KEY POINTS
- Bitwise plans to seed its Bitcoin ETF, which is 20x larger than that of BlackRock
- The crypto asset manager has not yet named its authorized participant
- ETF analyst Balchunas previously said issuers will have to to explicitly authorize participant parameters in S-1 Form
San Francisco-based crypto asset manager Bitwise has revealed a crucial spot Bitcoin exchange-traded fund (ETF) amendment that bested BlackRock's proposal.
As the deadline for the U.S. Securities and Exchange Commission approaches, several ETF issuers have submitted revised proposals to the regulator to iron out any issues and ensure that their applications are part of the first wave of approvals.
Bitwise, one of the aspiring companies in the race, has recently submitted its updated S-1 Form with a noteworthy announcement, revealing its planned $200 million seed investment for its spot BTC offering.
Bloomberg Intelligence ETF analysts say Bitwise's filing underscores the firm's plan to seed its Bitcoin ETF, which is 20x larger than that of BlackRock.
Senior ETF analyst Eric Balchunas highlighted the staggering difference in the planned amount Bitwise wants to seed its fund, which he said would be advantageous to the firm in the early stages of the product in the industry.
"Bitwise S-1 has been filed and it looks like someone (I wonder who) is going to seed $BITB with $200m, which blows away BlackRock's $10m (that we know of). That's gonna be huge help in early days of the race," Balchunas said.
"Bitwise Investment Manager, LLC, an affiliate of the sponsor, is expected to purchase the initial basket(s) of shares at a per-share price of $50 (the 'seed basket(s)'). Bitwise Investment Manager, LLC will act as a statutory underwriter in connection with the initial purchase of the seed basket(s), has indicated an interest in purchasing an aggregate of up to $200 million of shares in this offering from authorized participants or in the marketplace through broker-dealers. However, because indications of interest are not binding agreements or commitments to purchase, this potential purchaser could determine to purchase more, fewer or no Shares," Bitwise said in its latest S-1 filing.
Bitwise S-1 has been filed and it looks like someone (I wonder who) is going to seed $BITB with $200m, which blows away BlackRock's $10m (that we know of). That's gonna be huge help in early days of race. No AP named but prob forthcoming. pic.twitter.com/hQ7uW9Occo
— Eric Balchunas (@EricBalchunas) December 29, 2023
However, Bitwise has not yet identified its authorized participant (AP), while other issuers like BlackRock have already done so in their recently amended prospectus.
Balchunas previously said issuers will have to face the "not-so-easy" last step and need to explicitly authorize participant parameters in the S-1 form, further speculating that issuers must provide an AP agreement, along with their commitment to using the cash creation and redemption model, for the SEC to approve spot Bitcoin ETF applications.
Latest snapshot of The ETF Cointucky Derby w new column for "AP Agreement" as SEC wants AP (who is also underwriter) named in next S-1 update (coming in next 10 days). This is no easy last step, and may keep some from starting gate. AP agreement + cash creates = approval @JSeyff pic.twitter.com/e8cgCuUBLN
— Eric Balchunas (@EricBalchunas) December 22, 2023
"Latest snapshot of the ETF Cointucky Derby w (with) new column for 'AP Agreement' as SEC wants AP (who is also underwriter) named in next S-1 update (coming in next 10 days). This is no easy last step, and may keep some from starting gate. AP agreement + cash creates = approval," Balchunas said in a tweet.
