Bitwise, a number one digital asset administration agency, has lodged a brand new registration assertion with the US Securities and Change Fee (SEC), dated December 26, 2024, searching for approval for the “Bitwise Bitcoin Standard ETF.” The submitting describes a fund that goals to put money into publicly traded firms that maintain important quantities of BTC on their steadiness sheets or derive a considerable a part of their income from BTC-related actions.
“The Adviser believes that investing in equities of companies with substantial BTC-related business or assets can provide exposure to the performance of Bitcoin while mitigating challenges such as custody, regulatory constraints, and liquidity concerns,” the doc states.
Investing In Bitcoin’s Huge Gamers
Central to the proposal is a strict eligibility framework. Solely firms that maintain at the least 1,000 BTC in reserves qualify for inclusion, they usually should preserve a market capitalization of a minimum of $100 million. Every day buying and selling liquidity should exceed $1 million, and the portion of firm inventory that continues to be privately held should be underneath 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 defend 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 Standard ETF applies a weighting method based mostly on every firm’s market worth of BTC holdings, topic to a cap of 25% per agency.
This mechanism successfully locations larger emphasis on the magnitude of an organization’s BTC treasury slightly than its general dimension or income: “The Fund’s weighting process will focus on the estimated market value of each company’s Bitcoin reserves, with individual constituents capped to avoid excessive concentration.”
As an illustration, 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 probably larger weighting than Tesla, which holds roughly 11,509 BTC.
The submitting additionally reveals that the fund will make investments at the least 80% of its internet belongings in fairness securities of what Bitwise dubs Bitcoin Standard firms, whereas retaining flexibility to carry short-term devices resembling money for liquidity functions. “Under normal market conditions, the Fund intends to invest at least 80% of its net assets in the equity securities of companies that hold significant BTC on their balance sheets or generate a material portion of their revenues from Bitcoin-related activities,” the submitting states.
The reactions from the neighborhood had been overwhelmingly optimistic. Nate Geraci, president of The ETF Institute wrote by way of X: “The btc treasury operations virus is spreading.” James McKay, founding father of McKay Analysis, added: “You know the ‘thing’ is important when exposure to a thing that owns the thing is getting its own wrapper.”
On the identical day Bitwise submitted its submitting, Vivek Ramaswamy’s Attempt Asset Administration additionally made waves with its personal Bitcoin-focused ETF proposal. Dubbed the Attempt Bitcoin Bond ETF, it could goal convertible bonds from firms holding important quantities of BTC, resembling MicroStrategy.
At press time, BTC traded at $94,857.
Featured picture created with DALL.E, chart from TradingView.com
