Bitwise Asset Management, a leading crypto index fund manager in the United States, is taking significant steps in the crypto investment space. They have recently filed Form 8-As for two new Ethereum futures Exchange-Traded Funds (ETFs), named AETH and BTOP. These ETFs are set to debut on Monday, October 2, marking a significant development in the crypto investment landscape. Moreover, Bitwise has also made amendments to the registration statements for these ETFs.
Related: Grayscale Files for Ethereum Futures ETF
Bitwise‘s move into Ethereum futures ETFs is a notable one in the crypto asset management sector.
It represents a strategic effort to offer investment opportunities in the crypto market to individuals who prefer exposure without direct ownership of physical cryptocurrencies. Unlike traditional Bitcoin and Ethereum spot ETFs, these futures ETFs do not require explicit approval from the regulatory authority, providing Bitwise with a more streamlined path to market.
The Bitwise Ethereum Strategy ETF (AETH) will primarily focus on investing in regulated Chicago Mercantile Exchange (CME) Ethereum futures, with a particular emphasis on front-month contracts. Meanwhile, the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) will provide equal exposure to regulated CME Bitcoin and Ether futures. To safeguard these investments, Bitwise has selected the Bank of New York Mellon as the custody provider, ensuring the security of assets. These ETFs come with a combined expense ratio of 0.85%, making them competitive options for investors.
In addition to their Ethereum futures ETFs, Bitwise has also taken steps to address concerns raised by the Securities and Exchange Commission (SEC) regarding their spot Bitcoin exchange-traded fund application. The SEC previously denied their application, citing several key points of contention. Bitwise has now systematically tackled these concerns in its amended application, striving to meet the SEC’s regulatory requirements.
One significant point of contention revolved around the reliability of Bitwise’s price discovery metrics. The SEC had raised concerns about potential inconsistencies due to the sporadic and asynchronous nature of the prices considered. Bitwise’s response argues that any perceived bias introduced by the limited data reinforces their original argument, highlighting the underestimated influence of the CME Bitcoin futures market in price discovery.
While Bitwise pursues these developments, the U.S. Securities and Exchange Commission (SEC) has further delayed its decisions on various proposals for spot Bitcoin exchange-traded funds (ETFs). This delay, which was announced on September 28, has taken many applicants by surprise, as they had anticipated responses from the SEC between October 16 and 19.
The delays are closely tied to the looming threat of a U.S. government shutdown, which could potentially occur on October 1 if Congress fails to agree on funding bills for government operations. Such a shutdown would disrupt the functioning of federal agencies, including financial regulators like the SEC. This uncertainty has added complexity to the timeline for SEC decisions on Bitcoin ETFs.
These delays are not new, as they follow a pattern seen in late August, where the SEC postponed decisions just as initial deadlines approached. The third set of deadlines for these seven firms is expected around mid-January, with the possibility of further extensions. The SEC must make a final decision by no later than mid-March.
Related: SEC Approves Franklin Templeton’s Bitcoin ETF Application
Despite the delays, optimism regarding the approval of a Bitcoin ETF in the United States has been growing. Analysts have raised the likelihood of approval, fueled by a favorable U.S. Court of Appeals Circuit ruling in favor of Grayscale over the SEC. This ruling suggests a more accommodating environment for such approvals. Some analysts even predict a 95% chance of approval by the end of 2024. However, as of now, the US SEC has not yet approved any Bitcoin spot ETF, citing concerns related to clarity and investor protection.