Proposal Filed With SEC to Transition Bitwise Crypto Fund to Exchange-Traded Product

Bitwise Asset Management has taken a bold step forward by filing to list its Bitwise 10 Crypto Index Fund (BITW) as an exchange-traded product (ETP) on NYSE Arca. This move sets the stage for what could be a transformative chapter for the well-known and diversified cryptocurrency investment vehicle.

Bitwise Proposes Uplisting Crypto Index Fund to NYSE Arca as ETP

Currently trading on the OTCQX Best Market under the ticker BITW, shares of the Bitwise 10 Crypto Index Fund offer access to the ten largest cryptocurrencies by market cap. As of Oct. 31, 2024, the fund’s portfolio included bitcoin (BTC), ethereum (ETH), solana (SOL), cardano (ADA), and bitcoin cash (BCH) among others.

The shift to an ETP structure is designed to boost efficiency and strengthen investor protections through the use of continuous share creation and redemption mechanisms aligned with net asset value (NAV). The fund tracks the Bitwise 10 Large Cap Crypto Index, which undergoes monthly rebalancing.

This index uses a strict, rules-based approach, eliminating assets flagged for risks like regulatory uncertainty or low trading volume. Bitcoin and ethereum dominate the fund, together accounting for more than 90% of its weight.

If the SEC filing is approved, the ETP will adhere to NYSE Arca’s Rule 8.800-E, which covers investment interests based on commodities and digital assets. This setup is anticipated to deliver advantages like improved price accuracy relative to NAV via an arbitrage mechanism.

The filing highlights Bitwise’s ongoing efforts to expand crypto investment opportunities and provide clearer regulatory structures. Back in 2021, the fund became the first crypto index fund registered as an SEC reporting company, underscoring its commitment to transparency. Bitwise CEO Hunter Horsley noted last week that the ETP format’s potential to make cryptocurrency investments more accessible and streamlined.

While promising greater efficiency, the plan hinges on SEC approval. Similar proposals have faced challenges in the past, with regulators citing concerns about market manipulation and insufficient oversight. However, the rising institutional adoption of cryptocurrencies has strengthened arguments for such regulated products.

As regulators weigh the proposal, Bitwise’s initiative reflects the growing demand for regulated access to cryptocurrencies leveraging the ETP vehicle. It’s another step forward in navigating the evolving world of crypto investments while addressing investor needs and concerns.