Insights on Hashdex’s Bitcoin ETF Filing by Bloomberg’s ETF Analyst

Hashdex, the digital asset management firm, has made a significant move by filing a 19b-4 with the NYSE to reposition its DeFi ETF as a Bitcoin ETF. This transformation involves shifting its core strategy to hold spot Bitcoin directly without relying on Coinbase’s Supervisory Sharing Agreement (SSA).

The rebranding is evident as the DeFi ETF is now known as the Hashdex Bitcoin ETF. Instead of partnering with Coinbase, Hashdex has chosen the CME Market as its particular ally. To secure spot BTC, Hashdex will utilize the CME Market’s Exchange for Physical (EFP) transactions, rather than Coinbase’s SSA, which has been commonly used for spot Bitcoin ETFs.

EFPs, or Exchange for Related Position transactions, are specialized financial instruments that enable investors to switch seamlessly between futures and ETFs, or baskets of stocks in the underlying index, without being exposed to intraday market fluctuations. In essence, Hashdex aims to exchange futures for actual Bitcoin.

The filing contains intriguing details, highlighting Hashdex’s continuous reference to Coinbase as “unregulated.” This serves as a competitive move, as Hashdex intends to avoid relying on “unregulated Bitcoin spot exchanges.” By sidestepping Coinbase’s SSA, Hashdex’s strategy may offer a unique solution to appease regulators.

The SEC, which has expressed concerns about market surveillance and manipulation, has previously acknowledged the CME’s regulated Bitcoin futures market as a market of significant size. This acknowledgment could potentially alleviate some of the SEC’s worries. While major players like BlackRock have relied on surveillance-sharing agreements to satisfy the SEC, there is no evidence that this approach has been successful thus far. Hashdex’s bold move could either be a shrewd way to navigate regulatory obstacles or introduce new complications.

Once the SEC acknowledges the filing and publishes it on the federal register, a countdown will begin. The SEC has 45 days to make an initial decision, which could be further delayed for up to 240 days. The industry will eagerly observe how regulators respond to this development.

Nate Geraci, President of the ETF Store, expressed his amazement at ETF innovation, comparing the crypto asset management space to the “Silicon Valley of asset management.” Geraci emphasizes the relentless ingenuity showcased by Hashdex’s move.

In conclusion, Hashdex is setting a new standard and challenging the status quo with its transformative filing. It presents the SEC with a potential solution on a silver platter. If approved, this could revolutionize how everyday Americans securely invest in Bitcoin.