Invesco is partnering with Mike Novogratz's Galaxy Digital to launch crypto ETFs

• Invesco is partnering with Galaxy Digital to launch a crypto ETF to be ready if the SEC OKs digital-asset funds.
• The companies are aiming for the ETF to track the performance of crypto while trading like a stock.
• "We ultimately think we can define this new market," John Hoffman of Invesco said.

Invesco confirmed in a regulatory filing on Tuesday it is partnering with Galaxy Digital Holdings to launch cryptocurrency exchange-traded funds, joining a long list of over two dozen companies pining to be the first in the country to launch a fund backed by digital assets.

Invesco, one of the biggest operators of ETFs in the US, and Mike Novogratz's Galaxy Digital is aiming for their ETF to track the performance of cryptocurrencies while trading like a stock.

First in the pipeline is a bitcoin-holding ETF that Galaxy proposed last year, which Invesco joined as a sponsor after the market closed on Tuesday, The Wall Street Journal first reported.

"This is about expanding the horizon," John Hoffman, head of Americas at Invesco, told The Journal. "We ultimately think we can define this new market."

Invesco and Galaxy are preparing their ETF to be ready if the SEC ever approves crypto funds.

For now, Hoffman said Invesco partnered with Galaxy, which cryptocurrency enthusiast and former hedge fund manager Novogratz founded in 2018, due to the firm's expertise in the space.

In June, Invesco also filed two cryptocurrency-focused ETFs - Invesco Galaxy Blockchain Economy ETF and the Invesco Galaxy Crypto Economy ETF- that will invest in stocks focused on digital assets and technology.

"There's a multitude of ways you can package these exposures. It's no different than other asset classes," Hoffman told The Journal. "We started with equities, investing in companies involved in the exploration and production of energy. We then went into futures and continued to add more ways to obtain these various exposures."

Yet despite enthusiasm from various companies - with Cathie Wood's Ark Invest the latest fund provider to submit its own application - the SEC does not seem to share the same fervor.

Currently, the regulator, under the leadership of Gary Gensler, has yet to approve any cryptocurrency ETF, including those proposed by VanEck, Valkyrie Investments, and FirstTrust/SkyBridge. It has extended the decision to approve VanEck's ETF by 60 days to November 14.

Gensler previously taught classes on blockchain and cryptocurrencies at the MIT Sloan School of Management, leading some to assume he would be more receptive towards digital assets. But while leading the SEC, he has been clamping down on cryptocurrencies. Most recently, he compared stablecoins to poker chips.

He has, however, indicated that he is more open to cryptocurrency ETFs, suggesting those that comply with the strictest rules for mutual funds could provide investor protection. He has also seemed to lean towards approving a futures-based ETF.

The US lags behind other countries in approving bitcoin ETFs, with Canada this year approving the first publicly traded bitcoin ETF in North America, the Purpose Bitcoin ETF, as well as ethereum ETFs.