Asset management firm Hashdex recently met with the United States Securities and Exchange Commission (SEC) to discuss the regulator’s reservations about Hashdex’s application for the Hashdex Bitcoin Futures exchange-traded fund (ETF) to include spot Bitcoin.
According to a source familiar with the matter, the meeting took place on October 13, attended by representatives from Hashdex, NYSE Arca, Tidal Financial Group, and law firm K&L Gates, along with six SEC officials.
Spot Bitcoin Inclusion Mechanism
During the meeting, Hashdex presented its approach to enable the trading and holding of spot Bitcoin within the ETF on the Chicago Mercantile Exchange (CME), a platform regulated by the Commodity Futures Trading Commission (CFTC).
In addition, Hashdex’s approach sets it apart from other spot Bitcoin applications, as it does not rely on a surveillance-sharing agreement with Coinbase. Instead, Hashdex proposes acquiring spot Bitcoin from physical exchanges within the CME market, making it entirely dependent on CME pricing for transactions. An SEC filing by NYSE Arca in late August detailed this approach.
A Strategy Aligned with SEC Guidance
Hashdex’s strategy aligns with the SEC’s Teucrium Order, which asserts that the Bitcoin futures market is mature enough to support financial products seeking exposure to BTC. Further, the presentation shared with SEC officials showcased this alignment during the October meeting.
As the next step, the SEC may request additional information before the application’s initial deadline on November 17, as per the source.
Hashdex’s Track Record and Existing ETF
Hashdex boasts over $380 million in assets under management and currently manages 14 exchange-traded products (ETPs) in seven countries. The SEC approved Hashdex’s Bitcoin Futures ETF in April 2022, and the product has been listed on NYSE Arca since September of the previous year.
Moreover, the potential rule change being reviewed by the SEC could enable the ETF to incorporate spot Bitcoin as well.
Multiple prominent asset management firms are racing to launch the first spot Bitcoin ETF in the United States. Notably, BlackRock recently listed its ETF proposal with the Depository Trust & Clearing Corporation (DTCC), sparking optimism for potential approval, as reported by Bloomberg ETF analyst Eric Balchunas.
Anticipating SEC Approval
The source revealed,
“The current consensus view is that the SEC will approve all spot ETFs within three months.”
Further, this signifies the anticipation within the industry that the SEC may soon grant approval for these innovative investment products, marking a significant development in the crypto market.
Hashdex’s proactive engagement with the SEC demonstrates the cryptocurrency industry’s eagerness to provide investors with new ways to access digital assets within a regulated framework. Lastly, as the competition to launch spot Bitcoin ETFs intensifies, the decision from the SEC will likely play a pivotal role in shaping the cryptocurrency investment landscape in the United States.
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