San Francisco-based asset manager Bitwise is giving its Cryptocurrencies initiative another shot, joining the race to launch a physically-backed bitcoin exchange-traded fund (ETF).
The company filed with the US Securities and Exchange Commission (SEC) for a regulated ETF that would track its Bitwise Bitcoin Total Return Index. Bitwise explains that the index aims to capture the total returns available to investors in the world’s largest crypto asset, including “any meaningful hard forks.”
Bitwise says its proposed ETF differs from previously-filed similar proposals in that it will safeguard holdings in 100% cold storage with an institutional, regulated third-party custodian and as the index draws prices from a large number of cryptocurrency exchanges.
If approved, NYSE Arca, the exchange owned and operated by the Intercontinental Exchange (ICE), will host the proposed listing while Bitwise Index Services will produce and manage the bitcoin ETF. Bitwise's subsidiary already operates three crypto indexes covering the mid-cap, small-cap, and total-market segments of the market.
However, Bitwise global head of ETF products John Hyland didn't think the SEC will be in a rush to approve a cryptocurrency-based ETF but said he is excited to talk to regulators about what his firm has to offer.
"While there can be no assurance that the 19b-4 application will be granted or the SEC will review and ultimately accelerate the registration statement, we are optimistic that 2019 should be the year that a bitcoin ETF launches,” he added.
Bitcoin ETF Proposals Facing Regulatory Hurdles
Exchange-traded funds usually track an index or group of assets but trade like stocks. While other companies, including the Winklevoss twins' crypto exchange Gemini, have filed for bitcoin-only ETFs, Bitwise is the second to apply for a physically-backed exchange-traded product. The first was Blockchain technology company SolidX which filed with the SEC in collaboration with money management firm VanEck.
While some had argued that the proposal from New York-based VanEck, the ninth biggest ETF provider, was more likely to gain approval thanks to its plans for a high minimum share price, the US regulators have once again rescheduled its decision back in December.
Despite investor interest, it seems unlikely that the SEC would be comfortable using bitcoin as an underlying asset in a regulated investment vehicle any time soon. The SEC also denied a request to approve the Winklevoss twins’ bid to list a bitcoin ETF on the BATS exchange.
