Bitwise Rethinks ETF Strategy And Cancels SEC Filing

In a surprising development, Bitwise opted to pull back its application for the Bitcoin and Ether Market Cap Weight Strategy ETF. Initially presented to the United States Securities and Exchange Commission (SEC) on August 3, this move has caused ripples in the investment community.

Grayscale’s Triumph and Bitwise Revises Its Strategy 

Despite a positive shift in market sentiment after Grayscale’s victory with the SEC, Bitwise seems to be recalibrating its approach. This ETF withdrawal caught many off-guard. As per the official document, it was highlighted, “The fund aims to facilitate capital growth for its investors. Yet, the realization of this investment goal is not guaranteed.”

In a notable conversation with Bloomberg, Bitwise’s CIO, Matt Hougan, expressed his support for the SEC greenlighting all ETFs. Based on their respective market caps, the proposed ETF was slated to channel investments into either Bitcoin or Ether futures contracts. Concurrently, a collaboration was forged with ProShares to unveil a distinct ETF.

Bitwise clarified in its statement: “Our Trust has decided against pursuing the Fund’s effectiveness. No securities linked to the Fund were, or will be, traded in light of the referenced Post-Effective Amendment to the Trust’s Registration Statement.”

The SEC’s verdict on several Bitcoin ETF proposals, including ones from giants like WisdomTree, Invesco Galaxy, and Bitwise, is pending. An August 31 SEC document indicated an extended review period for certain Bitcoin ETF proposals. The forthcoming SEC deadlines are slated for mid-October. Yet, these could be postponed to January or even as late as March, April, or May of the following year.

Bitwise’s Legacy with the SEC

A pioneer in its domain, Bitwise quickly approached the SEC with Bitcoin ETF product applications. Its early 2019 proposal sought a BTC-backed ETF, mirroring the Bitwise Bitcoin Total Return Index. That is an index formulated from Bitcoin values obtained from various exchange transactions.

This prospective Bitcoin ETF was pitched to source data from multiple crypto exchanges. The aim? To render a reliable snapshot of the overarching crypto market. Additionally, they proposed the involvement of third-party custodians for tangible Bitcoin storage.

It’s worth noting that this isn’t Bitwise’s maiden retraction. An application was submitted for an Ethereum Strategy ETF earlier in the year. This would encompass investments in both front-time and back-time Ethereum futures. Yet, a mere seven days later, Bitwise chose to retract.

The decision to retract its ETF application offers a lens into the evolving cryptocurrency market dynamics and regulatory landscape dynamics. As firms navigate these waters, investors and market watchers keenly await the next move.

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