In the light of the recent proposals that the United States’ Securities and Exchange Commission (SEC) is receiving in regards to the establishment of a cryptocurrency-based exchange traded fund (ETF), Bitwise, one of the world’s leading cryptocurrency index fund, has also filed a proposal for the establishment of a crypto-based ETF to the SEC.
Bitwise, a global asset management spearhead, has offered to build a crypto-based ETF for the top 10 cryptocurrencies of the world by market capitalization. The whole movement is name as “Bitwise HOLD 10 Cryptocurrency Index Fund”.
HOLD 10 is aimed at engulfing approximately 80% of the market capitalization by various cryptocurrencies through its exchanged traded fund. Specific standards of its implementation have also been proposed and highlighted that are aimed at solving the issues regarding the ETF pertaining the crypto-market. These standards are aimed at addressing the challenges of market capitalization, changing supply, liquidity of the currency, trade volumes and custody restrictions.
Previously, as reported, the demands proposed to the SEC were, mostly, regarding the construction of exchange traded funds for specific cryptocurrencies only, such as bitcoin or ether etc. HOLD 10 aims at providing a well-established exchange traded fund for the top 10 cryptocurrencies as per their market capitalization, opposed to the proposals previously provided in favor of only one or two cryptocurrencies.
Bitwise Global Head of Exchange-Traded Products, John Hyland, stated in the proposal:
We are aware that other investment firms have filed for cryptocurrency ETFs under the Securities Act of 1933, and that there continues to be interest in filing under the Investment Company Act of 1940. As best we know, all of these funds plan to offer exposure to a single coin such as bitcoin or ether. That is fine, but our proposed offering is obviously different.
John Hyland, also, appreciated U.S. Securities and Exchange Commission’s efforts on asking for a public opinion on the matter of establishing a crypto-based ETF. He further stated:
We know that the current crypto-ETF filings have generated a great deal of discussion and analysis within the SEC about this emerging asset class, and the SEC and its staff, to their credit, have asked for public comment on a wide range of issues relating to these products. We expect the staff of the SEC has had ongoing discussions with the investment firms making the crypto filings to date, and we look forward to having our own discussions with the SEC about the nature of our proposed offering.
Bitwise’s Global Head of Research, Matt Hougan, emphasized and compared the establishment of ETFs with only a single coin focus with their own proposal of holding the top 10 cryptocurrencies as per their market capitalization. He further elaborated:
Our research shows that an index-tracking basket of multiple cryptocurrencies behaves differently than a single coin. As such, we think both sorts of exposure need to be looked at by investors when considering the growing cryptocurrency space. Our view is that this new area has many similarities to the introduction 10 to 15 years ago of commodity ETFs. At that time, we saw the launch of single-commodity ETFs tracking gold, silver, crude oil, and other commodities, as well as ETFs tracking diversified commodity index baskets. We see a lot of similarities here.
Public sentiment regarding the establishment of cryptocurrency-based ETFs is clearly visible from the comments made by major investors, CIOs, economists and financial analysts pertaining the world of cryptocurrencies. From the comments posted on the official website of U.S. Securities and Exchange Commission, a strong demand of building a crypto-based ETF is conspicuos and vivid.
This proposal for the establishment of a crypto-based ETF for the top 10 cryptocurrencies of the market is backed by almost all the major investment spearheads pertaining to the crypto-market. Some of these names include Khosla Ventures, General Catalyst, Blockchain Capital, Naval Ravikant, Alison Davis, David Sacks, Elad Gil, Adam Nash, Adam Ludwin etc.
With its center of operations located in San Fracisco, the team behind Bitwise HOLD 10 Cryptocurrency Index Fund contains experienced veterans previously linked to the industry of ETF, and also contains individuals with technology, security, indexing, and asset management expertise.
With the demand of a crypto-based exchange traded fund in full flow, and the presence of viable proposals for the establishment of such an ETF on the table, SEC seems inclined towards the proposal.
With all this in hindsight, the establishment of an exchange traded fund for top 10 cryptocurrencies of the world seems the most suitable option, and the establishment of such an ETF might just be inevitable in the near future.