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Stone Ridge to challenge CME, Bakkt; files application for Bitcoin Futures Fund with SEC

Prashant Jha

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Stone Ridge Asset Management has filed a prospectus for its Bitcoin Futures Fund with the U.S. Securities and Exchange Commission (SEC). The company filing revealed that these Futures funds would be cash-settled and each share would be worth $10, with no minimum orders.  The total number of shares on offer would be 100,000 and Stone Ridge would determine the eligible investors who can buy these shares.

Stone Ridge was founded back in 2012 as an asset management firm and at present, it has $15 billion worth of assets under its management. Interestingly, the funds won’t be directly backed by Bitcoin; rather it would use as an underlying reference asset. In order to support its Futures funds, Stone Ridge would buy Bitcoin Futures on a on-to-one basis to match the fund’s total.

Apart from buying Bitcoin futures, the firm would also accumulate a large amount of cash, government securities, and business securities to maintain liquidity and provide collateral. The filing by Stone Ridge for its Bitcoin Futures funds comes just a few weeks after Bakkt launched its much-awaited physically-settled Bitcoin contracts.

The growing trend of Bitcoin-based Futures financial products

Bitcoin’s Future financial products have been gaining a lot of attention from mainstream traditional asset management firms. The trend, which was started by the CME back in December 2017 with the launch of its Bitcoin Futures contracts, became a gateway for institutional investors to diversify their investment portfolios. This year saw another Bitcoin Futures contracts launched by Bakkt. However, this did not turn out to be the rage as many expected, only settling contracts worth $5 million in its first week.

While both CME and Bakkt Bitcoin Futures products are backed by Bitcoin, Stone Ridge has decided to back its Bitcoin Futures funds with Bitcoin, cash, and various securities. The growing trend of Bitcoin-based financial products catering to the needs of institutional investors shows that traditional players are comfortable with entering the crypto-investment space, a space from which they had maintained a safe distance previously.

A Computer Science graduate, Prashant focuses on UK and Indian markets. With over two years of experience as a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.