Hashdex Chooses BitGo as Custodian Amid SEC’s Transition to ‘Cash Create’ Model in Bitcoin ETF Sphere

In a major development within the cryptocurrency market, Hashdex, a prominent player in the Bitcoin ETF sector, has made a significant change to its application strategy by selecting BitGo as its custodian. This decision comes as a response to recent guidelines from the U.S. Securities and Exchange Commission (SEC) regarding the structure of Bitcoin ETFs.

Hashdex’s strategic move to partner with BitGo for cryptocurrency custody sets it apart from its competitors in the industry. While most competitors have chosen Coinbase, Fidelity has opted for self-custody, and VanEck has aligned with Gemini. Hashdex’s unique approach establishes a new precedent in the evolving landscape of ETFs.

The SEC’s emphasis on incorporating the “Cash Create” model in ETF applications has influenced this decision. After conducting detailed discussions with various Bitcoin ETF applicants, including BlackRock, Valkyrie, Fidelity, Grayscale, and Ark, the SEC has stressed the importance of this model, which differs significantly from the previously considered “in-kind redemptions.” The final application amendments must be submitted by December 29, according to the SEC.

Responding to the SEC’s guidance, Ark 21Shares, as per Bloomberg ETF analyst James Seyffart, has amended its S-1 form to adopt the “Cash Create” model. Despite not having any apparent advantage for being the first to make this move, Ark 21Shares remains optimistic about a favorable outcome by the SEC’s decision deadline on January 10, 2024.

The landscape for Bitcoin ETFs is undergoing a significant transformation due to regulatory changes and strategic decisions made by key players. Ark 21Shares’ adoption of the “Cash Create” model exemplifies these shifts. The industry eagerly awaits crucial regulatory decisions that will shape the future of cryptocurrency investments, with an expected announcement by January 10, 2024.