San Francisco-based cryptocurrency asset management company Bitwise Asset Management, Inc. has filed to set up a bitcoin exchange-traded fund it believes will avoid the pitfalls of other attempts to create ETFs based on bitcoin.
The fund would track the Bitwise Bitcoin Total Return Index, produced by Bitwise Index Services LLC. It would rely on third-party custodians to hold "physical" bitcoin, and the index will draw prices from a large number of cryptocurrency exchanges.
"Having a regulated bank or trust company hold physical assets of a fund has been the standard under U.S. fund regulation for the last 80 years, and we believe that is now possible with bitcoin," Bitwise Global Head of Exchange-Traded Funds John Hyland said in a statement.
The SEC has turned down proposals for bitcoin ETFs in the past over what it called a lack of protective measures against fraud and against market manipulation of the underlying assets.