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Hashdex Joins the US Bitcoin ETF Competition Following BlackRock’s Entry

Hashdex Joins the US Bitcoin ETF Competition Following BlackRock's Entry

Bitcoin coin with ETF text Put on wooden floor, Concept Entering the Digital Money Fund.

In the rapidly changing landscape of the cryptocurrency world, Hashdex, a prominent crypto asset management firm, has made a notable entrance into the competition for launching the first-ever spot Bitcoin exchange-traded fund (ETF) in the United States. The company has taken a proactive step by formally submitting an application to the US Securities and Exchange Commission (SEC), accompanied by a distinct and innovative approach: they are aiming to secure approval for a Bitcoin futures ETF that also incorporates direct investments in spot Bitcoin.

Exchange-traded funds (ETFs) serve as investment instruments traded on conventional stock markets, deriving their value from a mix of underlying assets such as stocks, bonds, and commodities. Similarly, Bitcoin ETFs are designed to mirror the value of Bitcoin and are traded on traditional stock exchanges, distinguishing them from cryptocurrency exchanges.

In contrast to recent strategies employed by industry giants like BlackRock, which relied on a surveillance-sharing agreement with the cryptocurrency exchange Coinbase, Hashdex has chosen a divergent course. The firm’s strategy involves procuring spot Bitcoin through reputable physical exchanges that operate within the CME market. This unique approach sets Hashdex apart from the crowd and showcases a fresh and distinct strategy. Their 19b-4 filing submitted to the SEC unveils Hashdex’s intention to rename their ETF and modify its ticker to Hashdex Bitcoin ETF.

The distinctive Bitcoin ETF filing by Hashdex has elicited diverse opinions from financial analysts. Notably, James Seyffart, an analyst at Bloomberg, underscored the approach’s emphasis on exchange-related positions transactions. This intriguing tactic involves the exchange of futures contracts to attain an equivalent exposure to spot Bitcoin, diverging from the conventional direct cash purchases on cryptocurrency exchanges.

Seyffart’s assessment points toward a higher likelihood of SEC approval for Hashdex’s proposal, driven by external influences affecting Gary Gensler, the chairman of the US Securities and Exchange Commission. These influences stem from factors such as the growing number of Ethereum futures ETF proposals and BlackRock’s decision to adopt the Coinbase surveillance sharing agreement.

Prominent figures within the financial sector, including Nate Geraci, President of The ETF Store, investor Alistair Milne, and finance attorney Scott Johnsson, have all weighed in on Hashdex’s unique Bitcoin ETF submission. Their collective opinion is that this approach could effectively address specific concerns of the SEC pertaining to potential market manipulation and liquidity issues associated with the Bitcoin market.

While the approval of a spot Bitcoin ETF appears to be on the horizon, the ongoing developments in the US cryptocurrency space underscore the ever-evolving dynamics of the crypto realm. Amidst the industry’s ongoing struggles with complex regulatory challenges and considerations surrounding security, the outcomes of these developments continue to capture the keen attention of industry observers.

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