In a surprising development, Bitwise has decided to withdraw its application for a Bitcoin and Ether Market Cap Weight Strategy exchange-traded fund (ETF), originally submitted to the United States Securities and Exchange Commission (SEC) on August 3.
Despite the positive market sentiment following Grayscale’s triumph with the SEC, Bitwise seems to be reevaluating its approach. The ETF application withdrawal was unanticipated, but the filing included a statement that read, “The fund seeks to provide investors with capital appreciation. There can be no assurance that the fund will achieve its investment objective.”
In a recent Bloomberg interview, Bitwise Chief Investment Officer Matt Hougan expressed support for the SEC’s approval of all ETFs. The proposed ETF aimed to invest in either Bitcoin or Ether futures contracts, depending on market capitalization. Bitwise also partnered with ProShares to introduce another ETF around the same period.
In its withdrawal statement, Bitwise stated:
“The Trust no longer intends to seek effectiveness of the Fund and no securities of the Fund were sold, or will be sold, pursuant to the above-mentioned Post-Effective Amendment to the Trust’s Registration Statement.”
The SEC has postponed its decisions on Bitcoin ETF applications from WisdomTree, Invesco Galaxy, Valkyrie, VanEck, BlackRock, Bitwise, and Fidelity. As per an SEC filing on August 31, the commission has allocated additional time to assess spot Bitcoin ETF applications from WisdomTree, VanEck, Invesco Galaxy, Bitwise, Valkyrie, 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, these could be further deferred to the SEC’s third batch of deadlines in January, or to the final possible decision dates in March, April, and May of the following year. Bitwise was one of the initial asset management firms to submit applications to the SEC for Bitcoin ETF products. Its January 2019 application to the U.S. securities regulator proposed a BTC-backed ETF that would track the Bitwise Bitcoin Total Return Index, calculated based on the value of Bitcoin from BTC transactions on exchanges. The proposed Bitcoin ETF was expected to source market data from multiple cryptocurrency exchanges to offer a reliable depiction of the broader cryptocurrency markets. Additionally, the firm would necessitate third-party custodians to physically store Bitcoin.
This is not the first time Bitwise has withdrawn an application. Earlier this year, it applied for an Ethereum Strategy ETF, designed to invest in both front-time and back-time Ethereum futures. However, the asset manager retracted its application just a week later.
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