Bitwise Asset Management filed an SEC registration statement on July 24th, 2018 to make their cryptocurrency index HOLD 10 the first publicly-offered cryptocurrency index exchange-traded fund (ETF). There have been several other submissions, but the SEC continues to raise concerns.
HOLD 10 Index
On November 22, 2017 HOLD 10 became the world’s first privately-offered cryptocurrency index fund. The portfolio was designed by their subsidiary, Bitwise Index Services. The group develops indexes and conducts cryptocurrency investment research.
“By holding a diversified portfolio of the world’s largest cryptocurrencies, the Index provides investors with exposure to the cryptocurrency market while minimizing investment-analysis and administrative costs.”
It is an open-ended private placement vehicle, open only to accredited investors. The fund is comprise of the 10 largest cryptocurrencies, rebalanced monthly by weighted market cap. The 10 coin basket accounts for approximately 80% of the total cryptocurrency market cap.
The distribution is made using a 5-year-diluted market cap and other criteria that takes on the challenges of cryptocurrency investing, such as growing coin supply, liquidity, trade volume concentration, custody limitations and most importantly, volatility.
“Our research shows that an index-tracking basket of multiple cryptocurrencies behaves differently than a single coin.”
Bitwise Asset Management
The firm opened last year in San Francisco, to work strictly with cryptocurrency. Their leadership is filled with financial and tech industry experience that could bring their services to traditional institutional investors.
“Our view is that this new area has many similarities to the introduction 10 to 15 years ago of commodity ETFs. At that time, we saw the launch of single-commodity ETFs tracking gold, silver, crude oil, and other commodities, as well as ETFs tracking diversified commodity index baskets. We see a lot of similarities here.”
- Hunter Horsley CEO – Prior Product Manager at Facebook and Instagram where he led monetization efforts from 2015 to 2016. Wharton School graduate, BS in Economics in 2015.
- Paul Fusaro COO – Prior Senior VP and Head of Portfolio Management and Capital Markets at IndexIQ (ETF issuer unit of New York Life) from 2008 for a suite of alternative strategy ETFs, Mutual Funds, and Separately Managed Accounts. VP of Portfolio Management and co-head of Trading and Operations at Direxion Investments from 2009. Equity derivatives and credit derivatives trading at Goldman Sachs before that.
- John T. Hyland CFA – Prior CEO of PointBreak ETFs from May 2015. Chief Investment Officer of United States Commodity Funds from 2005.