A leading indexer and manager of crypto assets has filed for its second exchange traded fund, this time alongside a prominent exchange seeking to list the shares.
On Thursday, Bitwise Asset Management filed a registration statement with the Securities and Exchange Commission for an ETF that would track its Bitwise Bitcoin Total Return Index, which aims to capture the value of bitcoin physically held by custodians. Past bitcoin ETFs filed with the SEC were not reliant on physically-held bitcoin with third-party custodians, in addition to prices on cryptocurrency exchanges, the company said.
The crypto ETF also differs from others in the past because its filing includes NYSE Arca as a proposed exchange to list the ETF's shares. In a statement about the new fund, Bitwise said it expects the NYSE to file a so-called "Rule 19b-4" request with the SEC in the coming days asking for any necessary NYSE rule changes to allow its application to be approved. The requests would also enable the exchange to list the ETF as soon as the SEC approved the fund.
“I definitely wouldn’t say that approval is imminent. We still have a lot of discussions to have with the SEC,” Matt Hougan, global head of research at Bitwise Asset Management, told WealthManagement.com.
But Hougan, who is barred from commenting specifically about the new fund while it is under SEC review, said Bitwise has done "substantial research" in response to communication with and questions posed by the regulator last year. “We look forward to sharing our findings with them and feel optimistic we can meet their questions but obviously they are the ultimate arbiter,” he said.
It's not likely the current government shutdown will meaningfully impact the timeline of the ETF's potential approval, Hougan said. There might be a backlog of new registration requests waiting for the agency when the government reopens, but it has as long as 270 days to respond to each one. Hougan said he is unsure when exactly that clock begins–at the time a new registration is filed or when the SEC begins work on it.
Timeline aside, Hougan says the regulator is seriously considering the new asset class and its derivative products.
“I think there is a sort of perception out there that the SEC is anti-crypto and I don’t think that’s true. I think the SEC has asked thoughtful, fair and reasonable questions about the crypto ecosystem,” he said. "They are just pro investors."
While expanding the number of private investment funds and indexes, Bitwise Asset Management also partnered with Morgan Creek Digital, the firm backed by the multibillion-dollar investment advisor Morgan Creek Capital Management, in August. It's also attracted well-known investors from the wealth management industry like financial advisor Ric Edelman, the founder of Edelman Financial Services that had $22 billion in assets under management.