Bitwise Asset Management Seeks Stablecoin ETF

Bitwise Asset Management has applied for a stablecoin and tokenization ETF to the SEC, adding to its existing Bitcoin and Ethereum investment products.

The latest fund proposal by the leading crypto asset manager offering both ETPs and ETFs has recently filed for a new variant, called Bitwise Stablecoin and Tokenization Index. According to the filing, the index will be split into 2 separate 'sleeves' of both companies and assets that fit the narrative. The document also outlines the associated risks involved with each aspect of the index (pp.5-7).

Each relevant company will either be an issuer, an infrastructure provider, a payment processor, an exchange or brokerage, or a closely-linked retailer. Additionally, they will be labelled into 3 tiers depending on their relation to stablecoin market and tokenization ecosystems, including: tier 1 (substantial exposure); tier 2 (regular exposure); and tier 3 (limited exposure). On the asset side, no single crypto asset included in this shall weigh more than 22.5% of the overall index.

Here is the qualifying criteria from Bitwise for what determines a crypto asset:

To be eligible for inclusion in the Crypto Asset Sleeve of the Index, the Index Provider must determine, in its sole discretion, that an asset is a Crypto Asset. The Index Provider considers an asset to be a Crypto Asset if it: (i) is a domestic or foreign-based single-asset exchange-traded product (“Crypto ETP”); (ii) provides exposure to the blockchain infrastructure that underpins a Stablecoin & Tokenization Company; and (iii) represents at least one percent (1%) of the market share for either stablecoins or tokenization. The Index Provider also considers an “Oracle” to be a Crypto Asset. An “Oracle” is an entity that connects blockchains to external systems thereby enabling smart contracts to execute based upon inputs and outputs from the real world. The Index Provider will allocate 5% of the Index to Oracles.

The stablecoin market today has crossed the $290B cap mark and the value of all RWA (Real-World Asset Tokenization) protocols has doubled from $7.2T to $15.6T since the start of the year (see DefiLlama). Following Circle's IPO and Ondo's opening of tokenized equities and ETFs onchain, investors are showing more interest in the new digital financial economy.