Bitwise Asset Management Files For Diversified Crypo ETF
Bitwise Asset Management, a San Francisco-based start-up, announced that it has filed a registration statement with the Securities and Exchange Commission (SEC) for approval to offer publicly traded cryptocurrency index exchange-traded fund (ETF).
The company affirms in their statement that what they plan to offer is a new ETF that will track the returns of the 10 largest cryptocurrencies. This would make it the first application of its kind, seeking to expose investors to more than just Bitcoin (BTC).
Bitwise’s exchange-traded fund will be a market-cap-weighted index and titled HOLD 10 Index. It founder states that the new venture will cater to both institutional and retail investors.
According to the company’s CEO and co-founder, Hunter Horsley, the HOLD 10 Index is an invaluable asset for investors. The main attraction is that unlike other funds, this one isn’t tied to the performance of one coin. He emphasized that the HOLD 10 Index offered investors broad crypto exposure.
Furthermore, the company adjusts the weightings every month and takes into consideration changes that allow market adaptability and flexibility.
As such the fund looks to capitalize on dynamics like hard forks and airdrops, essentially giving investors a low-cost avenue to gain much-needed exposure to a rapidly expanding crypto space.
Matt Hougan, Bitwise Global Head of Research added:
“Our research shows that an index-tracking basket of multiple cryptocurrencies behaves differently than a single coin. As such, we think both sorts of exposure need to be looked at by investors when considering the growing cryptocurrency space. Our view is that this new area has many similarities to the introduction 10 to 15 years ago of commodity ETFs.”
Bitwise has indicated that the index will seek to gain exposure to 80 percent of the total crypto market. It will use a five-year diluted market cap among other eligibility criteria to hedge against the challenges that accompany crypto investments.
Such challenges include aspects like “continuously changing supply, liquidity, trade volume concentration, and custody limitations.”
The HOLD 10 Index comprises of bitcoin (BTC), Ethereum (ETH), XRP, bitcoin cash (BCH), lumens, LTC, DASH, Zcash, Monero, and Ethereum Classic (ETC) at the moment.
Bitwise was founded in 2017 and has the backing of a good number of institutional and individual investors. Some of the prominent ones include institutional investors like:
- Khosla Ventures;
- Blockchain Capital; and
- General Catalyst.
There are also individual investors that include:
- Naval Ravikant;
- David Sacks;
- Alison Davis;
- Adam Nash;
- Elad Gil;
- Suna Said;
- Adam Ludwin; and
- Avichal Garg
The U.S. regulators have yet to approve a single cryptocurrency-based ETF. The SEC’s reluctance to give a nod to bitcoin ETFs have mostly been pegged on security and price manipulation concerns.
That concern has seen the regulator take a tough stance against cryptocurrency-related fraud cases, including suspending some stock trading and halting Initial Coin Offerings (ICOs).
On July 24, the watchdog postponed a decision on an application by Direxion, an ETF issuer. Earlier, it had rejected an application by the Winklevoss brothers, founders of Gemini crypto exchange.
The SEC also asked the public to submit comments on another application by CBOE that seeks to offer a bitcoin ETF. The market is very optimistic about the CBOE ETF listing application, which is managed by VanEck and SolidX and could be approved as early as next month.
The Bitwise team knows how this works and is optimistic too. Matt Hougan acknowledges and says that they are “joining the queue” and that “the market is professionalizing in a direction that the SEC would allow a crypto ETF onto the market.”
Bitwise Global Head of Exchange-Traded Products John Hyland holds a similar view and believes that the SEC staff’s discussions with the other investment firms that have made applications have been ongoing. His sentiment is that they’ll have honest discussions with the regulators about the nature of the proposed HOLD 10 Index offering.
It is likely to take a considerable amount of time before the Securities and Exchange Commission gives its final decision on Bitwise’s ETF application. Hyland told CNBC:
“I don’t know when and if the SEC will greenlight any cryptocurrency ETF, including ours. But we wouldn’t go to the expense and trouble of filing if we didn’t think we have the potential.”
Bitcoin has been the biggest beneficiary of improved market sentiment in relation to the impending entry of institutional investor money into crypto.
The top coin has rallied from about $5.8k to top $8.3k in about two weeks, gaining over 40%.
Bitcoin’s rise coincides with other pointers in the market that an approval of any of the ETF applications would be huge news for crypto. It could serve as a catalyst to the influx of mainstream investors, bolstering prices.