Bitwise, a leading digital asset manager, has filed a new registration statement with the US Securities and Exchange Commission (SEC), dated December 26, 2024, seeking approval for the “Bitwise Bitcoin Standard ETF.” the Deposit Describes a fund that aims to invest in publicly traded companies that hold significant amounts of Bitcoin on their balance sheets or derive a significant portion of their revenue from Bitcoin-related activities.
“The Advisor believes that investing in shares of companies with significant bitcoin-related businesses or assets can provide exposure to the performance of bitcoin while mitigating challenges such as custody, regulatory restrictions, and liquidity concerns,” the document states.
Investing in the big players in Bitcoin
Central to the proposal is a strict eligibility framework. Only companies with at least 1,000 BTC in reserves are eligible for inclusion, and they must maintain a market capitalization of at least $100 million. Daily trading liquidity must exceed $1 million, and the share of company shares that remain privately owned must be less than 10%.
These criteria are designed to ensure that the ETF’s exposure is concentrated in established companies that are truly committed to Bitcoin in both strategy and treasury. Bitwise emphasizes that this approach helps protect investors from potential liquidity risks and governance issues.
One notable feature of the filing is Bitwise’s decision to deviate from traditional market cap weighting. Instead, the Bitcoin Standard ETF applies a weighting approach based on each company’s market cap of BTC holdings, subject to a cap of 25% per company.
This mechanism effectively focuses more on the size of a company’s Bitcoin treasury rather than its overall size or revenue: “The fund weighting process will focus on the estimated market value of each company’s Bitcoin reserves, with a cap on individual components to avoid over-concentration.”
For example, MicroStrategy, a publicly traded business intelligence company, currently has an estimated 444,262 Bitcoin in its reserves. Although the company’s market capitalization is much smaller than that of Tesla, MicroStrategy’s large Bitcoin treasury would give it a higher weighting than Tesla, which holds approximately 11,509 BTC.
The filing also reveals that the fund will invest at least 80% of its net assets in securities that Bitwise calls Bitcoin Standard companies, while retaining the flexibility to hold short-term instruments such as cash for liquidity purposes. “Under normal market conditions, the Fund intends to invest at least 80% of its net assets in securities of companies that hold a significant amount of Bitcoin on their balance sheets or generate a material portion of their revenues from Bitcoin-related activities,” the filing said. Countries.
Feedback from the community has been very positive. “The Bitcoin treasury ops virus is spreading,” Nate Geraci, president of the ETF Institute, wrote via X. “You know a ‘thing’ is important when exposure to something that has the thing is getting its own cover,” added James McKay, founder of McKay Research.
On the same day Bitwise filed its filing, Vivek Ramaswamy’s Strive Asset Management also made waves with its Bitcoin-focused ETF proposal. Dubbed the Strive Bitcoin Bond ETF, it will target convertible bonds from companies holding large amounts of BTC, such as MicroStrategy.
At press time, Bitcoin was trading at $94,857.
Featured image created with DALL.E, a chart from TradingView.com
Comments are closed, but trackbacks and pingbacks are open.