Analysts suggest that Hashdex’s spot-bitcoin exchange-traded fund (ETF) application may stand out and have a higher likelihood of gaining approval from the Securities and Exchange Commission (SEC).
In an October 13 meeting with the SEC, Hashdex positioned its application as a “novel proposal,” emphasising its reliance on the CME (Chicago Mercantile Exchange) for purchasing physical bitcoin from a regulated market, different from conventional approaches. Hashdex aims to transition its existing Hashdex Bitcoin Futures ETF (DEFI), approved in 2022 and listed on NYSE Arca, into a spot-bitcoin ETF.
What sets Hashdex apart is its choice to use CME over Coinbase for the SEC’s surveillance-sharing agreement (SSA) requirement. The SSA is intended to facilitate the sharing of information on market trading, clearing activity, and customer identification to minimise the risk of market manipulation.
Hashdex’s Chief Investment Officer, Samir Kerbage, highlighted this unique approach in August, stating, “BlackRock and most other spot bitcoin ETF applicants believe a surveillance-sharing agreement with the exchange where BTC trades solves this SEC’s SSA requirement, but there has been no evidence that this addresses the SEC’s concerns.”
Analysts, including Bloomberg Intelligence ETF analyst James Seyffart, have expressed optimism about Hashdex’s chances, noting that their approach could provide an edge. Seyffart suggested that Hashdex’s strategy of exchanging futures for equivalent spot exposure, rather than buying directly from exchanges with cash, could challenge the SEC’s stance.
Following Hashdex’s recent meeting with the SEC, Seyffart doubled down on his optimism, tweeting that Hashdex’s application is tailored to address every argument the SEC has made in the past.
Other analysts, such as Nate Geraci and Eric Balchunas, have echoed the sentiment, considering Hashdex’s different approach as a clever move that could potentially secure approval from the SEC. Alistair Milne, co-founder and CIO of the Altana Digital Currency Fund, remarked that the application could be “hard to reject.”
Hashdex did not directly comment on the likelihood of approval but indicated that changes had been made to address SEC concerns. Hashdex’s Kerbage explained, “A filing for a strategy change of a futures ETF allows an issuer to take an SEC-approved approach and make changes to directly address SEC concerns around holding spot. Since it would be live and already trading, investors have the added benefit of not having to switch from a futures to spot product.”