Hashdex Enters the Competition for a Bitcoin ETF Spot with Innovative Approach

In a bid to secure a coveted spot for a Bitcoin exchange-traded fund (ETF) in the U.S., crypto asset management firm Hashdex has taken the plunge. Their application to the U.S. Securities and Exchange Commission (SEC) stands out for proposing a Bitcoin futures ETF that incorporates actual spot Bitcoin holdings.

Unlike traditional investments, ETFs are funds traded on stock markets. They derive their value from an underlying collection of assets, spanning stocks, bonds, commodities, and financial instruments. Bitcoin ETFs mirror the value of BTC and are traded on conventional stock exchanges, not within the cryptocurrency exchange realm.

Hashdex’s approach veers from recent applications, avoiding reliance on the Coinbase surveillance sharing agreement. Instead, the firm plans to source spot Bitcoin directly from physical exchanges within the CME market. This innovative strategy, as disclosed in NYSE Arca’s 19b-4 filing with the SEC, entails integrating spot Bitcoin within their Bitcoin futures ETF. Notably, they intend to rebrand the ETF as the Hashdex Bitcoin ETF.

Market experts have weighed in on Hashdex’s distinct Bitcoin ETF proposal. Bloomberg analyst James Seyffart pointed out that their strategy revolves around executing exclusive exchange-for-related-positions transactions. In simpler terms, this means exchanging futures contracts for an equivalent exposure to spot Bitcoin, as opposed to making direct cash purchases from exchanges.

Seyffart anticipates that Hashdex’s approach could garner higher odds of approval from the SEC. The reasoning lies in the mounting pressure on Gary Gensler, the SEC chair, prompted by factors such as the Grayscale lawsuit, the submission of Ethereum futures, and BlackRock’s integration of the Coinbase surveillance sharing agreement.

Other industry specialists, including Nate Geraci, president of The ETF Store, investor Alistair Milne, and finance attorney Scott Johnsson, have also chimed in on Hashdex’s unconventional Bitcoin ETF proposal. They believe that it has the potential to assuage certain concerns of the SEC, particularly those related to the manipulation of the Bitcoin market and liquidity.

As the industry awaits developments, the SEC, led by Gary Gensler, has maintained silence regarding the influx of Ethereum ETFs, the ongoing spot Bitcoin ETF applications, and the prospects of approving a spot Bitcoin ETF within the current year.

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