The Securities and Exchange Commission is close to approving an unlisted, closed-end, interval fund that uses a bitcoin-futures strategy, according to Dalia Blass, the director of the Division of Investment Management at the SEC.

The unnamed fund will not offer daily redemptions nor be subject to potentially significant and unexpected liquidity demands during short periods, she said during a keynote speech for the ICI Securities Law Development Conference.

The fund operators have addressed the regulator’s concerns regarding valuation, custody, liquidity, and efficient arbitrage mechanisms for digital asset-based funds.

“For example, on valuation, this fund expects to generally value its bitcoin futures holdings at daily settlement prices reflected on a CFTC-registered futures exchange, consistent with the principles of the Investment Company Act of 1940 and U.S. GAAP,” said Blass. “With respect to custody, the fund will invest in cash-settled futures and so will not face the challenges presented by direct holdings of digital assets.”

As an unlisted fund, its pricing does not depend on market makers or an efficient arbitrage mechanism.

The fund, which will have an initial cap of $25 million, plans to address potential market manipulation by offering access to the fund only via registered investment advisors, limiting the size and future growth of the fund, and including prominent risk disclosures.

“No investment products are absolutely risk-free,” she said. “This can be particularly true with novel and previously-untested investment strategies. Investors should proceed with caution, ask questions, and consider their risk tolerance before investing.”