Strive Asset Management, founded by Vivek Ramaswamy, has taken a significant step in the financial world by seeking approval from U.S. regulators to launch an exchange-traded fund (ETF) focused on convertible bonds issued by companies like MicroStrategy that have invested heavily in Bitcoin. This initiative aims to provide investors with exposure to what are termed “Bitcoin Bonds,” which are convertible securities issued by firms that allocate substantial portions of their capital to Bitcoin acquisitions. The proposed ETF will be actively managed, with Strive planning to gain exposure to these Bitcoin Bonds either directly or through financial derivatives such as swaps and options. While the exact management fees have yet to be disclosed, it’s anticipated that, like many actively managed funds, they may be higher than those of passive index funds.
MicroStrategy, under the leadership of co-founder Michael Saylor, has been a pioneer in corporate Bitcoin investment. Since 2020, the company has invested approximately $27 billion in Bitcoin as part of its corporate treasury strategy. This bold move has paid off, with MicroStrategy’s stock, MSTR, experiencing a remarkable increase of over 2,200%, outperforming nearly every other sizable public company, except for Nvidia. To finance these Bitcoin purchases, MicroStrategy has issued a combination of new stock and convertible bonds. These bonds offer low or no interest but can convert into MSTR shares under certain conditions, providing a unique investment vehicle for those interested in the cryptocurrency market.
Other corporations have followed suit, with corporate treasuries now holding approximately $56 billion worth of Bitcoin, according to BitcoinTreasuries.net. This trend reflects a growing acceptance of Bitcoin as a legitimate asset class among corporate investors.
Vivek Ramaswamy, the founder of Strive Asset Management, is a notable figure in both the business and political arenas. He founded Roivant Sciences, a pharmaceutical company, in 2014. In February 2023, Ramaswamy declared his candidacy for the Republican Party nomination in the 2024 United States presidential election. He suspended his campaign in January 2024, after finishing fourth in the Iowa caucuses, and subsequently endorsed President-elect Donald Trump. Ramaswamy has been an outspoken ally of Trump and has been involved in various initiatives, including leading the Department of Government Efficiency (DOGE), a private initiative intended to reduce wasteful government spending.
The filing for the Bitcoin Bond ETF aligns with industry predictions that the incoming Trump administration will foster a more favorable regulatory climate for cryptocurrencies. Since Trump’s presidential win, there has been speculation that his administration will support the crypto industry, as evidenced by the nomination of pro-crypto figures to key regulatory positions. In December, Trump announced former PayPal chief operating officer David Sacks as his “AI and crypto czar” and former commissioner Paul Atkins as his pick for Securities and Exchange Commission chair. This shift in regulatory stance has encouraged asset managers to submit a flurry of filings for ETFs holding various cryptocurrencies, including Bitcoin, Solana, XRP, and Litecoin.
The proposed Strive Bitcoin Bond ETF represents a novel approach to cryptocurrency investment. By focusing on convertible bonds issued by companies with significant Bitcoin holdings, the ETF offers investors a way to gain exposure to the cryptocurrency market without directly purchasing Bitcoin. This strategy could appeal to those who are interested in the potential returns associated with Bitcoin investments but prefer the structure and regulatory oversight of traditional financial instruments.
The success of this ETF will depend on several factors, including regulatory approval, market demand, and the performance of the underlying assets. The U.S. Securities and Exchange Commission (SEC) has been cautious in approving cryptocurrency-related financial products, citing concerns over market volatility and investor protection. However, the changing political landscape and the increasing mainstream acceptance of cryptocurrencies may influence the SEC’s approach to such filings.
Investors should be aware that, like all investments, the Strive Bitcoin Bond ETF carries risks. The value of the ETF will be influenced by the performance of the underlying companies and their Bitcoin holdings, which can be highly volatile. Additionally, the regulatory environment for cryptocurrencies is still evolving, and future changes could impact the ETF’s performance and viability.
