In a surprise move, Bitwise filed a request to withdraw its Bitcoin and Ethereum Market Cap Strategy Ethereum Futures Contract (ETF) application, which was originally filed with the U.S. Securities and Exchange Commission (SEC) on Aug. 3.
While sentiment has turned bullish following Grayscale’s SEC win, Bitwise appears to be cautiously reevaluating its strategy. The exit of the Bitcoin and Ethereum market capitalization strategy was unexpected; however, in the filing, a statement reads: “The Fund aims to provide investors with capital appreciation. There can be no assurance that the Fund will achieve its investment objectives.”
The timing of the withdrawal request appears odd, considering Bitwise Chief Investment Officer Matt Hougan advocated for SEC approval of all ETFs in a recent Bloomberg interview. The ETF intends to invest in either bitcoin futures contracts or ethereum futures contracts, depending on their relative market capitalization. Notably, Bitwise also launched another ETF in partnership with ProShares around the same time.
In the retracted statement, the asset manager said only,
“Pursuant to the above-mentioned post-effective amendment to the Trust’s registration statement, the Trust no longer intends to seek the validity of the Fund and has not sold or will sell any securities of the Fund.”
The U.S. Securities and Exchange Commission has delayed a decision on WisdomTree, Invesco Galaxy, Valkyrie, VanEck, BlackRock, Bitwise and Fidelity’s Bitcoin (BTC) exchange-traded fund applications. According to a filing with the SEC on Aug. 31, the committee specified a longer timeframe for reviewing bitcoin ETFs from WisdomTree, VanEck, Invesco Galaxy, Bitwise and Valkyrie, Fidelity’s proposed Wise Origin Bitcoin Trust, and BlackRock. The SEC’s next set of deadlines is in mid-October, but it could also be pushed back to the SEC’s third set of deadlines in January, or to final possible decision dates in March, April and May of next year.
Bitwise was one of the early asset management companies to submit a bitcoin ETF product application to the SEC. The firm filed with U.S. securities regulators in January 2019, proposing to launch a BTC-backed ETF tracking the Bitwise Bitcoin Total Return Index, which is calculated based on the value of Bitcoin derived from BTC trades that occur on the exchange out.
related: SEC Delays Decision on 6 Bitcoin ETF Spot Applications
The firm’s proposed bitcoin ETF would purportedly draw market data from multiple cryptocurrency exchanges to provide a credible representation of the broader cryptocurrency market. The company also requires third-party custodians to physically hold the bitcoins.
Bitwise’s recent exit is not their first. Earlier this year, they filed for an ethereum strategy ETF designed to invest in front- and late-stage ethereum futures. However, the asset manager withdrew the ETF just a week after filing.
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