Hashdex’s proposed ETF stands out from existing cryptocurrency-related ETFs due to its unique approach, which is the purchase of physical Bitcoin.
Brazilian crypto asset manager, Hashdex recently held extensive discussions with the Securities and Exchange Commission (SEC) regarding its proposal to launch an Exchange-Traded Fund (ETF) designed to purchase physical Bitcoin (BTC).
Hashdex Offers Strong Argument to Support ETF Pursuit
Nate Geraci, co-founder of The ETF Institute and the host of the ETF Prime Podcast, has recently shared his insights on the ongoing dialogue between Hashdex and the SEC, shedding light on why this discussion is of significant interest to the community.
The memorandum presented by Hashdex, which includes a comprehensive presentation, underscores several key points that demonstrate the growing maturity and viability of the crypto market, especially with Bitcoin-focused Exchange-Traded Products (ETPs).
One of the central arguments made in the memorandum is that the CME (Chicago Mercantile Exchange) market has reached a level of development and stability necessary to support Hashdex’s proposed physical Bitcoin ETF.
This assertion draws from the Teucrium Order, a significant SEC decision from April 2022. In this order, the Commission explicitly recognized the CME Bitcoin futures market’s growing maturity, asserting that it was now equipped to adequately support ETPs that seek exposure to Bitcoin by holding CME Bitcoin futures contracts.
Hashdex also pointed out that open interest in the CME Bitcoin futures market has grown by nearly 50 percent since 2022, suggesting that the introduction of its ETF would have even less of an impact on CME prices. This growth in open interest indicates increasing institutional and retail interest in Bitcoin, making it less susceptible to price manipulation.
Furthermore, Hashdex emphasized that its ETF proposal incorporates unique features designed to mitigate concerns about market manipulation. The digital asset manager believes these features will provide robust safeguards for investors, ensuring the integrity and fairness of the market.
Understanding the Significance of a Physical Bitcoin ETF
Hashdex’s proposed ETF stands out from existing cryptocurrency-related ETFs due to its unique approach, which is the purchase of physical Bitcoin. This approach implies that the fund would directly acquire and keep custody of real Bitcoin, as opposed to futures contracts or other derivative instruments linked to the cryptocurrency.
This shift was made apparent through Hashdex’s 19b-4 submission to the New York Stock Exchange (NYSE), which was initially shared on August 25. The innovative approach of acquiring spot Bitcoin through the CME Market’s Exchange, rather than relying on platforms like Coinbase SSA, marks an evolution in how Bitcoin ETFs are structured.
This unique approach aligns with the shifting landscape of crypto markets and reflects the industry’s continuous evolution. It is also worth noting that Hashdex has supported Nasdaq’s application to the SEC for approval to list an Ethereum (ETH) ETF.
This innovative investment vehicle is designed to hold both spot Ether and futures contracts in its portfolio, paving the way for a new approach to crypto investment that adheres to regulatory guidelines.