In the U.S. market, an exchange traded fund linked to bitcoin remains elusive. Bitwise Asset Management, a provider of cryptocurrency indexes and funds, is looking to change that.
In 2018, ETF industry observers and crypto market fans were tantalized by the prospects of a U.S.-listed bitcoin ETF coming to market only to be rebuffed by the Securities and Exchange Commission at every turn.
Last year, the SEC's Division of Trading and Markets turned back applications for bitcoin-related ETFs from issuers such as ProShares, Direxion and GraniteShares. The commission also delayed a decision on an institutionally-focused bitcoin ETF from VanEck and fintech firm SolidX.
While it remains to be seen how the SEC rules on the VanEck/SolidX product, previous decision delays on bitcoin ETFs have ultimately led to outright rejections by the SEC.
After watching rival fund issuers try and fail to bring bitcoin ETFs to market last year, San Francisco-based Bitwise Asset Management believes it can avoid a similar fate with the Bitwise Bitcoin ETF and provide the SEC with the data and information the commission needs to potentially (and finally) make a positive decision on a bitcoin ETF.
Bitwise announced Thursday “that it has filed an initial registration statement on Form S-1 with the U.S. Securities and Exchange Commission (SEC) relating to a new proposed physically held bitcoin exchange-traded fund (ETF),” according to a statement issued by the company.
Bitwise is an established player in the cryptocurrency index fund space. Last year, the asset manager partnered with Morgan Creek Digital, the digital assets unit of Morgan Creek Capital Management, to launch the Digital Asset Index Fund. That product was developed for institutional investors and high net worth individual investors.
Bitwise's proposed bitcoin ETF has important differences relative to previously proposed, competing efforts.
“The proposed ETF differs from previously filed proposed bitcoin ETFs in that it will rely on regulated third party custodians to hold its physical bitcoin, and in that the index draws prices from a large number of cryptocurrency exchanges, representing the majority of currently verifiable bitcoin trading,” said the company.
If the Bitwise Bitcoin ETF is approved, it will traded on the New York Stock Exchange and it's expected that the exchange operator will soon file plans with the SEC for a proposed rule change that would pave the way for the fund to trade on the largest U.S. exchange.
“Bitwise expects the NYSE to file a so-called 'Rule 19b-4' request with the SEC in the coming days requesting necessary NYSE rule changes in order to allow its application to be approved and the ETF to list once the registration statement is declared effective by the SEC,” according to the Bitwise statement.
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