Bitwise CIO Details OBTC Acquisition Plans

Bitwise Asset Management's planned acquisition of Osprey Bitcoin Trust (OBTC) assets for its Bitwise Bitcoin ETF (BITB), revealed on Tuesday, marks a shift in the Bitcoin fund landscape. Matthew Hougan, chief investment officer at Bitwise, provided details about the transaction to etf.com.

As of Aug. 27, OBTC had $121 million in assets, while BITB held $2.3 billion, according to Hougan. The deal, subject to customary closing conditions, is expected to close later this year.

According to a joint press release, OBTC unitholders will receive shares of BITB as part of a liquidating distribution of OBTC, in a transaction intended to be tax-free for U.S. federal income tax purposes.

“There are a variety of regulatory steps required to bring OBTC fully into BITB," Hougan said. "We do not have an exact timeline but are pushing to close the acquisition as quickly as possible.”

Hougan highlighted changes for OBTC shareholders:

“As part of the transition, shareholders will see their total expense ratio drop to just 0.20%,” he said. OBTC’s current management fee is 0.49%. He also noted that BITB donates “10% of gross profits to open-source bitcoin developers.”

OBTC Shareholders to Join Bitcoin ETF 

The Fairfield, Connecticut based Osprey launched OBTC in February 2021. Now, its shareholders are set to join BITB, which has been attracting “institutions, family offices, financial advisors and retail investors alike,” according to Hougan.

Bitwise currently offers 20 products on the market, including seven U.S.-listed ETPs, Hougan said. The firm plans to continue expanding its offerings in the crypto space.  

“We will continue to innovate to help investors access the exciting and world-changing opportunities in the crypto/blockchain space,” Hougan said.

The acquisition announcement comes after Osprey’s March 2023 press release, which stated the company was “exploring strategic alternatives to maximize unitholder value.”

At the time, Osprey mentioned it was in “various discussions about a potential sale of the trust to, or merger with, an existing Bitcoin ETF.” The press release also noted that if these talks did not conclude positively, Osprey intended to liquidate and dissolve the trust within 180 days.