Bitwise has revealed a plan to soon let retail investors trade its large-cap index product.
The asset manager told CoinDesk Friday that it's working to list shares of its Bitwise 10 Index Fund on OTCQX, an alternative trading system regulated by the U.S. Securities and Exchange Commission (SEC). If approved, retail investors and advisors would be able to trade the fund on popular platforms including Charles Schwab and TD Ameritrade, said CEO Hunter Horsley.
The company has several steps before it can begin trading. The first is an announcement to current shareholders, Horsley said, which occurred on Friday. Bitwise will also have to publish public disclosures in accordance with ATS reporting standards and have a market maker file a Form 211 with FINRA.
Once FINRA approves the Form 211, trading can commence.
"We expect approval for trading in the second half of 2020," Horsley said. "It’ll take a number of months for trading to commence."
He likened the process to Grayscale Investments' Bitcoin Trust product, which already trades on OTCQX. Grayscale currently lists shares of its Digital Large Cap Fund, Ethereum Trust and Ethereum Classic Trust on the platform.
Like the Grayscale large-cap fund, the Bitwise 10 Index Fund is a diversified one. Horsley noted it holds assets representing 85 percent of the crypto market capitalization.
"[It] has a formal public methodology, has governance – both a committee and an advisory board – and it’s designed with several rules to screen and handle the nuances of the crypto space," he said.
The fund includes bitcoin, ethereum, XRP, bitcoin cash, litecoin, EOS, tezos, stellar lumens, ADA and ethereum classic.
Interest in this type of product is growing, Hunter said, adding that Bitwise is holding some 2,000 calls per month with advisors.
According to a survey Bitwise published earlier this year, 72 percent of advisors said their clients were asking about crypto. About 6 percent of respondents already allocate funds to crypto assets, and this figure is set to double by the end of the year, Horsley said.
Nor does he see the current economic downturn due to the COVID-19 outbreak to be a major concern.
Still, he noted that "during a panic, everything can happen."
Further on, Horsley said, he hopes to list a potential bitcoin exchange-traded fund (ETF) – a product several companies have attempted to get approval from before – alongside the index fund.
"We’re continuing work on the bitcoin ETF, so the index fund here would exist alongside a future bitcoin ETF as another option," he said.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.