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The U.S. Securities and Exchange Commission (SEC) accelerated the approval of Bitwise Asset Management’s combined Bitcoin and Ethereum exchange-traded fund (ETF) (Jan. 30, 2025). Announcing the decision on Friday, the SEC noted that it was made within a 45-day review period—an exception from the more common 240-day review period—indicating the ruling would not be a detour but rather a sign of growing comfort on behalf of the SEC with investment products backed by cryptocurrencies.
Fund Structure and Management
The ETF, which just received regulatory approval, will be structured to hold both Bitcoin and Ethereum in amounts proportionate to their market caps. At the time of filing, this distribution consisted of approximately 83% Bitcoin and 17% Ethereum.
The fund’s net asset value will be calculated daily and determined in the prescribed manner using established third-party pricing benchmarks, the CME CF Bitcoin – New York Variant (for Bitcoin) and the CME CF Ether – Dollar Reference Rate – New York Variant (for Ethereum). The fund will be managed by Bitwise Investment Advisers, with Coinbase as the provider of custody services and Bank of New York Mellon as the cash custodian, administrator, and transfer agent.
Context of the Approval
The approval follows the SEC greenlighting similar dual-asset ETFs from Hashdex and Franklin Templeton in December 2024. The regulator’s move to fast-track Bitwise’s application indicates its increasing comfort with crypto-backed investment vehicles. A key highlight is that the SEC approved the decision on an “accelerated basis.”
The SEC highlighted that this proposal is consistent with Section 6(b)(5) of the Exchange Act, meaning that
“a national security exchange shall not be registered unless the rules of the exchange are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in the exchange of securities, and in general, to protect investors and the public interest.”
Industry Implications
The SEC’s quick approval of Bitwise’s ETF may be a sign of a quicker process for future cryptocurrency-related exchanges. But Bloomberg ETF analyst Eric Balchunas said there was still no clear way to know what was going on, adding,
“I really want to interpret this as a sign the new SEC will be more expeditious, but there’s no way to know, really.”
This would open the gates to new forms of innovative crypto investment products for investors, allowing them to gain diverse exposure to top digital assets in a regulated environment.
Regulatory Shift Signals Wider Acceptance of Crypto ETFs in Traditional Markets
The approval of the ETF gives credit to Bitwise, an acknowledgment of the regulatory environment that is changing and embracing cryptocurrencies as an investment vehicle for traditional capital markets. Investors should look forward to a wider range of products for diversifying into digital assets through regulated financial instruments as the SEC evaluates and tentatively approves these products.
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FAQs
What did the SEC approve?
As an example, the SEC gave the green light to Bitwise’s Ethereum and Bitcoin ETF, paving the way for it to trade and list, thus enabling investors to have regulated exposure to both Bitcoin and Ethereum through a single fund.
An important part of this approval?
The approval also indicates a more permissive stance from regulators about cryptocurrency ETFs, broadening access to the asset class and giving institutional investors a regulatory-compliant means of obtaining exposure to Bitcoin and Ethereum.
How does the ETF work?
It holds Bitcoin and Ethereum, allocating based on market cap. However, investors can trade shares similar to stocks, allowing for exposure without direct ownership of cryptocurrencies.
More crypto ETFs to get approved?
And probably, since the SEC has demonstrated a greater openness to approving products like this. Bitwise is also awaiting the public comments on its Solana, XRP, and Dogecoin ETFs.
