The probability of Hashdex’s spotbitcoin exchangetraded fund (ETF) application getting the Securities and Exchange Commission (SEC) approval could be higher than others among the 12 spot-bitcoin applicants due to its apparently different approach to the application, according to some analysts.
During an Oct. 13 meeting with the SEC, the firm argued that its application is a “novel proposal” that is building upon the SEC’s guidance as the “fund will buy physical bitcoin from a regulated market, the CME (Chicago Mercantile Exchange), and it will be entirely reliant on CME pricing.”
The Brazil-based asset manager aims to shift the investment strategy of its already trading Hashdex Bitcoin Futures ETF (DEFI) – approved in 2022 and listed on NYSE Arca – into one that can hold spot-bitcoin ETF. What may set the company’s application apart, as Hashdex has argued since August, seems to be the firm’s decision to use CME over Coinbase (COIN) for the SEC’s requirement of a surveillance-sharing agreement (SSA) for all the applicants.
An SSA allows for sharing information about market trading activity, clearing activity, and customer identification, and is meant to leave a lesser possibility of market manipulation.
“BlackRock and most other spot bitcoin ETF applicants believe a surveillance-sharing agreement with the exchange where BTC trades, solves this [SEC’s SSA requirement], but there has been no evidence that this addresses the SEC’s concerns.” Hashdex’s CIO Samir Kerbage wrote in a blog in August.
This approach could give Hashdex an edge, analysts said in August.
“In a way, this is a move trying to go around the Coinbase SSA by only doing certain types of transactions – EFRP (Exchange for Related Position),” Bloomberg Intelligence ETF analyst James Seyffart said in a post on the social media platform X (formerly Twitter) at the time.
“Basically [Hashdex] will exchange futures for equivalent spot exposure rather buying direct from exchanges with cash. This seems to be another angle where SEC/Gensler is kinda getting cornered,” he noted.
Seyffart appeared to have since doubled down on his optimism about Hashdex’s chance to get approval, following the latest development of the firm’s meeting with the SEC.