Crypto asset manager Bitwise is seeking to launch an exchange-traded fund (ETF) tied to cash-settled Bitcoin futures contracts, adding its name to a growing list of hopefuls for this type of investment vehicle.
ETFs are investment products that track the price of an asset or group of assets and trade like stocks on an actual exchange.
ETF Series Solutions teamed up with Bitwise Index Services, a division of the asset management firm, to file an application for a Bitcoin futures ETF with the Securities and Exchange Commission (SEC) on Tuesday, September 14.
If approved, Bitwise Bitcoin Strategy ETF will not invest in Bitcoin directly. Instead, the fund seeks “to obtain exposure to Bitcoin primarily through indirect investments in standardized, cash-settled Bitcoin futures contracts traded on commodity exchanges registered with the CFTC.”
According to the filing, the fund may also invest in other financial products such as “pooled investment vehicles and Canadian-listed funds that provide exposure to Bitcoin,” as well as “cash, U.S. government securities or money market funds.”
Bitwise joins ETF hopefuls
Bitcoin ETFs tied to the world’s largest cryptocurrency have long been on American investors’ wish list, yet the SEC is yet to approve such a product. As an excuse to repeatedly deny or delay decisions, or make frustrated applicants withdraw, the agency cites Bitcoin’s volatility and market manipulation risks.
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Currently, there are more than ten firms queuing up for the SEC to approve their applications, including the likes of VanEck, Fidelity, and SkyBridge.
However, their hopes for an ETF backed by physical Bitcoin seem to be withering as the agency’s chair Gary Gensler hinted last month that he’d be more inclined to see an ETF tied to Bitcoin futures.
While Gensler’s remarks prompted several firms, including Invesco, VanEck, Valkyrie Investments, Galaxy Digital, and AdvisorShares, to apply for Bitcoin futures ETFs, the hunger for spot Bitcoin ETF remains.
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"People don't want Bitcoin futures exposure, they want physical Bitcoin exposure," Bloomberg ETF research analyst James Seyffart told Decrypt last month.
This desire is also reflected in Bitwise’s latest application as it mentions the possibility of investing in Canadian Bitcoin ETFs.
Canada is one of the countries where investors already have exposure to the benchmark cryptocurrency through ETFs tied to physical Bitcoin, with Purpose Bitcoin ETF, Evolve Bitcoin ETF, and CI Galaxy all trading on the Toronto Stock Exchange.