Bitwise Seeks SEC Approval for Spot Chainlink ETF Tracking LINK Price

TLDR:

• Bitwise files for a spot Chainlink ETF, aiming to track LINK’s price directly for investors.
• The proposed ETF would hold LINK directly, with Coinbase acting as custodian and agent.
• SEC’s approval of the ETF remains uncertain, with altcoin ETFs still facing regulatory hurdles.
• The firm’s approach simplifies the ETF structure to increase chances of SEC approval.

On August 26, Bitwise Asset Management filed an application with the U.S. Securities and Exchange Commission for a spot Chainlink Exchange-Traded Fund. This move has generated significant attention, as it aims to track the price of LINK directly, potentially opening up the ETF market to a broader range of investors. 

However, despite this positive news, the price of Chainlink has declined over the past week, highlighting ongoing volatility in the crypto market.

Bitwise Chainlink ETF Design and Structure

The Bitwise filing outlines a straightforward design for the proposed ETF. If approved, the fund would hold Chainlink tokens directly and track the CME CF Chainlink-Dollar Reference Rate. This setup is similar to other existing spot ETFs for Bitcoin and Ethereum, where the fund holds the underlying asset and tracks its price movements. 

Notably, Coinbase Custody Trust Company would act as the custodian, while Coinbase Prime would handle execution. The ETF would also offer both cash and in-kind creation and redemption options, providing flexibility for investors.

Unlike other altcoin-focused products, the proposed ETF would not involve staking or complex structures, which could simplify the approval process with the SEC. This decision reflects Bitwise’s attempt to keep the product as straightforward as possible, focusing solely on the spot price of Chainlink, without the complexities of staking or other DeFi operations. 

By doing so, Bitwise appears to be navigating the SEC’s cautious stance on altcoin ETFs, especially in light of the agency’s previous guidance on staking in proof-of-stake networks.

Market Context and Recent Chainlink Price Performance

Despite the filing, Chainlink’s price has faced challenges in recent days. As of today, the price of LINK stands at $24.27, reflecting a 1.20% decline over the last 24 hours and a 1.32% drop over the past week.

This comes amid broader market trends, where institutional interest in Chainlink has been building, but the token’s price has not yet mirrored this optimism. The ongoing fluctuations in LINK’s price raise questions about the token’s short-term trajectory, particularly in the face of the potential for a U.S.-listed ETF.

Meanwhile, the SEC’s approach to altcoin ETFs remains uncertain, adding an extra layer of complexity to the situation. Although the SEC has approved spot ETFs for Bitcoin and Ethereum, its stance on other digital assets like Chainlink is less clear. The outcome of Bitwise’s filing could set an important precedent for future altcoin ETFs, influencing how the SEC evaluates similar proposals from other crypto projects.

Bitwise’s Strategic Positioning in the ETF Market

Bitwise’s filing comes at a time when the U.S. crypto ETF market is expanding, with institutional investors increasingly looking for ways to gain exposure to digital assets in a regulated environment. 

By targeting Chainlink, Bitwise is tapping into a growing interest in decentralized oracle networks. Chainlink has seen notable institutional investment, and its role in connecting blockchain networks to real-world data positions it as a key player in the broader crypto ecosystem.

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