Hashdex, a digital asset management company, has submitted a 19b-4 filing to the NYSE. This involves transforming its DeFi ETF into a complete Bitcoin ETF. Notably, this change is happening independently of Coinbase’s Supervisory Sharing Agreement (SSA).
Significantly, the DeFi ETF is being rebranded as the Hashdex Bitcoin ETF. Hashdex is shifting its main approach to directly hold actual bitcoins.
Hashdex has opted for a specific partnership with the CME Market. Instead of using Coinbase’s SSA like other spot Bitcoin ETFs, Hashdex will acquire spot BTC through the CME Market’s Exchange for Physical (EFP) transactions.
UPDATE: We have another entrant into the spot #bitcoin ETF race. @hashdex has filed to be able to hold spot bitcoin in their bitcoin futures ETF — $DEFI pic.twitter.com/zH0noPFw4l
— James Seyffart (@JSeyff) August 25, 2023
What an EFP (Exchange for Physical)?
EFPs fall under Exchange for Related Position (EFRP) transactions. These special financial tools enable investors to smoothly transition between futures and ETFs or groups of stocks in the underlying index. This transition avoids exposure to market changes within the day. Essentially, Hashdex plans to exchange futures contracts for actual bitcoins.
Moving on to the filing’s specifics, Hashdex consistently labels Coinbase as “unregulated” in its documents. The intention is evident: Hashdex won’t depend on any “unregulated bitcoin spot exchanges.” This decision serves as a strategic move in the competitive landscape.
SEC’s Regulatory Labyrinth
Hashdex’s decision to avoid relying on Coinbase’s SSA could present a unique approach to appease regulators. The SEC has previously noted that the CME’s bitcoin futures market is both regulated and significant in size, potentially easing concerns about market manipulation.
Major players like BlackRock have used surveillance-sharing agreements to gain SEC approval for spot Bitcoin ETFs, but results are uncertain. Hashdex’s bold move might either brilliantly bypass regulatory challenges or introduce new complexities.
Once the SEC acknowledges and publishes the filing, the countdown begins. The SEC has 45 days for an initial decision, extendable up to 240 days. The focus now shifts to regulatory responses.
According to Nate Geraci, President of the ETF Store, innovation in ETFs never stops. Hashdex’s action exemplifies the ongoing creativity in crypto asset management, akin to the “Silicon Valley of asset management.”
*VERY INTERESTING* 19b-4 filed by NYSE on DEFI ETF…
Changing name to Hashdex Bitcoin ETF & updating strategy to hold spot btc.
Notably, this filing isn’t relying on Coinbase SSA.
Instead will secure spot btc through CME Market’s Exchange for Physical.https://t.co/dBLjCNvAki pic.twitter.com/kmXETHUqB0
— Nate Geraci (@NateGeraci) August 25, 2023
In summary, Hashdex is breaking new ground and questioning established norms. They’re presenting the SEC with a straightforward solution. If the SEC gives the green light, it could lead to a significant shift in how regular Americans can confidently invest in Bitcoin.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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