Bitwise Files Amended S-1s for Spot Dogecoin ETF and Aptos ETFs: What This Means for Crypto Investors

• What's New in Bitwise's Updated ETF Filings?
• How Do Bitwise's ETF Structures Differ From Previous Filings?
• What Does the In-Kind Creation Provision Mean for Dogecoin ETF?
• Why Is the Aptos ETF Filing Significant?
• How Does This Fit Into the Broader Crypto ETF Landscape?
• What Are the Potential Implications for Crypto Investors?
• What's Next in the Approval Process?
• How Does This Affect the Broader Crypto Market?
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Bitwise Asset Management has submitted amended S-1 registration statements for its proposed Spot dogecoin ETF and Aptos ETFs to the U.S. SEC. The updated filings come just two weeks after regulators delayed their review of the Dogecoin ETF. Industry experts view these developments as positive signs of SEC engagement, potentially paving the way for future crypto ETF approvals. The filings reveal interesting structural differences, including in-kind creations for Dogecoin and a first-of-its-kind focus on Aptos' native token. As the crypto ETF landscape evolves, these filings could represent significant milestones in institutional crypto adoption.

What's New in Bitwise's Updated ETF Filings?

Bitwise Asset Management made waves in the crypto investment space by submitting amended S-1 registration statements for both its Spot Dogecoin ETF and Aptos-focused ETFs. The San Francisco-based asset manager originally filed for the Dogecoin ETF in January 2024, followed by the Aptos ETF application in March. These updated filings, submitted on Thursday, June 27th, 2024, come exactly two weeks after the SEC extended its review period for the Dogecoin ETF proposal.

The revised filings have drawn positive attention from market analysts. Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, commented on the development: "Good signs here, as this indicates SEC engagement and tracks with other approvals on the horizon." This sentiment reflects growing Optimism that the SEC may be moving toward greater acceptance of cryptocurrency-based investment products.

Bitwise already has several crypto ETF offerings in the market, including its bitcoin ETF (BITB), and multiple pending applications including one for XRP. The company's experience in navigating the regulatory landscape positions it well for these new filings. The Dogecoin ETF in particular represents an interesting case, as it would be among the first meme-coin-based ETFs if approved.

How Do Bitwise's ETF Structures Differ From Previous Filings?

The initial Dogecoin S-1 filing revealed that Bitwise was seeking to register its ETF under the Securities Act of 1933 (the '33 Act), rather than the Investment Company Act of 1940 (the '40 Act) used by competitors like Grayscale and Osprey Funds. This structural difference carries significant implications for investors and the funds' operations.

The '40 Act typically provides deeper investor protections, including stricter governance requirements. However, the '33 Act is commonly used for commodity-based and physically-backed ETFs. This approach may give Bitwise more flexibility in structuring these funds, though it also subjects them to different regulatory scrutiny. The choice suggests Bitwise may be positioning these products more as commodity exposures than traditional securities.

For the Aptos ETF, Bitwise registered a Delaware statutory trust on February 28th and filed the corresponding S-1 with the SEC on March 5th. Notably, the fund doesn't propose a staking mechanism, despite Aptos being a proof-of-stake blockchain. This conservative approach might reflect regulatory concerns about staking services in the wake of the SEC's actions against platforms offering similar services.

What Does the In-Kind Creation Provision Mean for Dogecoin ETF?

One significant update in Bitwise's amended Dogecoin ETF filing is the inclusion of in-kind creation and redemption mechanisms. This provision WOULD allow authorized participants to deliver or receive actual Dogecoin rather than cash when creating or redeeming ETF shares—a feature absent from the initial January filing.

In-kind transactions are generally preferred in the ETF space for several reasons. They can reduce slippage (the difference between expected and actual trade prices), improve tax efficiency, and better align the ETF's performance with its underlying asset. Market participants view this feature as almost a regulatory necessity for future spot crypto ETFs, as it helps maintain the fund's integrity and tracking accuracy.

Coinbase Custody is slated to serve as the custodian for the Dogecoin held by the ETF. However, the SEC hasn't yet approved the fund, having extended its review period on June 12th to evaluate market risks and investor protection concerns. The initial Dogecoin filing dates back to March 3rd, with public comments opening shortly thereafter.

Why Is the Aptos ETF Filing Significant?

Bitwise's Aptos ETF proposal represents a first in several respects. If approved, it would become the first U.S.-based fund exclusively focused on APT, the native token of the Aptos blockchain. Aptos, developed by former Meta (Facebook) employees, is a relatively new LAYER 1 blockchain that has gained attention for its technical innovations and backing from prominent investors.

The Aptos blockchain uses a novel consensus mechanism called Block-STM that enables high throughput while maintaining decentralization. Despite being a proof-of-stake network, Bitwise's ETF proposal notably excludes staking rewards—a decision that might reflect regulatory caution but could impact the fund's potential returns compared to direct APT ownership.

