SEC Delays Decision on Bitwise Bitcoin ETF

The United States Securities and Exchange Commission (SEC) has delayed its decision on cryptocurrency index fund provider Bitwise Asset Management’s bitcoin (BTC) exchange traded fund (ETF).

SEC Looks for Public Comments

In its recent filing, the SEC stated that it has delayed its decision on the approval of the Bitwise ETF, and has also requested for public comments from interested parties.

As such, the Bitwise Bitcoin ETF decision was delayed for another five weeks. According to the published filing, it seems the SEC is still unsure that Bitcoin is resistant to price manipulation, along with several other issues.

Bitwise initially filed for an ETF with the SEC in February. The proposed Bitcoin ETF differs from other previously proposed Bitcoin ETFs in that it draws prices from a list of reputable cryptocurrency exchanges, with the goal of better representing the market. The Bitwise team had also provided the SEC and the public with a detailed research on cryptocurrency exchange volume and possible fake trade volume on more obscure platforms.

According to Bitwise, the ETF will satisfy the rules of the NYSE Arca, providing evidence that the ETF will be accurately priced and resistant to price manipulation. The company wants to achieve this by sourcing the price from the most reliable cryptocurrency exchanges.

Bitwise Targeting Insitutional Investors

The objective of the Bitwise Bitcoin ETF is to broaden access to the crypto-asset to institutions.

Bitwise plans to process all share creation and redemption, and accrue all fees, in Bitcoin rather than fiat. Trading activity of the ETF may have a greater impact on the supply and demand of the coin, unlike other cash-settled alternatives.

In their initial proposal Bitwise noted:

“Having a regulated bank or trust company hold physical assets of a fund has been the standard under U.S. fund regulation for the last 80 years, and we believe that is now possible with Bitcoin,”

Тhe SEC had first delayed its decision on the Bitwise ETF application in March. Following the decision, the SEC was obligated to come to a decision on whether to approve the rule change by May 16, 2019.

Per today’s filing, the public comment period will last three weeks after the most recent amendments to the Bitwise ETF application are published in the Federal Register.

Bitwise Investments First to File for a Bitcoin ETF in 2019

Cryptocurrency startup Bitwise Asset Management has filed a proposal with the United States Securities and Exchange Commission (SEC) for a new Bitcoin Exchange-Traded Fund (ETF), which aims to address the regulatory concerns that overthrew previous attempts.

What is an ETF?

An exchange traded fund or ETF is a marketable security that tracks a stock index, a commodity, bonds, or a basket of assets and is traded the same way in which stocks are on an exchange.

The recently proposed ETF will track the Bitwise Bitcoin Total Return Index, which measures the value of bitcoin plus any “meaningful hard forks.

According to the press release, the firm’s proposed Bitcoin ETF differs from other previously proposed ETFs in that the index that the ETF is based on will determine prices using data drawn from a “large number of cryptocurrency exchanges,” which will in turn allow it to represent “the majority of currently verifiable bitcoin trading.” In comparison to other applications, Bitwise’s ETF will also require “regulated third-party custodians to hold its physical bitcoin.”

In a statement, Bitwise global head of Exchange-Traded Funds John Hyland remarked that the SEC may not approve the ETF, however they stay hopeful and optimistic:

“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 U.S. fund regulation for the last 80 years, and we believe that is now possible with bitcoin.”

If the ETF is approved, its shares will be listed on New York Stock Exchange (NYSE) Arca, which focuses on trading stocks and options rather than large-cap stocks, which are traded on the NYSE.

According to the initial registration statement, Bitwise aims to derive and establish its index for the valuation of the fund with spot prices from exchanges and physically settled futures contracts, rather than cash-settled contracts, as opposed to what previously proposed ETFs would have done.

The crypto industry has long awaited the approval of a Bitcoin ETF by U.S. regulators, as many companies have applied to launch such goods in the country.

Presently, the SEC has 1 (one) Bitcoin ETF rule change proposal pending, which was filed last year by investment firm VanEck and blockchain company SolidX in partnership with Chicago Board Options Exchange (CBOE). In December, the SEC postponed its decision again on the Bitcoin ETF, setting the new deadline for Feb. 27, 2019.

Bitwise Launches Two New Cryptocurrency Index Funds Due to Increased Demand

Bitwise Asset Management announced on Wednesday the launch of two new crypto funds, a move that could put the firm up against one of the largest investors in the market for digital assets.

Backed by prominent investors, Bitwise has been among the leading providers of cryptoasset index funds. The Bitwise Bitcoin Fund and the Bitwise Ethereum Fund are the second and third strategies in the Bitwise fund family, joining the broad-market Bitwise 10 Private Index Fund.

On the new launch, Bitwise CEO mentioned that many of their institutional clients see a great opportunity to enter the cryptocurrency markets at current prices. While many started doubting the long-term viability of Bitcoin and other digital assets, it looks like institutional investors see it otherwise.

“The 68% drawdown in bitcoin prices this year has given investors a unique opportunity to enter the market at prices many thought we’d never see again,” said Hunter Horsley, Bitwise CEO.

The Bitwise Bitcoin Fund holds Bitcoin and aims to capture the total returns available to investors in the world’s largest cryptocurrency by market capitalization, including any meaningful hard forks and air drops. The Bitwise Ethereum Fund does the same for ether. The funds safeguard clients’ holdings in 100% cold storage with an institutional third-party custody partner, and even prepare simple K-1 tax documents for their investors each year.

The funds are available today in two share classes: Institutional Shares have an all-in fee of 1.0% and a minimum investment of $1 million, while Investor Shares have a fee ratio of 1.5% and a minimum investment of $25,000. Investors can come in and out of the fund weekly, with no lockups, withdrawal fees, or performance fees.

While the fund aims to provide more liquidity than other products on the market, it will only be open to so-called accredited investors. Matt Hougan, head of research at Bitwise, stated that even during this period when cryptocurrency markets are losing in value, their clients continue to be active in accumulating positions.

“Our clients have been adding to their positions throughout the downturn, and many who’ve been following the space for a while are using this opportunity to finally come in.”

Bitwise is backed by institutional and individual investors, including Khosla Ventures, General Catalyst, Blockchain Capital, Naval Ravikant and other prominent names.