Crypto Investment Firm Bitwise Files For New Bitcoin ETF

Announcements, News | January 13, 2019 By:

Cryptocurrency investment startup Bitwise Asset Management has filed with the US Securities and Exchange Commission (SEC) for a new physically held bitcoin exchange-traded fund (ETF).

In a press release published on Thursday, Bitwise explained that the proposed ETF, which would track the Bitwise Bitcoin Total Return Index, differs from previously filed bitcoin ETFs in that it will rely on regulated third party custodians to hold its physical bitcoin. Additionally, the index will draw prices from a large number of cryptocurrency exchanges, representing the majority of currently verifiable bitcoin trading.

NYSE Arca, the exchange owned by Intercontinental Exchange (ICE) and is headquartered in Chicago, will be filing a so-called “Rule 19b-4” request with the SEC in the coming days requesting necessary NYSE rule changes. If approved, NYSE Arca will list shares of the Bitwise Bitcoin ETF.

“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,” said John Hyland, Global Head of Exchange-Traded Funds for Bitwise.

The SEC has rejected multiple applications for a crypto ETF. In its decision not to approve the Winklevoss twins’ ETF, the regulator pointed to the risks of fraud and market manipulation and the challenge of investor protection. In November 2018, SEC Chairman Jay Clayton said that he wants to see better market surveillance and custody for cryptocurrencies before being “comfortable” with a bitcoin ETF.

“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,” said Matt Hougan, Global Head of Research, who oversees Bitwise’s indexing efforts. “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.”

“We believe the crypto trading ecosystem has evolved in significant ways in the past year,” further stated Mr. Hyland. “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.”