Bitwise Wants Ether Added to BITC; ARK Files for Blockchain Fund

Firms jockey to launch crypto products ahead of major decision in Grayscale spot bitcoin lawsuit.

Bitwise Investments, the creator of the largest crypto index fund (BITW), is seeking to convert its bitcoin futures ETF to also include ether futures, a move that could put the firm ahead of competitors who are filing to launch new ether future ETFs.  

ARK Investment Management, which is seeking approval of a spot bitcoin exchange-traded fund, aims to launch with 21Shares a “Digital Asset and Blockchain Strategy ETF,” a thematic fund that also would include exposure to bitcoin futures contracts and equities, according to the firm’s Aug. 11 filing.

Bitwise aims to convert its Bitwise Bitcoin Strategy Optimum Roll ETF (BITC) into what would be called the Bitwise Bitcoin and Ether Equal Weight Strategy ETF if approved. Because the SEC’s timeline to convert an ETF is 60 days, whereas approving a fresh filing takes 75 days, adding ether to an already existing exchange-traded fund could be a shortcut to quicker approval.  

The fund’s potential conversion date is Oct. 9, just two days before Volatility Shares, the first firm among a recent wave of ether future ETF proposals, aims to launch its own fund.  

Like Bitwise, Valkyrie Investments has sought to convert an existing ETF into one that can incorporate ether futures. It filed with the SEC on Aug. 4 and is expected to convert its Valkyrie Bitcoin Strategy ETF (BTF) on Oct. 3.  

Ether Futures Race 

The proposed conversions come as firms are jockeying for “first mover” benefits to launching cryptocurrency-related ETFs. With the race for the bitcoin ETF already underway, investors are looking to the second largest cryptocurrency for an advantage: ether. Ethereum is up roughly 55% this year, according to Coinbase.  

Bitwise and Valkyrie may also be acting to expand their existing ETFs because of perceived market demand for an ether and bitcoin combination product, as opposed to an ETF that tracks just one of them.  

“The product that the market wants is a combination of the two,” Steven McClurg, chief investment officer of Valkyrie Investments, told etf.com.  

It is still unclear whether the SEC will approve an ether futures ETF. The agency has not decided whether it considers ether a security, or an asset more like a commodity. This distinction could be crucial in determining whether ether futures ETFs gain approval, according to etf.com Senior Analyst Sumit Roy.  

Ark Digital Fund

The ARK fund would invest in equity securities of “issuers in the blockchain, digital asset, and fin tech industry,” according to the filing. The ETF’s managers will decide the distribution of bitcoin futures contracts and equities and will allow “up to 80%” invested in bitcoin futures. Up to 20% of the fund can also be invested in “assets in cash or cash equivalents such as U.S. treasuries.” 

Contact Lucy Brewster at [email protected]