Hashdex aims for first US spot Bitcoin approval with novel filing

TL;DR Breakdown

  • Hashdex is attempting to outpace giants like BlackRock with a unique spot bitcoin ETF strategy.
  • Instead of surveillance-sharing agreements, Hashdex’s ETF net asset value will be based on the CME market’s bitcoin futures curve.

Description

While industry giants like BlackRock and Ark have been scurrying to get the nod for their spot bitcoin ETFs, it’s Hashdex, a relatively lesser-known Brazilian asset manager, that has positioned itself to potentially outmaneuver them all. A Unique Strategy to Win SEC’s Trust Hashdex is angling for approval, aiming to alleviate the concerns of the … Read more

While industry giants like BlackRock and Ark have been scurrying to get the nod for their spot bitcoin ETFs, it’s Hashdex, a relatively lesser-known Brazilian asset manager, that has positioned itself to potentially outmaneuver them all.

A Unique Strategy to Win SEC’s Trust

Hashdex is angling for approval, aiming to alleviate the concerns of the US Securities and Exchange Commission (SEC) over the spot bitcoin market’s vulnerability to manipulation.

Instead of adopting the common approach like its competitors – setting up surveillance-sharing agreements with crypto exchanges – Hashdex offers an intriguing twist.

They intend to base their ETF’s net asset value on the bitcoin futures curve from the CME market. The allure of this tactic is that it’s anchored in a market the SEC respects, as it’s perceived to be at a lesser risk of manipulation.

Further consolidating its position, Hashdex has sought the New York Stock Exchange’s support to transform its existing NYSE Arca exchange-listed $3 million Bitcoin Futures ETF (DEFI) into a spot Bitcoin ETF.

This play seems well-timed, especially considering the circulating rumors that the SEC might be softening its long-standing stance against spot bitcoin ETFs.

The Competition and Its Limitations

The moment BlackRock, the behemoth of asset management, submitted its application for such an ETF, a modern-day gold rush ensued.

Esteemed managers including Ark Investment Management, WisdomTree, and VanEck scrambled to the SEC with their proposals, in hopes that BlackRock’s bold move would set a precedent.

Yet, the SEC remains tight-lipped, keeping everyone in suspense. Their core apprehension? Bitcoin’s trading takes place on unregulated exchanges that could be prone to deceit or manipulation.

If Hashdex’s gamble pays off, this could be a David vs. Goliath moment. Despite managing a meager $435 million, a pittance compared to BlackRock’s staggering $9.4 trillion, Hashdex might just pull the rug from under the industry giants.

The Hashdex ETF has another ace up its sleeve. Its blend comprises bitcoin futures contracts, spot bitcoin, and cash. Additionally, physical bitcoin transactions would be routed through the CME’s Exchange for Physical Transactions, further embedding it within regulated territory and scrutiny.

Consequently, manipulating this fund’s price would be an uphill battle.

1933 Securities Act – A Crucial Difference

Another notable facet is DEFI’s structure. Unlike many ETFs structured under the 1940 Investment Act, DEFI is orchestrated under the 1933 Securities Act. This distinction isn’t just legalese. The former permits investments only in securities, while the latter accommodates commodities.

Gary Gensler, the SEC chair, has been clear: bitcoin is a commodity. Should the SEC relax its grip on spot bitcoin ETFs, Hashdex’s 1933 Act alignment could present an unparalleled edge.

Furthermore, the inherent flexibility in DEFI’s structure might offer a fast track. As Cinthia Murphy, director of research at the ETF Think Tank, highlights, if the SEC green-lights a spot bitcoin, DEFI could feasibly make an overnight transition from futures to physical assets.

While the race to market first often bestows advantages, it’s not devoid of risks. Investors, cautious of being early adopters, might hold off, banking on imminent launches by renowned entities like BlackRock.

In a market that’s becoming increasingly crowded, Hashdex’s strategy offers a refreshing departure from the norm. Their gambit, daring and unorthodox, might just rewrite the rules of the game.

Only time will tell if this audacious move places them ahead of the curve or if they’ve bitten off more than they can chew.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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