Bitwise files prospectus with SEC for an ETF to track 'crypto innovators'

Bitwise, a crypto-focused asset manager and index provider, has filed a prospectus for a new exchange-traded fund tracking the performance of crypto innovators.

The so-called Bitwise Crypto Innovators ETF will track the performance of companies included in the Bitwise Crypto Innovators Index, assembled by Bitwise Index Services. 

The development comes alongside other efforts from Bitwise on crypto-centric products. Bitwise announced on February 2 that it plans to list its bitcoin fund on OTC Markets. If approved, the fund would trade similarly to the $24.4bn Grayscale Bitcoin Trust (GBTC), which is listed on OTC Markets’ OTCQX venue.

In a filing with the Securities and Exchange Commission, dated February 5, Bitwise defines crypto innovators as firms that “service and transact in the segment of the economy dealing with crypto assets and distributed ledger technology.”

This could include a broad range of organizations. Such companies include trading platforms, custodians and wallet providers; financial services firms leveraging these technologies; miners; hardware firms; and “issuers that own a material amount of crypto assets or otherwise generate revenues relating to crypto asset or distributed ledger technology.”

The filing lays out the screening rules of the Innovators Index in detail. 70% of the index will be comprised of companies that derive more than 75% of their revenue from servicing or transacting in the crypto sector or which have more than 75% of their net assets denominated in crypto. Such firms must also have a market capitalization of $100 million.

The rest of the index will be made up of larger firms that a Bitwise committee identifies as crypto innovators on the basis of them having a “dedicated business initiative” in the space, reported on in at least one of their recent quarterly or annual reports. The firms making up this portion of the index must have a minimum market capitalization of $10 billion.

The proposed fund will not invest directly in cryptocurrencies or through derivatives, nor will it invest in initial coin offerings.