• Bitwise CIO Matt Hougan cites contango and other complexities as reasons to pull the product proposal
  • The San Francisco-based fund group is content to let other firms “fight over whatever scraps are available” in bitcoin futures ETF market, president of The ETF Store says

Bitwise Asset Management withdrew its application to launch a bitcoin futures ETF, the firm’s CIO, Matt Hougan, shared in Twitter posts Wednesday, citing the complexity and costs associated with such a product.

The firm had filed for its bitcoin strategy ETF in September after US Securities and Exchange Commission (SEC) Chairman Gary Gensler said the agency would favor ETFs under the Investment Company Act of 1940 that are limited to CME-traded bitcoin futures contracts. 

ProShares launched the first bitcoin futures-based ETF in the US on Oct. 19, and Valkyrie Investments brought to market a similar offering three days later. The ProShares Bitcoin Strategy ETF (BITO) has grown to nearly $1.3 billion assets under management, while the Valkyrie (BTF) has about $60 million in assets.

“It’s an unsurprising decision and I expect additional withdrawals from other ETF issuers,” Nate Geraci, president of The ETF Store, said of Bitwise’s withdrawal. “I think a much bigger underlying factor in this decision-making is the first-mover advantage the SEC awarded to ProShares.”

VanEck, which was expected to launch its bitcoin futures ETF last month, has not yet done so. A spokesperson for the firm did not immediately respond to Blockworks’ request for comment on whether or not it still intends to launch the product. 

Global X, which filed for an ETF in August that would invest in blockchain companies and bitcoin futures, also appears nearly ready to launch, recent filings indicate. A Global X representative declined to comment.

Why the withdrawal?

Hougan noted that contango — a situation where the futures price of a commodity is higher than the spot price — is running at about 6% per year.  

“Still, we filed our application, as we thought the benefits of the ETF wrapper (convenience, access) would outweigh the contango challenge,” Hougan wrote on Twitter. “Since then, however, new challenges have emerged.”

Though Bitwise initially believed it would be possible to hold both futures and Canadian-listed bitcoin exchange-traded products, that is not currently permitted. Bitcoin futures ETFs have also “soaked up all available capacity at futures commission merchants,” Hougan added, which creates more expenses. 

“The result? Costs on top of costs, plus added complexity,” Hougan wrote in the Twitter thread. “None of this means that futures-based ETFs are bad, and BITO and BTF are thoughtful versions. But we believe most long-term investors would be better served by spot exposure, and today, there are many options for getting spot-based exposure — including other Bitwise funds.”

Bitwise offers a range of offerings, including the Bitwise 10 Crypto Index Fund, which was the world’s first crypto index fund. The company launched the Bitwise Crypto Industry Innovators ETF (BITQ) in May, which tracks a modified market-cap-weighted index of global companies supporting a crypto asset-enabled decentralized economy. The fund has $125 million assets under management.

The firm most recently filed to launch the Bitwise Bitcoin ETP Trust. Bitwise had previously filed for a physically backed bitcoin ETF in 2019, but withdrew its request in January 2020 amid SEC concerns.

As part of the latest filing, the fund group published its findings — roughly 150 pages of data-driven research that it hopes will help the product gain approval.

“The bitcoin futures ETF market has a natural cap given that investors really want a spot bitcoin ETF,” Geraci told Blockworks. “I think an issuer like Bitwise is content to focus on that bigger prize and let other issuers fight over whatever scraps are available in the bitcoin futures ETF market.”


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  • Ben Strack is a Denver-based reporter covering macro economics, financial services and digital asset management. Prior to joining Blockworks, he covered the asset management industry for Fund Intelligence, and was a reporter and editor for various local newspapers on Long Island. He graduated from the University of Maryland with a degree in journalism.