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Radhika Parashar
- Bitwise filed about this ETF with the U.S. SEC on September 16
- The index has been planned to be split in two sleeves — equity and crypto
- The SEC will now review the application and may take time to give its verdict on the proposal
Digital assets management firm Bitwise has filed with the U.S. SEC to unveil a “stablecoin and tokenization ETF”. With this, the San Francisco-based company plans on launching an exchange-traded fund that track an index of firms working on stablecoins and asset tokenization.
Bitwise’s SEC filing, dated September 16 noted that firms working as stablecoin issuers and stablecoin and tokenization infrastructure providers will be eligible to be part of this ETF. In addition, platforms that have integrated stablecoin payment services have also made it to Bitwise’s list of recommended firms for this ETF.
Essentially, Bitwise has proposed to split the index into two sleeves — an equity sleeve and a crypto sleeve. Each of these will make half of the ETF.
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While companies that work more directly with stablecoin and tokenization will fall under the equity sleeve, those providing blockchain infrastructure services around these two categories would make way under the crypto sleeve.
“The Index is rebalanced and reconstituted [quarterly], and the Fund will make corresponding changes to its portfolio shortly after the Index changes are made public,” Bitwise said in its filing. “The largest constituent in the Crypto Asset Sleeve will have its weight capped at 22.5 percent of the Index.”
The company has further listed a number of risk factors linked to this fund. These include risks of non-diversification of fund, disruptopns in oracle data, and passive investment risks for companies with small and medium valuations along with operational errors.
For now, the SEC has neither approved nor rejected the proposal. It could be a while before Bitwise secures clarity on its proposal.
Over the last few months, the SEC has ended up delaying a number of ETF approval requests owing to a wave of proposals. Bitwise’s Solana ETF application, for instance, is expected to get its SEC verdict on October 16. Arca’s Truth Social Bitcoin and Ethereum ETF and 21Shares Core XRP Trust are among ETF applications that now await their respective decisions from the SEC in October.
With multiple ETF approvals slated for October, the next month could prove to be a pivotal one for the crypto sector for this year.
