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Known for its funds cutting across the decentralized finance (DeFi) ecosystem, the Bitwise Bitcoin ETF product, if approved, will also explore investments in safer financial instruments.
Cryptocurrency asset manager Bitwise has filed for a new Bitcoin Exchange Traded Fund (ETF) product in the United States, a move that places it on the growing list of applications awaiting approval for such a fund. According to the filing lodged with the United States Securities and Exchange Commission (SEC) on Tuesday, the new ETF product dubbed the Bitwise Bitcoin Strategy ETF (BITC) is a collaborative effort between Bitwise Index Services, a division of the asset manager, and ETF Series Solutions.
According to the filing, the Bitwise Bitcoin Strategy ETF will not invest directly in BTC, rather, it will focus on exchange-traded futures contracts that provide exposure to movements in the value of bitcoin.
“While the Fund intends to obtain exposure to bitcoin primarily through indirect investments in standardized, cash-settled bitcoin futures contracts traded on commodity exchanges registered with the CFTC (“Bitcoin Futures”), it may also invest in pooled investment vehicles and Canadian-listed funds that provide exposure to bitcoin (together with Bitcoin Futures, “Bitcoin Instruments”),” the filing detailed.
There are currently more than 10 ETF applications sitting on the SEC’s archive waiting for approval. The cryptocurrency ecosystem has grown to the point where both retail and institutional investors are willing to embrace safe means of gaining exposure to the nascent world of digital currencies. ETFs are amongst the major alternatives that directly track the prices of its underlying assets. With regulators in Canada, Germany, Brazil, and others have approved similar crypto ETF products, the SEC has continued to stall in the move to approve one, citing the volatility inherent in the ecosystem.
Known for its funds cutting across the decentralized finance (DeFi) ecosystem, the Bitwise Bitcoin ETF product, if approved, will also explore investments in safer financial instruments. Per the filing, the Fund expects to have significant holdings of cash, US government securities, and money market funds. These sources of ready cash are tagged Collateral Instruments, and “are intended to provide liquidity and to serve as collateral for the Fund’s Bitcoin Futures.”
Bitwise Bitcoin ETF and the Hope for Approval
The pressure to approve a crypto ETF product is mounting amongst the key stakeholders in the digital currency ecosystem. Besides the claim that America is lagging behind its contemporaries in this regard, proponents of Bitcoin ETF products argue that the cold feet have continued to make the United States trail behind in terms of embracing financial innovation.
The SEC Chairman Gary Gensler has often expressed the willingness by the Commission to approve a Bitcoin ETF product more pegged to Futures contracts. This disposition has stirred firms that have previously filed for a spot-based ETF to reapply with plans to tie their new funds to futures in hopes that the SEC would look favorably on their applications faster.
Thus far, American investors have a high demand for Bitcoin ETF, and while the wait for such product tied to spot trading drags for much longer, the SEC can reignite a market rejuvenation with the approval of one of the applications tied to futures.