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Bitwise withdraws its Ethereum and Bitcoin ETF application

By:
on Sep 1, 2023
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  • Bitwise’s ETF application withdrawal has coincided with a drop in global crypto prices.
  • At press time, Bitcoin and Ethereum had lost all the post Grayscale's SEC triumph price surges.
  • Bitcoin has dropped to $2,626 while Ethereum has declined to $1,647.

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Unexpectedly, Bitwise has submitted a request to withdraw its application for Bitcoin and Ethereum Market Cap Weight Strategy exchange-traded fund (ETF). Bitwise submitted the ETF application to the US Securities and Exchange Commission (SEC) on August 3.

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Although Grayscale’s SEC triumph caused the crypto market mood to become optimistic, Bitwise seems to be rethinking its approach. In a statement announcing the withdrawal of the ETF application, the company stated that “The fund seeks to provide investors with capital appreciation.”

SEC delayed decision on crypto ETF applications

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It is not exactly clear why Bitwise decided to pull out of the ETF race seeing that in a recent interview with Bloomberg, Bitwise Chief Investment Officer Matt Hougan had argued in favour of SEC approval for all ETFs. Bitwise’s ETF intended to invest in either Ethereum (ETH) futures contracts or Bitcoin (BTC) futures contracts whose value would be determined by market capitalization.

Bitwise had collaborated with ProShares to launch another ETF.

Seven companies among them Invesco Galaxy, WisdomTree, Valkyrie, BlackRock, Fidelity, Bitwise and VanEck have filed for crypto ETFs with the SEC. The SEC has, however, delayed its decision on the ETF applications and according to a court filing on August 31, the commission will take longer to review the applications. All eyes are now on the next SEC deadline scheduled for mid-October although there are speculations that the commission would further postpone issuing its decision on the ETFs to between January and May next year.

Bitwise crypto ETF

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Bitwise was one of the first asset management companies to submit crypto ETF applications to the SEC. Bitwise suggested a BTC-backed ETF following the Bitwise Bitcoin Total Return Index in its January 2019 application to the US securities regulator. This index is produced based on the value of Bitcoin derived from BTC transactions taking place on exchanges.

In an effort to give a reliable representation of the larger cryptocurrency markets, the company’s proposed Bitcoin ETF was said to pull market data from a variety of cryptocurrency exchanges. Additionally, the company would demand that third-party custodians actually possess Bitcoin.

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