Bitwise Asset Management has submitted a preliminary application for an ETF based on the altcoin Chainlink. This move indicates a growing interest in diversified investments in cryptocurrencies.
How Will Bitwise’s Chainlink ETF Operate?
In its application, Bitwise outlined that the core objective of the ETF is to accurately reflect the price of LINK tokens. Coinbase Custody Trust Company has been named as the custodian, while Coinbase will act as the principal transaction broker. The ETF shares are expected to be listed on a national exchange in the United States, though the exact platform has not yet been disclosed. The application emphasizes a structure that operates through traditional creation and redemption mechanisms, allowing for transactions in cash or assets. The ETF will manage these operations through a method known as 'Trust-Directed Trade,' conducted via the main transaction broker.
No Staking Mechanism in the ETF
One notable aspect of the ETF application is the absence of any staking plans for LINK tokens. Despite the SEC’s recent clarification that staking activities do not violate federal securities laws, Bitwise’s Chainlink ETF will solely rely on the spot market price. This approach aims to provide investors with direct price exposure, excluding enhancements from staking rewards.
Prospects and Significance of Chainlink
Bitwise’s initiative demonstrates a shift in current crypto-based ETFs beyond Bitcoin and Ethereum, with a focus on single-asset offerings. Grayscale has also recently applied to convert its Avalanche Trust into a spot ETF. The flurry of activity among issuers signifies Wall Street’s accelerating effort to broaden its range of crypto investment products. Matt Hougan, the Chief Investment Officer of Bitwise, described Chainlink as one of the 'cleanest' investment options in a report published in July. He noted the potential surge in LINK’s significance with the increasing trend toward tokenization.
Bitwise's application for the Chainlink ETF confirms the growing interest in cryptocurrency investment diversification. With the increasing importance of Chainlink, this ETF opens new opportunities for investors.
