Bitwise, a number one digital asset administration agency, has lodged a brand new registration assertion with the US Securities and Alternate Fee (SEC), dated December 26, 2024, looking for approval for the “Bitwise Bitcoin Commonplace ETF.” The submitting describes a fund that goals to spend money on publicly traded corporations that maintain important quantities of BTC on their stability sheets or derive a considerable a part of their income from BTC-related actions.
“The Adviser believes that investing in equities of corporations with substantial BTC-related enterprise or property can present publicity to the efficiency of Bitcoin whereas mitigating challenges reminiscent of custody, regulatory constraints, and liquidity issues,” the doc states.
Investing In Bitcoin’s Massive Gamers
Central to the proposal is a strict eligibility framework. Solely corporations that maintain at the very least 1,000 BTC in reserves qualify for inclusion, and so they should preserve a market capitalization of at least $100 million. Each day buying and selling liquidity should exceed $1 million, and the portion of firm inventory that is still privately held have to be below 10%.
These standards are designed to make sure the ETF’s publicity is concentrated in established firms genuinely dedicated to Bitcoin in each technique and treasury. Bitwise underscores that this method helps shield traders from liquidity dangers and potential governance points.
One of many standout options within the submitting is Bitwise’s choice to deviate from conventional market-cap weighting. As a substitute, the Bitcoin Commonplace ETF applies a weighting method primarily based on every firm’s market worth of BTC holdings, topic to a cap of 25% per agency.
This mechanism successfully locations better emphasis on the magnitude of an organization’s BTC treasury somewhat than its total measurement or income: “The Fund’s weighting course of will deal with the estimated market worth of every firm’s Bitcoin reserves, with particular person constituents capped to keep away from extreme focus.”
For example, MicroStrategy, a publicly traded enterprise intelligence agency, at present boasts an estimated 444,262 BTC in its reserves. Regardless of the corporate’s market capitalization being considerably smaller than that of Tesla, MicroStrategy’s sizeable Bitcoin treasury would assign it a doubtlessly larger weighting than Tesla, which holds roughly 11,509 BTC.
The submitting additionally reveals that the fund will make investments at the very least 80% of its internet property in fairness securities of what Bitwise dubs Bitcoin Commonplace corporations, whereas retaining flexibility to carry short-term devices reminiscent of money for liquidity functions. “Below regular market circumstances, the Fund intends to speculate at the very least 80% of its internet property within the fairness securities of corporations that maintain important BTC on their stability sheets or generate a fabric portion of their revenues from Bitcoin-related actions,” the submitting states.
The reactions from the group had been overwhelmingly optimistic. Nate Geraci, president of The ETF Institute wrote through X: “The btc treasury operations virus is spreading.” James McKay, founding father of McKay Analysis, added: “You already know the ‘factor’ is essential when publicity to a factor that owns the factor is getting its personal wrapper.”
On the identical day Bitwise submitted its submitting, Vivek Ramaswamy’s Try Asset Administration additionally made waves with its personal Bitcoin-focused ETF proposal. Dubbed the Try Bitcoin Bond ETF, it will goal convertible bonds from corporations holding important quantities of BTC, reminiscent of MicroStrategy.
At press time, BTC traded at $94,857.
Featured picture created with DALL.E, chart from TradingView.com
