The digital asset management firm, Hashdex, has just filed a 19b-4 with the NYSE, radically repositioning its DeFi ETF into a full-fledged Bitcoin ETF. This move is done without leaning on Coinbase’s Supervisory Sharing Agreement (SSA).
Let’s begin by appreciating the dramatic rebranding: the DeFi ETF is no more, and in its place stands the Hashdex Bitcoin ETF. Hashdex is changing its core strategy to hold spot bitcoin directly.
But Hashdex isn’t looking to tie up with just anyone; they’ve chosen a very particular partner in the CME Market. Rather than relying on Coinbase’s SSA, which has been the foundation for many prospective “pure” spot bitcoin ETFs, Hashdex will secure spot BTC through the CME Market’s Exchange for Physical (EFP) transactions.
What’s an EFP?
EFPs are a specific type of Exchange for Related Position (EFRP) transaction. These are special financial instruments that allow investors to seamlessly switch between futures and ETFs or baskets of stocks in the underlying index—without exposure to intraday market fluctuations. Essentially, Hashdex is aiming to swap futures for actual bitcoin.
Now, let’s talk about some of the details in this filing. Hashdex continually refers to Coinbase as “unregulated” throughout its documentation. While the decisions are clear—that Hashdex will not be relying on any “unregulated bitcoin spot exchanges”— this is indeed a competitive move.
SEC’s Regulatory Maze
Hashdex’s strategy to not rely on Coinbase’s SSA might offer a unique path to pacify regulators. The SEC has previously stated that the CME’s bitcoin futures market is a “regulated market of significant size,” which could potentially alleviate some of their concerns around market surveillance and manipulation.
BlackRock and other major players in the spot Bitcoin ETF space have been betting on surveillance-sharing agreements to satisfy the SEC. But so far, there’s no evidence that this is working. Hashdex’s daring move could either be a brilliant end-run around the regulatory obstacles or may bring a fresh set of complications.
Once the SEC acknowledges the filing and posts it to the federal register, the countdown will begin. The SEC will have 45 days to make an initial decision, which could be delayed up to a total of 240 days. All eyes will now be on how regulators react to this.
In the words of Nate Geraci, President of the ETF Store, ETF innovation never ceases to amaze. Hashdex’s move showcases the relentless ingenuity in the crypto asset management space, which Geraci likens to the “Silicon Valley of asset management.”
So what’s the bottom line? Hashdex is setting a new standard and challenging the status quo. They’re giving the SEC a solution on a silver platter. And if the SEC approves this, what we’re looking at is a potential sea change in how everyday Americans can securely invest in Bitcoin.
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