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Hashdex and the SEC meet to discuss the spot Bitcoin ETF application

Asset management firm Hashdex recently convened with the U.S. Securities and Exchange Commission (SEC) to address the regulatory body’s concerns pertaining to its application for a Bitcoin Exchange-Traded Fund (ETF) focusing on spot Bitcoin. During this meeting, attended by six SEC officials and representatives from Hashdex, NYSE Arca, Tidal Financial Group, and the legal experts at K&L Gates, the company aimed to elucidate its innovative mechanism for facilitating the trading and custody of spot Bitcoin within the ETF on the Chicago Mercantile Exchange (CME), an entity under the regulatory purview of the Commodity Futures Trading Commission.

Notably, Hashdex’s approach differs markedly from other applications seeking approval for spot Bitcoin, as it does not rely on a surveillance-sharing agreement with the cryptocurrency exchange Coinbase. Instead, Hashdex’s proposal centers on the acquisition of spot Bitcoin from physical exchanges within the CME market, rendering its operation wholly dependent on CME pricing for transactions. This distinctive strategy was delineated in an SEC filing by NYSE Arca in late August, further solidifying its uniqueness.

A presentation shared with SEC officials during the meeting this month underscores that the strategy aligns with the commission’s Teucrium Order, which underscores the maturity and robustness of the Bitcoin futures market, providing a solid foundation for financial products seeking exposure to Bitcoin.

As the next step in the journey, the SEC may seek additional information before the application’s initial deadline on November 17, as disclosed by a source with insight into the matter.

It’s worth noting that Hashdex boasts an impressive portfolio of over $380 million in assets under management, along with a suite of 14 exchange-traded products (ETPs) operating in seven countries.

Notably, the SEC granted approval to Hashdex’s Bitcoin Futures ETF in April 2022, and this product has been actively listed on NYSE Arca since September of the preceding year. Pending the green light for the proposed rule change, the ETF will have the capacity to embrace spot Bitcoin as part of its investment strategy.

The race to introduce the first spot Bitcoin ETF in the United States has ignited significant competition among major asset management firms. The recent listing of BlackRock’s ETF proposal with the Depository Trust & Clearing Corporation (DTCC) suggests a potential pathway to approval, according to Bloomberg ETF analyst Eric Balchunas. This development has led to a prevailing consensus that the SEC is poised to approve all spot ETFs within the next three months, as affirmed by a knowledgeable source.

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