Bitwise Asset Management, which is a crypto asset management company based in San Francisco has the joined the queue at SEC’s doorstep for an approval for a crypto-based ETF. This would be the 15th application for a crypto/bitcoin application that awaits SEC’s nod after a series of rejections and delays that applicant has seen from SEC.
Bitwise asset management application looks to be a solution
The new ETF will be called the Bitwise HOLD 10 Cryptocurrency Index Fund and a registration statement application relating to the shares of the Bitwise HOLD 10 Cryptocurrency Index Fund ETF has been filed with the US Securities and Exchange Commission (SEC) but has not yet been declared effective. The ETF aims to track the returns of Bitwise’s HOLD 10 Index, a market-cap-weighted index of the 10 largest cryptocurrencies, rebalanced monthly. Currently the index is composed of BTC (58.7%), ETH (17.7%), XRP (7.7%), BCH (6.1%), XLM (3.4%), LTC (2.3%), ZEC (1.1%), XMR (1.0%), ETC (0.9%).
The index uses 5-year diluted market capitalization instead of a straight market cap, several eligibility criteria including trade volume and concentration histories, composited prices, circulating supply, multiple data sources, monthly rebalancing, and specific policies for rare events like hard forks to protect the integrity of its basket.
An ETF or the exchange-traded fund is a marketable security that tracks a group of assets and is traded like stocks on an exchange. While other 14 applications to SEC have been for filed for pure vanilla Bitcoin-only ETFs, according to CNBC, Bitwise is the only firm to apply for an ETF that would track multiple digital assets.
Bitwise’s Global Head of Research Matt Hougan was quoted commenting on that announcement that,
“Our research shows that an index-tracking basket of multiple cryptocurrencies behaves differently than a single coin. As such, we think both sorts of exposure need to be looked at by investors when considering the growing cryptocurrency space. Our view is that this new area has many similarities to the introduction 10 to 15 years ago of commodity ETFs.”
His comments continued saying that
“at that time, we saw the launch of single-commodity ETFs tracking gold, silver, crude oil, and other commodities, as well as ETFs tracking diversified commodity index baskets. We see a lot of similarities here.”
Bitwise experience of managing cryptos makes it a strong suitor for ETF approval
Having its own crypto index does give Bitwise the advantage in terms of some concern the SEC has raised to likes of pricing of ETF and crypto risk mitigation as Bitwise would already be doing the same for its index investments and fund.
Bitwise Asset Management operates via its two subsidiaries Bitwise Index Services, LLC is a and Bitwise Investment Advisors, LLC. Bitwise Index Services develops cryptocurrency indexes and conducts research in the area of cryptocurrency investing while Bitwise Investment Advisors, LLC sponsors U.S. and non-U.S. private funds that invest in cryptocurrencies.
Bitwise has a strong management team which combines its modern software expertise with decades of asset management experience – coming from firms including Facebook, Wealthfront, BlackRock, NYLife Investments, IndexIQ, US Commodity Funds, Goldman Sachs, JPMorgan, and ETF.com
Founded in 2017, Bitwise Asset Management is a cryptocurrency asset manager. Bitwise launched the first cryptocurrency index fund, the Bitwise HOLD 10 Private Index Fund, on November 22, 2017. is backed by leading institutional and individual investors, including,
Khosla Ventures, General Catalyst, Blockchain Capital, Naval Ravikant, Alison Davis, David Sacks, Elad Gil, Adam Nash, Adam Ludwin, Suna Said, and Avichal Garg.
The firm is a partner to individuals, financial advisors, family offices, investment managers, and institutions in navigating cryptocurrency.
As the queue for Bitcoin/Crypto ETF is increasing and crypto market maturing, it is not a very comfortable position for SEC to avoid the issue any further by delaying it or may be rejecting it. That’s why a lot of analysts believe SEC may change its stance this time.
Is Bitwise a better candidate compared to others to get an SEC license for a crypto ETF? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.