Crypto Community Sends Unsolicited Donations to Bitwise After It Reveals the Address Where It Holds Its Bitcoins: But There’s a Problem

Bitwise, which recently managed to launch the Bitcoin Spot ETF product, recently shared the wallet address where it holds the BTCs of the ETF in question.

Hundreds of transactions and unwanted donations were made by cryptocurrency users to the shared address. Small amounts of Bitcoin, BRC-20 tokens, Bitcoin domains, and various Bitcoin NFTs arrived in the wallet, raising more than $5,000 in total.

Bitwise CIO Matt Hougan stated that all assets sent to the wallet will be used for the benefit of BITB shareholders. “All assets accrue for the benefit of BITB shareholders,” Hougan said. If Bitwise inadvertently acquires assets, it can sell them for cash and distribute the cash pro rata to shareholders, according to the fund’s S-1 filing.

But the fund faces a potential problem. The United States Treasury has imposed sanctions on some BTC wallet addresses, requiring wallets that receive funds from these addresses to block the received Bitcoin and report the transaction to the Office of Foreign Assets Control. This poses a problem as BTC wallets cannot prevent funds from being sent to them.

This issue is being addressed at the custodian level, Hougan said. Bitwise currently uses crypto exchange Coinbase as its custody provider. A Coinbase spokesperson confirmed that the exchange blocks OFAC-sanctioned addresses and works with customers to ensure funds are blocked and reported as required by law. The spokesperson also cited a Coinbase blog post, stating that funds attempted to be sent to or received from a sanctioned address will be transferred to and held securely in an internal Coinbase custodial account.

*This is not investment advice.