1st Crypto Index ETF Filed

July 24, 2018

While much of the investing world waits with bated breath for the approval and rollout of the first bitcoin ETF, Bitwise Asset Management today filed for an index fund that will track the performance of a basket of the 10 largest cryptocurrencies. The press release notes that the index that will underlie the Bitwise HOLD 10 Private Index Fund captures roughly 80% of the market capitalization of the total cryptocurrency market.

This isn’t Bitwise’s first rodeo when it comes to cryptocurrency index funds though. It launched the first such product as a private placement vehicle that is available to accredited investors and tracks the same index as the proposed ETF, the press release says. As with any index fund, the model offers more diversified exposure than investing in a single coin.

The cryptocurrencies in the Bitwise HOLD 10 Private Index Fund as of the end of June included bitcoin, ethereum, Ripple, bitcoin cash, Litecoin, Stellar Lumens, Dash, Monero, Zcash and Ethereum Classic.

Limbo Land

With ETFs from other would-be issuers solely covering bitcoin still in limbo with the SEC despite the coin’s active futures market, it may seem strange that Bitwise is looking to launch a fund that covers bitcoin and a bevy of lesser-known cryptocurrencies, but the filing gets the firm’s foot in the door on such products.

“We have no real view into how the SEC is thinking about different filings. We’re just excited to get our filing in and have a discussion with them,” said Matt Hougan, Bitwise’s global head of research.

“Our view is that the crypto space has been rapidly developing in the past six months. There have been a lot of positive developments,” he added, citing the market makers that have entered the space, the futures market and positive regulatory developments. “While we don’t have any insight into when or if any particular filing will be approved, we’re hopeful that things are pointed in the correct direction.”

Hougan pointed out that his firm has what many others do not: its own cryptocurrency fund with a track record.

“We have experience running a cryptocurrency index fund, and we’d love to talk to the SEC about our filing,” he said, noting that the concerns around cryptocurrencies in general are similar to the ones around bitcoin. Given that if the SEC comes around to a bitcoin ETF, it seems like a broad bitcoin fund wouldn’t be far behind.

The filing does not include a ticker, expense ratio or listing exchange.

Contact Heather Bell at [email protected]

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