Cryptocurrency ETFs Gain Traction with US Regulators
The US Securities and Exchange Commission (SEC) has taken a significant step towards approving a novel exchange-traded fund (ETF) that tracks the two largest cryptocurrencies, Bitcoin and Ethereum. This move marks a crucial milestone in the journey towards mainstream adoption of digital assets.
A Balanced Exposure to Cryptocurrencies
The Bitwise Bitcoin and Ethereum ETF, proposed by Bitwise Asset Management, aims to provide investors with a balanced exposure to the two digital assets, weighted by their market capitalization. The fund’s structure is similar to existing ETFs that hold either Bitcoin or Ether directly.
Regulatory Hurdles Ahead
While the SEC has approved the so-called form 19b-4, the Bitwise fund still needs to clear another hurdle – approval for its pending registration application known as an S-1. Both steps are required to start trading. Bitwise submitted paperwork for the joint fund to regulators last November, following the US presidential election, which brought in a crypto-friendly administration.
A Crypto-Friendly Administration
President Donald Trump has pledged to implement supportive regulations for the digital-asset sector, aiming to make the US the crypto capital of the world. This has encouraged investment firms to propose more crypto portfolios, with the SEC receiving a flurry of applications.
Unique Filings and Memecoin ETFs
Issuers are “probing the SEC’s boundaries” with unique filings, including memecoin ETFs, according to Bloomberg Intelligence Senior Government Analyst Nathan Dean. For instance, Bitwise has proposed an ETF that would track Dogecoin, a cryptoasset with no inherent worth whose price is influenced by social media.
A Growing Market
US ETFs investing directly in Bitcoin have been a major success, with over $121 billion in total assets. Ether funds have also gained traction, with more than $11 billion of funds under management. The SEC has received applications for ETFs tracking other tokens, such as XRP, Solana, and Litecoin, which claim to have utility.
A New Era for Cryptocurrencies
As the cryptocurrency market continues to evolve, the approval of novel ETFs like the Bitwise Bitcoin and Ethereum ETF could mark a significant shift towards mainstream adoption. With regulators increasingly open to the idea of digital assets, the future looks bright for investors and issuers alike.
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