Bitwise Asset Management, a San-Francisco-based leading crypto index fund provider has taken an ambitious step of filing a Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC). This move from Bitwise comes when Bitcoin and the overall crypto market is going through a crunch-like situation.
The exchange-traded-fund (ETF) is basically a marketable security that tracks a specific commodity bond, asset, or stock index. In this case, the Bitwise Bitcoin ETF will track the Bitwise Bitcoin Total Return Index. This index tracks the total returns available to investors in Bitcoin along with “any meaningful hard forks”.
If the Bitwise ETF proposal is approved, its shares will be listed on NYSE Arca, an exchange owned and operated by Intercontinental Exchange (ICE).
A Shift from the Past Proposals
After the previously failed attempts to get a Bitcoin ETF approval, the new proposal from Bitwise take all regulatory concerns in consideration. Unlike the earlier proposed cash-settled contracts, the new proposal seeks for a physically held Bitcoin ETF fund by safeguarding the Bitcoin holdings in a 100% cold storage solutions provided by institutional third-party custodians.
Furthermore, the Bitwise Index with spot the Bitcoin prices from a large number of cryptocurrency exchanges which will allow it to represent “the majority of currently verifiable bitcoin trading”.
Considering the hostile behaviour towards Bitcoin ETF products by the SEC in the past, there are slimmer chances that SEC will rush to approve this ETF proposal, even though it might meet the regulatory requirements.
Matt Hougan, Global Head of Research at Bitwise, however, remains optimistic about their proposal. In the official press release, Hougan said
"The SEC has asked thoughtful and relevant questions about the quality of the crypto trading ecosystem, the reliability of crypto pricing, the strength of the arbitrage function in crypto and the robustness of crypto custody. We have spent the past year researching these questions and look forward to discussing those findings with the SEC staff in connection with the filing and listing application.”
John Hyland, Global Head of Exchange-Traded Funds for Bitwise, also spoke on similar lines. He said:
"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.”
Hyland remains optimistic that “2019 should be the year that a bitcoin ETF launches”. Apart from the Bitwise proposal, last year’s CBOE Bitcoin ETF proposal still remains pending and in the pipeline under consideration. The final hearing on CBOE Bitcoin ETF is scheduled on Feb. 27, 2019.