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Hashdex sits down with SEC over spot Bitcoin ETF application

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Asset manager Hashdex recently held a meeting with the U.S. Securities and Exchange Commission to address the regulator’s concerns about its application to allow the Hashdex Bitcoin Futures exchange-traded fund (ETF) to hold spot Bitcoin, a source familiar with the matter told Cointelegraph. 

As per a memorandum released by the Division of Trading Markets, the meeting took place on Oct. 13, with six SEC officials and representatives of Hashdex, NYSE Arca, Tidal Financial Group, and law firm K&L Gates in attendance.

In the meeting, Hashdex presented its mechanism allowing spot Bitcoin (BTC) to be traded and held in the ETF on the Chicago Mercantile Exchange (CME), which the Commodity Futures Trading Commission regulates.

Hashdex’s filing differs from other spot Bitcoin applications because it doesn’t have a surveillance-sharing agreement with crypto exchange Coinbase. Instead, Hashdex proposes to acquire spot BTC from physical exchanges within the CME market, thus making it entirely reliant on CME pricing for transactions, according to an SEC filing by NYSE Arca in late August.

A presentation shared with SEC officials during this month’s meeting shows that the strategy is also built on the commission’s Teucrium Order, which states that the Bitcoin futures market is sufficiently developed to support financial products seeking exposure to BTC.

As a next step, the SEC may ask for more information before the application’s first deadline on Nov. 17, according to the person with knowledge of the matter.

Screenshot of Hashdex’s presentation to the U.S. Securities and Exchange Commission. Source: SEC

Hashdex claims to have over $380 million in assets under management and 14 exchange-traded products (ETPs) across seven countries. An ETP is a type of investment vehicle backed by a crypto token.

The SEC approved Hashdex’s Bitcoin Futures ETF in April 2022. The product has been listed on NYSE Arca since September last year. If the rule change is approved, the ETF will be able to hold spot Bitcoin as well.

Several major asset managers are racing to list the first spot Bitcoin ETF in the United States. BlackRock’s ETF proposal was recently listed on the Depository Trust & Clearing Corporation (DTCC), suggesting approval could be on the way, according to Bloomberg ETF analyst Eric Balchunas.

“The current consensus view is that the SEC will approve all spot ETFs within three months,” said the source.

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