Hashdex joins race for spot Bitcoin ETF with unique strategy

Hashdex’s approach differs from recent filings as it won’t depend on the Coinbase surveillance sharing agreement, opting to acquire spot Bitcoin from physical exchanges within the CME market.

Crypto asset management company Hashdex has joined the competition for a spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States. The firm has submitted an application to the U.S. Securities and Exchange Commission (SEC) for a Bitcoin futures ETF that will hold spot Bitcoin. 

ETFs are investment funds that trade on a stock market, with their value derived from an underlying basket of assets such as stocks, bonds, commodities and other financial instruments. Similarly, Bitcoin ETFs track BTC’s value and trade on traditional stock exchanges rather than crypto exchanges.

Hashdex’s approach differs from recent filings as it won’t depend on the Coinbase surveillance sharing agreement, opting to acquire spot Bitcoin from physical exchanges within the CME market. According to a 19b-4 filing by NYSE Arca with the U.S. SEC, Hashdex intends to include spot Bitcoin in its Bitcoin futures ETF and modify the name, changing its ticker to Hashdex Bitcoin ETF.

Breaking: NYSE files a modification to another ETF, to be now called the Hashdex Bitcoin ETF

Their application is unique in that it will not use Coinbase, they will use prices and acquire spot BTC via CME.

It will hold a mixture of spot & futures positions
Hard to reject imo pic.twitter.com/K1ABKKZX5o

— Alistair Milne (@alistairmilne) August 25, 2023

Some experts have responded to Hashdex’s unique Bitcoin ETF filing. James Seyffart, an analyst at Bloomberg, observed that the strategy involves exclusively conducting exchange for related positions transactions. This entails swapping futures contracts for an equivalent spot exposure instead of direct cash purchases from exchanges.

Seyffart anticipates a higher likelihood of SEC approval, considering the pressure on Gary Gensler stemming from the Grayscale lawsuit, Ethereum futures submission, and BlackRock’s incorporation of the Coinbase surveillance sharing agreement.

Related: Former Binance​.US CEO joins Hashdex board

Other specialists, including Nate Geraci, president of The ETF Store, investor Alistair Milne and finance attorney Scott Johnsson, have responded to Hashdex’s distinctive Bitcoin ETF submission. They believe it could alleviate certain worries of the SEC regarding Bitcoin market manipulation and liquidity.

The SEC and its Chair Gary Gensler, have not commented on the spot Bitcoin ETF applications, the influx of Ethereum ETFs and the potential approval of a spot Bitcoin ETF within this year.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?