Bitwise Asset Management has recently filed a Bitcoin exchange-traded fund (ETF) proposal with the United States Securities and Exchange Commission. This initial registration statement on Form S-1 was done on January 10th.
The proposal for Bitwise Bitcoin ETF Trust is led by the global head of exchange-traded funds for Bitwise and the former chief of investment officer of United States Commodity Funds (USCF), John Hyland, who plans to lead the efforts for the world’s very first crude oil ETF, the United States Oil Fund (USO), the very first natural gas ETF, the United States Natural Gas ETF(UNG), and several other funds as well.
Developed by Bitwse Index Services, LLC, the newly announced Bitwise Bitcoin ETF will track the Bitwise Bitcoin Total Return Index. Shares will reflect the performances of the total returns provided to investors in cryptocurrency, as measured by the performance of the index.
In order to mollify the SEC, which has previously rejected every single Bitcoin ETF proposal submitted before, Bitwise is attempting to carefully maneuver every single possible point of contention and criticism that has made regulators hesitant of giving approval.
According to the press release,
“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.”
As a leading provider for crypto asset index and beta funds, Bitwise tracks over 200 online cryptocurrency exchanges. With its incredibly strict criteria, it has successfully reduced the number of exchanges based on a couple of factors.
- Eliminating exchanges that are domiciled in emerging market countries
- Eliminating exchanges domiciled in countries that have capital controls
- Eliminating exchanges that do not charge fees for trading, either explicitly or through “trade mining” activities where an exchange provides an off-setting rebate to the client for the trades
- Eliminating exchanges that lack functioning and stable Application Programing Interfaces (APIs) for the transmission of price and volume data
- Eliminating exchanges which, in the judgment of the Index Provider, have issues with significant downtime, problems with customers withdrawal abilities, or known security issues
- Eliminating exchanges which, in the judgement of the Index Provider, are or may be subject to extraordinary legal or regulatory activity
- Eliminating exchanges that do not account for at least 0.1% of the trailing 30-day Average Daily Volume among all exchanges that charge transaction fees
Even with the lac of confidence given by SEC in previously submitted Bitcoin ETF proposals, Hyland strongly believes Bitwise will be capable of ending the losing streak and deliver exactly what the SEC demands.
“We believe the crypto trading ecosystem has evolved in significant ways in the past year. Having a regulated bank or trust company hold physical assets of a fund has been the standard under US fund regulation for the last 80 years, and we believe that is now possible with Bitcoin.”