Hashdex Selects BitGo as Custodian Amid SEC’s Shift Towards ‘Cash Create’ Model in Bitcoin ETF Arena

In a significant development in the cryptocurrency market, Hashdex, a prominent player in the Bitcoin ETF sector, has updated its application strategy, now choosing BitGo as its custodian. This move comes amid a broader shift influenced by recent guidelines from the U.S. Securities and Exchange Commission (SEC) regarding the structure of Bitcoin ETFs.

Hashdex’s Strategic Choice:

Hashdex’s decision to partner with BitGo for cryptocurrency custody marks a notable divergence from the industry norm. This shift revealed in an amended S-1 filing, contrasts with the choices of its competitors. While most have preferred Coinbase, Fidelity has adopted self-custody, and VanEck has aligned with Gemini. Hashdex’s unique approach sets a new precedent in the evolving ETF landscape.

SEC’s New Emphasis:

Following detailed discussions with several Bitcoin ETF applicants, including prominent entities like BlackRock, Valkyrie, Fidelity, Grayscale, and Ark, the SEC has underscored incorporating the “Cash Create” model in ETF applications. This model differs significantly from the previously considered “in-kind redemptions.” The SEC has set a December 29 deadline for final application amendments.

Ark 21Shares Adapts to Regulatory Shift:

In response to the SEC’s guidance, Ark 21Shares, according to Bloomberg ETF analyst James Seyffart, has amended its S-1 form to adopt the “Cash Create” model. Despite no apparent advantage for being the first to move, Ark 21Shares remains optimistic about a favorable outcome by the SEC’s January 10, 2024, decision deadline.

The landscape for Bitcoin ETFs is undergoing a significant transformation, driven by regulatory shifts and strategic decisions by key players. The adoption of the “Cash Create” model by Ark 21Shares exemplifies these changes. The industry awaits critical regulatory decisions, which are expected by January 10, 2024, and will shape the future of cryptocurrency investments.