In an unexpected turn of events, Bitwise has submitted a surprising request to withdraw its application for a Bitcoin and Ethereum cap-weighted strategy exchange-traded fund (ETF). This application had initially been filed with the US Securities and Exchange Commission (SE c) on August 3.
While the mood in the crypto space had turned optimistic following Grayscale's victory with the SEC, Bitwise seems to be reassessing its approach. The decision to withdraw the ETF application took many by surprise, and the withdrawal statement included a noteworthy disclaimer: " The fund is intended to provide capital appreciation to investors. There can be no assurance that the fund will achieve its investment objective."
Matt Hougan, the Chief Investment Officer at Bitwise, had recently advocated for SEC approval of all ETFs in a Bloomberg interview. The ETF that was withdrawn had been designed to invest in Bitcoin and Ethereum futures contracts based on their market value. Bitwise had also launched another ETF in partnership with ProShares around the same time.
Bitwise's official statement regarding the withdrawal read: "Pursuant to the post-effective amendments to the Trust's registration statement described above, the Trust no longer intends to seek validity of the Fund and does not sell or will sell any securities of the Fund. "
The SEC has been postponing decisions on Bitcoin ETF applications from various firms, including WisdomTree, Invesco Galaxy, Valkyrie, VanEck, BlackRock, Bitwise, and Fidelity. In its filing on August 31, the SEC extended the review period for spot Bitcoin ETF applications from several firms, with the next set of SEC deadlines set for mid-October. However, these deadlines could potentially be further pushed back to the SEC's third set of deadlines in January or the final possible decision dates in March, April, and May of next year.
Bitwise had been among the pioneers in asset management to file for a Bitcoin ETF product. Back in January 2019, the company had submitted an application to US securities regulators proposing the launch of a BTC-backed ETF tracking the Bitwise Bitcoin Total Return Index .This index is calculated based on the value of Bitcoin derived from BTC transactions occurring on various exchanges, and the proposed ETF aimed to provide an accurate representation of the broader cryptocurrency market. Bitwise had also required third-party customers to physically h old the bitcoins. Bitwise had previously filed for an Ethereum Strategies ETF earlier this year, focused on investing in both early- and late-stage Ethereum futures, but this application was withdrawn just a week after it was submitted.
