U.S. regulators still haven’t signed off on a Bitcoin exchange traded fund, but many investors are making do with alternative mechanisms to access the crypto universe.
Bitwise Asset Management recently filed plans for Bitwise Crypto Innovators ETF, which will track the Bitwise Crypto Innovators Index. That benchmark is constructed by Bitwise Index Services.
“The term ‘Crypto Innovators’ generally refers to companies that service and transact in the segment of the economy dealing with crypto assets and distributed ledger technology (e.g., blockchain technology). Crypto assets are digital representations of value or rights that are capable of being possessed by a party, secured cryptographically, and commonly associated with blockchain technology,” according to the Bitwise filing with the Securities and Exchange Commission (SEC). “A distributed ledger is a shared electronic database where information is recorded and stored across multiple computers. A blockchain is the type of distributed ledger most commonly associated with crypto assets, and involves the use of cryptography and economic incentives to establish consensus and security around the transaction ledger. Blockchain derives its name from the way participants verify and store transaction data in ‘blocks,’ each of which is cryptographically linked to the prior block as a time-stamped chain.”
Blockchain Galore for Bitwise
The rapid rise of Bitcoin has generated fierce debate concerning the long-term viability of investing in cryptocurrencies. While rapidly evolving blockchain technology can provide a discrete digital ledger to track transactions, many advisors remain concerned with the regulation and volatility of cryptocurrency products, indicating that the Bitwise ETF, assuming it comes to market, can be an ideal replacement strategy for clients looking to avoid some of the crypto volatility.
The idea of decentralized currencies goes far beyond Bitcoin and Ethereum. Today, all sorts of companies, organizations, and governments are exploring the concept of initial coin offerings, or ICOs.
Businesses and currencies exist for roughly the same purpose: to facilitate the exchange of value. Fiat currencies like the U.S. dollar are positively primitive compared with the promise of blockchain and the emerging token economy, which some technologists have taken to calling an asset operating system.
For now, there are dichotomies surrounding the blockchain thesis, though for investors willing to take on some risk, the story remains compelling.
“Crypto Innovators include parties that operate crypto asset trading platforms, custodians and wallets; financial services providers leveraging crypto assets and/or blockchain technology, or other financial institutions principally servicing clientele involved in the crypto ecosystem; distributed ledger infrastructure and transaction validation services (e.g., crypto asset “miners”); and technology hardware, software and solutions providers to participants of the crypto ecosystem. These companies also include issuers that own a material amount of crypto assets or otherwise generate revenues relating to crypto asset or distributed ledger technology,” adds the Bitwise filing.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.