Bitwise will need to file a FORM 19b-4 to trigger the SEC's review process for the Aptos ETF. Once the SEC acknowledges the registration, a 240-day countdown begins for the agency to issue a final decision—a timeline that has become standard for crypto-related ETF applications.

How Does This Fit Into the Broader Crypto ETF Landscape?

The amended filings come amid a flurry of activity in the crypto ETF space. Just one day before Bitwise's updated submissions, asset manager IDX filed for a hybrid ETF offering exposure to both Gold and Bitcoin. That proposed fund would invest through a mix of futures, options, swaps, and other exchange-traded products rather than holding physical assets.

Bitwise's approach with both the Dogecoin and Aptos ETFs appears more straightforward—seeking to provide direct exposure to the underlying cryptocurrencies. The company's existing BITB Bitcoin ETF has demonstrated strong market performance, suggesting investor appetite for such products when properly structured and regulated.

These developments occur against the backdrop of increasing institutional interest in cryptocurrency exposure. Traditional finance players are recognizing that digital assets represent an emerging asset class that can't be ignored, and ETFs provide one of the most accessible on-ramps for institutional capital.

What Are the Potential Implications for Crypto Investors?

For retail and institutional investors alike, the potential approval of these ETFs could open new avenues for crypto exposure. ETFs offer several advantages over direct cryptocurrency ownership, including easier tax reporting, regulatory oversight, and integration with traditional brokerage accounts.

The Dogecoin ETF in particular could bring legitimacy to meme coins as an investable asset class. While Bitcoin and ethereum have gained recognition as "serious" cryptocurrencies, Dogecoin's origins as a joke have kept it somewhat on the fringes. An SEC-approved ETF could change that perception.

For Aptos, an ETF would represent significant validation of its technology and ecosystem. As a newer blockchain competing with established players like Solana, having a dedicated investment vehicle could boost its profile among institutional investors and accelerate ecosystem development.

What's Next in the Approval Process?

The SEC's review process for these ETFs will be closely watched by market participants. For the Dogecoin ETF, the clock is already ticking on the 240-day decision window that began when the SEC acknowledged the initial filing. The agency's decision to extend the review period in June suggests they're conducting thorough due diligence.

For the Aptos ETF, Bitwise still needs to file the crucial Form 19b-4 to officially start the SEC's review clock. Market observers will be watching for any indications about how the SEC views these more niche cryptocurrency offerings compared to Bitcoin and Ethereum products.

Approval of either fund could trigger a wave of similar filings for other altcoins, potentially reshaping the crypto investment landscape. However, rejection could reinforce the perception that the SEC remains cautious about expanding beyond Bitcoin and Ethereum in its ETF approvals.

How Does This Affect the Broader Crypto Market?

The crypto market has shown sensitivity to ETF-related news in the past, with Bitcoin's price often reacting to developments in spot Bitcoin ETF applications. While Dogecoin and Aptos are smaller markets, positive developments for their ETFs could still impact prices and trading volumes.

Perhaps more importantly, successful launches of these ETFs would demonstrate that the SEC is willing to consider a broader range of crypto assets for regulated investment products. This could encourage more projects to focus on compliance and investor protection, potentially leading to greater institutional participation across the crypto ecosystem.

As always in crypto, regulatory clarity remains the holy grail. Each step toward approved, regulated products helps establish precedents and frameworks that can guide future innovation while protecting investors.

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What are the key differences between Bitwise's ETF filings and previous crypto ETF applications?

Bitwise's filings stand out by using the Securities Act of 1933 rather than the Investment Company Act of 1940 used by many competitors. This '33 Act approach is more common for commodity-based ETFs and may offer greater flexibility in fund structure, though with different investor protections.

Why is the in-kind creation provision important for the Dogecoin ETF?

In-kind creations allow authorized participants to exchange actual Dogecoin rather than cash when creating or redeeming ETF shares. This reduces slippage, improves tax efficiency, and helps the ETF better track its underlying asset—features considered essential for spot crypto ETFs.

What makes the Aptos ETF filing unique?

The Aptos ETF would be the first U.S.-based fund focused solely on APT, the native token of the Aptos blockchain. Despite Aptos using proof-of-stake, the ETF notably excludes staking rewards, likely reflecting regulatory considerations around staking services.

How long does the SEC typically take to decide on crypto ETF applications?

After acknowledging a filing, the SEC has up to 240 days to issue a final decision. The clock starts when the SEC deems the application complete, which for the Aptos ETF will require submission of a Form 19b-4.

What are the potential benefits of these ETFs for crypto investors?

These ETFs could provide easier, more regulated access to crypto exposure with benefits like simplified tax reporting and integration with traditional brokerage accounts. They may also bring greater legitimacy to their respective cryptocurrencies as institutional investment options.