The Bitwise Bitcoin ETF (BITB) has published the on-chain addresses of its holdings – the first issuer to do so among the 11 approved funds.
This major decision enables public verification of BITB’s holdings and flows directly on the blockchain.
The move by Bitwise aligns with the core ethos of Bitcoin (BTC), which emphasizes transparency and open verification. Bitwise also expressed its ambition to expand these efforts. Collaborations with firms like Hoseki are on the horizon, aiming to provide real-time cryptographic attestations.
By publishing the Bitcoin addresses of its holdings, BITB offers a new level of transparency. Investors can now directly verify the ETF’s holdings on the blockchain, ensuring accuracy and security.
However, investors need to understand that the addresses published by Bitwise will only show proof of its asset holdings, not the firm’s proof of reserves.
The U.S. Securities and Exchange Commission (SEC) approved several spot Bitcoin ETFs, with BlackRock and Fidelity’s offerings leading the pack. BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) collectively accounted for 70% of all inflows into spot BTC exchange-traded products, each amassing inflows of $1.9 billion and $1.6 billion, respectively. These two ETFs quickly reached $1 billion in assets under management (AUM), outperforming other approved funds from asset managers like Bitwise and ARK 21Shares, which saw over $500 million in inflows.
In contrast, Grayscale’s Bitcoin Trust (GBTC) experienced significant outflows, losing nearly $4 billion in value shortly after the SEC approved spot ETFs. Despite being the largest spot BTC ETF with over $20 billion in market capitalization and holding more than 500,000 Bitcoins, Grayscale transferred about 93,700 BTC to Coinbase Prime wallets. This move seemingly created sell pressure on BTC, as the fund liquidated tokens to meet redemption demands.
Grayscale’s ETF, which charges a 1.5% fee, the highest among its peers, faced criticism for its cost structure. CEO Michael Sonnenshein defended the fee, citing the ETF’s size, liquidity, and tenure as the market’s oldest spot BTC ETF. He noted that newer issuers offered lower fees, as low as 0.21%, to attract investors in a competitive market.