Osprey Funds to convert Bitcoin Trust into ETF as Bitwise acquisition talks end

United States-based Osprey Funds is preparing to convert its Bitcoin trust into an exchange-traded fund after the acquisition deal with Bitwise fell through.

The investment management firm said on Jan. 14 that it would file a Form S-1 with the U.S. Securities and Exchange Commission “as soon as possible” to convert Osprey Bitcoin Trust (OBTC) into an ETF.

Launched in February 2021, OBTC offers investors access to Bitcoin without the complexities of direct investing, such as managing wallets or keys. The fund carries a management fee of 0.49%, making it one of the lowest-cost solutions of its kind.

As of January 7, 2025, OBTC was managing approximately $186.7 million in assets, with each share representing approximately 0.000326 Bitcoin.

The decision to convert OBTC into an ETF follows the termination of the proposed asset purchase agreement with Bitwise. The deal, announced in August 2024, aimed to transfer OBTC’s assets into the Bitwise portfolio and provide unit holders with exposure to Bitcoin through Bitwise Bitcoin shares.

However, the agreement failed as the legal deadline of December 31 passed without the necessary approvals and both parties were forced to withdraw.

After OBTC began trading at a noticeable discount to the value of its underlying Bitcoin assets, raising concerns among shareholders, the foundation began exploring various strategic options, including the aforementioned Bitwise deal.

If approved, Osprey would join the expanding US ETF market, which currently includes 32 Bitcoin ETFs. Of these, 11 spot Bitcoin ETFs collectively manage approximately $109 billion in assets as of January 15, just over a year after initial approval.

Franklin Templeton and Hashdex have also launched ETFs that offer exposure to Bitcoin and Ether indices, appealing to investors looking for diversified strategies. Meanwhile, Bitwise has proposed an ETF focused on public companies holding more than 1,000 BTC in their corporate treasuries.