Hoped-for Crypto ETF Boom

Olga Kharif
·2 min read

(Bloomberg) -- Mike Novogratz is seeking to position his Galaxy Digital Holdings at the center of what could turn out to be a boom in cryptocurrency exchange-traded funds.

Galaxy’s trading desk is one of several that are providing Bitcoins for the Purpose Bitcoin ETF, the first-ever approved. The Toronto Stock Exchange-listed fund debuted Thursday. CI Global Asset Management filed this week in Canada to offer the CI Galaxy Bitcoin ETF. Galaxy Digital will act as the Bitcoin sub-advisor, and execute trades on behalf of the proposed ETF. None have been approved in the U.S.

“Crypto is being institutionalized at an accelerating rate,” Novogratz said in an interview. “And now an ETF product is showing up in Canada first, it will show up in the U.S. next. It’s all part of this accelerating evolution of being a store of value.”

While high-profile Bitcoin purchases by Tesla Inc. and MicroStrategy Corp. are generating headlines, many more companies and pension funds are seeking to follow suit, Novogratz said.

“All of these stories -- and there’s a story every day -- really point to a sustainable bull market in crypto,” the billionaire former hedge fund manager said. Galaxy Digital is registered in Canada, though Novogratz is based in New York.

Bitcoin rose to a record of more than $56,000 Friday, increasing the cryptocurrency’s market value to more than $1 trillion for the first time.

ETFs have long been seen by many crypto advocates as a path toward greater mainstream acceptance. There are already a number of ETF-like products in Europe and exchange-traded trusts in the U.S.

The U.S. Securities and Exchange Commission has repeatedly shot down attempts to offer crypto ETFs in America, citing concerns such as market concentration and manipulation. The approval of the Purpose fund is seen as beneficial for the pending funds, said James Seyffart, an analyst at Bloomberg Intelligence.

“Its been wildly successful as far as volume goes,” Seyffart said. “And we expect to see that show up in flows in the coming days. If you look at it compared to other Canadian ETFs, it is by far the most traded fund. It is already more liquid than every Bitcoin ETP in Europe.”

The U.S. currently has several active filings for a Bitcoin ETF as well, including from VanEck Associates Corp. and Bitwise Asset Management. Recently imposed regulations and the new Biden administration are “potentially adding momentum to similar efforts in the U.S.,” according to Bloomberg Intelligence. A U.S. Bitcoin ETF would likely dwarf any ETF from Canada, Seyffart said.

“We want Galaxy to be seen as the smartest guys in the room when it comes to crypto,” Novogratz said. “We want to be in the center of the action.”

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