BitWise: There is Still Hope for the New Multi-Faceted Crypto ETF
Crypto experts all over the world are still hopeful that regulators will have a new perspective of Bitcoin-centric ETF, despite the negative verdict for the proposal of the Winklevoss Twins.
Bitwise, an asset management firm based in San Francisco presented a proposition to the SEC aiming to launch a cryptocurrency index ETF last week. SEC is a heavy-handed regulatory body in the United States of America (USA). Investors will have the opportunity to invest in a pool of ten digital currencies that are part of the firm’s crypto pool called “Hold 10” index if SEC approves of this proposition.
— CNBC's Fast Money (@CNBCFastMoney) July 30, 2018
This proposition might sound insignificant to retail investors who already have funds within the digital asset space, but it is the first-ever attempt by any company at a digital currency index ETF. CNBC Fast Money host put it candidly “Bitwise is planning to go where no man has gone before.”
Bitwise CEO and co-founder, Hunter Horsely, on Monday took some time to explain to the Fast Money panel about his company’s ETF. The panel, that consisted mostly of investors and analysts from legacy markets wanted to know the strategy Horsely would use to get his fund through SEC’s strict regulatory Radar.
Horsely, who seemed prepared for such countered explaining the features that make his fund stand out against the competition. The CEO said that they have managed to introduce a private index fund last year and have been operating on the same hence gaining experience on the same. He said that they have been dealing with issues concerning custody, trading partners, carrying out daily audits, striking the NAV (Net Asset Value), dealing with tax issues as well as airdrops and hard forks. With all these issues having been handled effective, Horsely believes that it is possible to operate an index vehicle effectively.
A quick perusal at the company’s website shows that Bitwise have had a success with the private funds they have been managing. The company has had the backing of various prominent VC firms the likes of Khosla Ventures, Blockchain Capital and Craft Ventures. Horsely notes that a majority of Bitwise clients are in favor of “like the index strategy” since they will be holding investments that won’t tie them down to one particular asset but will distribute to their risk. This according to him proves that the industry is not tied down to single coin.
Horsely continues to say that investors are looking forward to something promising from the public blockchains. They are hopeful that a valuable digital coin may emerge and that an index would be a great way of capturing such a coin. He thinks that the focus around public registered products such as ETFs revolves around Bitcoin since there has been a running hype that this coin is the digital gold.
SEC Has Shown a Significant Understanding of Digital Coins; Says Horsely
Considering that regulation is a key pillar of any upcoming and growing industry, the host proceeded to ask Horsely what he thinks of the SEC’s relationship with the crypto industry. Surprisingly, the Bitwise CEO went ahead to claim that according to him, the regulatory body has shown a growing interest and understanding of the crypto space. He says that this body has shown some level of “open-mindedness.” On why SEC has not been approving crypto-related funds, the CEO supported the body saying that this is just part of their job. They are responsible for protecting consumers from possible high-risk investments.
As a member of the crypto industry, Brian Kelly brought up the issues the regulatory bodies may have on the index approach. This is what Horsely had to say on this. The pressing issues regarding ETF are liquidity, custody and market manipulation and are similar for most of the large cap assets. Once investors get comfortable with these issues on one single coin, Horsely says that the same can be applied on any other digital coins hence the success of the ETF.
Bitwise’s new proposal may not appeal a lot to the regulators, but a collection of a range of digital asset may push the regulators over the edge to accept this new development. The bold move by Bitwise to push for a crypto-backed ETF shows that the dust is yet to settle in the quest to have the SEC approve of such investments.