Bitwise Launches First Crypto-adjacent ETF in the U.S.

Bitwise Launches First Crypto-adjacent ETF in the U.S.

Bitwise, an asset management firm specializing in crypto indexed funds, has launched its Bitwise Crypto Industry Innovators ETF for the (NYSE:BITQ), the first crypto-adjacent ETF (exchange traded fund) for the U.S. market, with listings targeted at companies operating within or related to the crypto and blockchain industry.

The firm currently has $1.5 billion in assets under management across its diverse portfolio. With the launch of its crypto ETF, Bitwise enables exposure for investors to public companies that are engaged in the crypto and blockchain industry, without directly holding crypto assets such as Bitcoin or Ethereum.

BITQ’s Bitwise Crypto Industry Innovators 30 Index is designed for analysis and capture of “pure-play” companies and organizations in the crypto and blockchain industry, which is to say, any company indexed as participants in the crypto sector should be actively engaged in the sector, with at least $100 million of liquid crypto assets on its balance sheet. The index is set for rebalancing at every financial quarter.

This new index is aimed at capturing the crypto equity market, based on the potential it opens because of its sector-specific aspects. The index maintains a “fast-entry” policy that accepts entry from new IPOs and direct listings a day after their launch, setting the index to a higher rate of adaptability to an accelerating market.

The BITQ fund was developed by Bitwise in collaboration with London-based index research firm Moorgate Benchmarks, and Exchange Traded Concepts, an ETF platform provision firm serving as investment adviser to the BITQ fund. Bitwise has also tapped into SEI Investment Distribution Co for investment management services and distribution.

“Like e-commerce and mobile before it, crypto is a disruptive technology creating massive opportunities for new companies to emerge as winners,” shared Matt Hougan, Chief Information Officer at Bitwise. “Until recently, most great crypto innovators were private companies, but that’s changing rapidly. Today, there’s a growing set of public companies capitalizing on crypto, and more to come. BITQ aims to identify these businesses and give investors access,” Hougan added.

According to Bitwise, companies in the new index are required to either have at least 75% of their revenue to come directly from servicing cryptocurrency markets, or have at least 75% of their net assets audited as direct holdings of any cryptoasset with proven liquidity. According to these parameters, companies that offer crypto brokerage services, financial and banking services, mining solutions, technology solutions, or analytics solutions are listed and considered.

“Over the past few years, many investors have had to watch from the sidelines as a select few have reaped the rewards of stellar cryptocurrency returns,” shared Hunter Horsley, CEO of Bitwise.

“We’ve heard time and again from clients that the primary challenge has been finding a way to access the incredibly complex and fast-moving crypto space. With BITQ, our aim is to make crypto investment opportunities available through traditional investing platforms and a familiar, liquid, and cost-effective ETF. We are thrilled to see this space continue to grow as investors increasingly gravitate toward this transformative asset class,” Horsley added.

Coinbase, which went public back in April 14, was one of the first to qualify for inclusion to the index. BITQ currently tracks Coinbase at a 10% weight. Bitwise currently operates a suite of investment funds that includes the first DeFi (decentralized finance) crypto index fund (listed in February this year) as well as the Bitwise 10 Crypto Index Fund (OTCQX:BITW), which was listed in OTC markets in December of 2020. To date, the U.S. Securities and Exchange Commission is yet to approve an ETF directly pinned to Bitcoin, or other crypto-based assets.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice. 

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