The Rise of Hashdex: A Unique Approach to Bitcoin ETF Approval
The largest crypto asset management firm in Latin America, Hashdex, is making a bold move by applying to the SEC for approval to operate a Bitcoin exchange-traded fund (ETF). Unlike other companies that have submitted similar applications, Hashdex is taking a unique approach to acquiring spot Bitcoin. Instead of relying on unregulated spot exchanges, the firm proposes to use the Chicago Mercantile Exchange (CME) market to acquire and dispose of spot Bitcoin through Exchange for Physical (EFP) transactions.
Key Points:
- The SEC has typically ignored or rejected Bitcoin ETF applications for spot markets.
- BlackRock’s application for a Bitcoin spot ETF reignited industry interest.
- Hashdex plans to acquire spot Bitcoin from the regulated CME market through EFP transactions.
- The firm argues that this approach provides greater assurances to financial regulators.
- Other companies have relied on surveillance-sharing agreements with Coinbase.
Alistair Milne, founder of Altana Digital Currency Fund, believes that Hashdex’s strategy would be difficult for the SEC to reject. In contrast, other companies have entered into surveillance-sharing agreements with Coinbase, but Hashdex argues that this approach does not address the SEC’s concerns. Ultimately, the goal for Hashdex and other applicants is to convince American regulators that they are actively safeguarding their financial products from market manipulation.
Hot Take:
The unique approach taken by Hashdex in acquiring spot Bitcoin for its ETF application shows innovation and a commitment to meeting the SEC’s concerns head-on. By utilizing the regulated CME market instead of unregulated spot exchanges, Hashdex aims to provide greater assurances to financial regulators. This strategy may give the company an edge in securing approval for its Bitcoin ETF, making it a frontrunner in the race for regulatory acceptance.
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