Bitwise, a prominent asset management firm, has unexpectedly requested the retraction of its application for the Bitcoin and Ether Market Cap Weight Strategy exchange-traded fund (ETF) filed with the United States Securities and Exchange Commission (SEC) on August 3. This surprising move comes at a time when market sentiment has turned bullish following Grayscale’s recent SEC victory. Although Bitwise’s decision to withdraw its ETF application was unexpected, the filing stated that there is no guarantee that the fund will achieve its investment objective of providing investors with capital appreciation.
Matt Hougan, the chief investment officer of Bitwise, has been a strong advocate for SEC approval of all ETFs. In a recent Bloomberg interview, he expressed his support for the swift approval of Bitcoin (BTC) and Ether (ETH) futures contracts through the ETF. Bitwise had also collaborated with ProShares to launch another ETF during the same period.
In the withdrawal statement, Bitwise clarified that the Trust no longer intends to seek effectiveness of the Fund and that no securities of the Fund were sold or will be sold as per the Post-Effective Amendment to the Trust’s Registration Statement.
The SEC has currently delayed its decision on several Bitcoin ETF applications from WisdomTree, Invesco Galaxy, Valkyrie, VanEck, BlackRock, Bitwise, and Fidelity. The commission has designated a longer period to review spot Bitcoin ETF applications from WisdomTree, VanEck, Invesco Galaxy, Bitwise, and Valkyrie, as well as the Wise Origin Bitcoin Trust proposed by Fidelity, and BlackRock’s Bitcoin ETF. Although the next set of deadlines for the SEC is in mid-October, there is a possibility of further delays to the third batch of deadlines in January or to the final decision dates in March, April, and May of next year.
Bitwise was among the early asset management firms to submit Bitcoin ETF applications with the SEC. Its January 2019 application proposed a BTC-backed ETF that would track the Bitwise Bitcoin Total Return Index, which derives its value from BTC transactions on exchanges. The proposed ETF aimed to gather market data from various cryptocurrency exchanges to provide a reliable representation of the broader cryptocurrency markets. It also required third-party custodians to physically hold the Bitcoin.
This recent withdrawal by Bitwise is not its first. Earlier this year, the company submitted an application for an Ethereum Strategy ETF, intending to invest in Ethereum futures. However, Bitwise withdrew this application just one week later, adding to the surprises surrounding their ETF endeavors.
In conclusion, Bitwise’s unexpected request to retract its ETF application highlights the uncertain landscape surrounding crypto ETFs and the regulatory concerns faced by asset management firms. The delay in SEC decisions further adds to the anticipation and speculation surrounding the approval of ETFs for Bitcoin and other cryptocurrencies. Despite the setbacks, the industry continues to push for the establishment of regulated and accessible investment vehicles to attract more institutional and retail investors into the crypto space.
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