Led in large part by bitcoin, cryptocurrency is an increasingly mainstream asset class. The debut of spot bitcoin ETFs earlier this year in the U.S. cemented that notion. As such, more traditional asset managers are making inroads in the digital currency universe. An effective avenue for doing that is partnering with firms that feature crypto as their core competency.
The latest example of that trend is a collaboration between Galaxy Asset Management and State Street Global Advisors. The announcement came Wednesday. The companies said clients will be provided with access to the $2.4 trillion cryptocurrency universe through “manager-directed strategies.”
A unit of Galaxy Digital Holdings Ltd. (TSX: GLXY), Galaxy Asset Management is already one of the world’s largest crypto-dedicated asset managers. As of the end of May, the firm had $6.2 billion in AUM across various investment strategies. The firm is also a provider of equity-based crypto indexes.
Good Timing for Galaxy, SSGA Partnership
Spot bitcoin ETFs are bringing more professional investors and advisors to the crypto space. But many market participants of that ilk are seeking deeper exposure to digital assets.
“Institutional and retail interest in digital assets has surged since the introduction of spot bitcoin ETFs. However, investors are also seeking exposure to this growing asset class through investment options beyond pure spot bitcoin. We believe this is where the next level of growth is for the digital asset ecosystem,” said the two sides in a statement.
SSGA was the purveyor of the first ETF to trade in the U.S. and one of the “big three” issuers of ETFs. So it’s reasonable that advisors and investors are pondering if ETFs could be forthcoming with the Galaxy relationship. It’s a possibility.
“The expectation is that State Street Bank and Trust would provide administrative and accounting services for the new digital assets ETFs that State Street Global Advisors and Galaxy jointly develop pursuant to this collaboration,” according to the press release.
Galaxy has ETF experience. It’s also a partner on indexes used by the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC ) and the Invesco Alerian Galaxy Crypto Economy ETF (SATO ).
“By partnering with State Street Global Advisors and utilizing our combined expertise, we believe we are in a strong position to make digital assets more accessible to the broader investment community through the creation of new ETFs offering exposure to digital assets,” said Steve Kurz, global head of asset management at Galaxy, in the statement.
VettaFi LLC (“VettaFi”) is the index provider for BLKC and SATO, for which it receives an index licensing fee. However, BLKC and SATO are not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of BLKC and SATO.
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