Invesco and Galaxy Team to Build Suite of Crypto ETFs

Asset management titan Invesco is teaming up with Galaxy Digital to create a suite of physically backed digital assets ETFs despite the current regulatory uncertainty around such products in the US.

Atlanta-based Invesco, which manages $1.5 trillion in assets globally, including roughly $470 billion in ETFs and indexed strategies, revealed the partnership in an announcement Wednesday.

“When we partner, we always look to work with best in class, subject matter experts and Galaxy has experience across all verticals of digital assets,” John Hoffman, the firm’s head of Americas, ETFs and indexed strategies, told Blockworks. “We are aligned on a common vision and most importantly a path focused on education to help investors safely navigate this new technology.”

Sumit Roy, crypto editor and analyst at ETF.com, said the partnership is significant in the sense that a well-established player in the ETF space is teaming up with a fast-growing firm in the crypto space. 

“But they are far from the only capable firms working on crypto ETFs,” he told Blockworks. “This is going to be a highly competitive area and I don’t see any one firm or consortium dominating.”

Galaxy, which has $2.1 billion assets under management, had filed for a US ETF that would invest directly in bitcoin in April. In an amendment to that application filed with the SEC on Tuesday, Invesco is now listed as a sponsor for the proposed fund.

Invesco has historically been instrumental in the development and maturation of several new asset classes, including commodities, said Steve Kurz, Galaxy’s head of asset management.

“We believe the combination of an institutional, crypto native asset management business alongside a global ETF pioneer will drive the entire crypto space forward,” Kurz added. “For us, the partnership with Invesco is about expanding investor choice in accessing the crypto ecosystem, educating at scale, and ultimately defining this new market.”

Invesco had filed in June to launch a Crypto Economy ETF that will invest primarily in crypto companies as well as up to 10% in bitcoin futures. The planned fund would seek to track the Alerian Galaxy Global Cryptocurrency-Focused Blockchain Index.

The firm also filed last month to bring to market a bitcoin strategy offering that would invest most or all of its assets in bitcoin futures contracts traded on the the Chicago Mercantile Exchange (CME).

SEC Chairman Gary Gensler has been vocal in recent months about the need for regulation in the crypto space. While proposed ETFs that would invest in bitcoin directly await approval by the agency, Gensler hinted during a virtual forum in August that the SEC would favor approving ETFs limited to investing in bitcoin futures contracts.

Galaxy CEO Mike Novogratz said Wednesday during the Mainnet 2021 conference in New York that he expects the regulatory sphere to be “really volatile” over the next six to 12 months.

“I’m not sure when Mr. Gensler will decide to pull the trigger, but there are going to be equity ETFs with all the different public stocks, there are going to be all kinds of different products that come out and the SEC will get there,” Novogratz noted. “I’m not sure when, but they will get there.”

An Invesco spokesperson declined to comment about future product development.

“If the SEC allows it, I wouldn’t be surprised to see them launch products tied to all of the most popular crypto assets — bitcoin, ether and Solana,” Roy said, “and likely index products as well.”

This article was updated on September 22, 2021, at 5:35 pm ET.

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