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Goldman Sachs Bank has submitted an application to the U.S. Securities and Exchange Commission (SEC) for the establishment of the Goldman Sachs Bitcoin Premium Income ETF. The fund aims to allocate at least 80% of its net assets to instruments linked to Bitcoin, primarily in spot exchange-traded products (ETPs).
According to the application, the ETF will not hold Bitcoin directly. Up to 25% of the investments are planned to be made through a subsidiary registered in the Cayman Islands.
The income for shareholders will be generated through the sale of call options on spot ETPs with Bitcoin or related indices. The fund’s strategy is based on “overwrite” options. This refers to an investment tactic where the fund will sell call options on assets tied to cryptocurrencies.
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A call option grants the buyer the right to purchase the underlying asset, such as a Bitcoin ETP, at a predetermined price before a specified date. The seller of the option receives a premium immediately upon sale but assumes the obligation to sell the asset if the buyer decides to exercise the option. These premiums contribute to the regular income of investors.
Asset management will be handled by Goldman Sachs Asset Management. The strategy includes monthly payouts. The bank notes that due to indirect investments, the volatility of shares may be lower compared to direct ownership of Bitcoin. However, this strategy has a drawback: profits will not increase with rising Bitcoin prices.
On January 23, the asset management firm BlackRock submitted a similar application to the SEC for the iShares Bitcoin Premium Income ETF (BITP). Unlike Goldman Sachs’ product, it involves direct ownership of Bitcoin, as well as investments in shares of the iShares Bitcoin Trust (IBIT).
In early April, Morgan Stanley launched the MSBT spot exchange-traded fund, with shares linked to the Bitcoin price. On its first trading day on the NYSE Arca, the fund attracted approximately $32 million, with trading volume exceeding 1.6 million shares.
