The SEC’s approval marks a key milestone for bitcoin and ether ETPs, bringing their creation and redemption processes in line with those of traditional-asset ETFs and ETPs.

Bitwise Asset Management, the global crypto asset manager with over $10 billion in client assets, today announced that the Bitwise Bitcoin ETF (NYSE: BITB) and the Bitwise Ethereum ETF (NYSE: ETHW) will now offer in-kind creation and redemption of shares by the funds’ authorized participants. The SEC’s recent approval paves the way for greater trading efficiencies that could ultimately lower trading costs for investors in Bitwise’s spot crypto ETPs.

Until now, new shares of spot crypto ETPs in the U.S. could only be created or redeemed when authorized participants (APs)—large institutions that help regulate the supply and demand of ETP shares—exchanged U.S. dollars for shares of the fund. Following regulatory approval, APs can now deliver or receive bitcoin or ether in exchange for shares, a change that could contribute to tighter bid-ask spreads and reduce tax exposure. Already today, the Bitwise ETPs have among the lowest management fees, highest trading volumes, and tightest bid/ask spreads in the market—advantages that in-kind functionality could further enhance.

Because the approval of in-kind transactions applies only to authorized participants, individual investors in BITB and ETHW will not see any direct changes in how they access the funds.

“It might seem like esoteric news, but this approval is significant,” said Matt Hougan, Chief Investment Officer at Bitwise. “Part of the genius of ETFs and ETPs historically is how they’ve incentivized APs to help funds trade more efficiently, but for the past several years, the cash-only mechanism meant crypto ETPs couldn’t achieve the efficiency that traditional-asset products enjoy. In-kind creation is one of the final structural pieces that spot crypto ETPs need to reach their full potential as a mainstream investment. With this approval, crypto ETPs can unlock new tax efficiencies, tighter spreads, and new cost savings. That’s great news for investors.”

The approval marks another step forward in the U.S. integration of crypto assets into mainstream financial markets. “This is more than an operational milestone; it is a breakthrough for crypto’s role in the global financial system,” said Teddy Fusaro, President at Bitwise. “In-kind creation is how the most trusted ETFs and ETPs in the world are built. With this approval, crypto ETPs move onto that same foundation, bringing them in line with the design that institutions trust most. It’s one more sign that crypto is becoming a lasting part of modern portfolios. We’re proud to play a role in building that bridge.”

The Bitwise Bitcoin ETF (BITB) and the Bitwise Ethereum ETF (ETHW) (each, a “Fund” and together the “Funds”) are not suitable for all investors. An investment in either Fund is subject to a high degree of risk, has the potential for significant volatility, and could result in significant or complete loss of investment. BITB and ETHW are not investment companies registered under the Investment Company Act of 1940 (the “1940 Act”). As a result, shareholders of BITB or ETHW do not have the protections associated with mutual funds or ETFs registered under the 1940 Act.

About Bitwise

Founded in 2017, Bitwise offers industry-leading education and a broad suite of professional investment products spanning ETPs, private funds, multi-strategy solutions, separately managed account strategies, and staking. The firm has over 100 technology and investment professionals, and serves as a partner to thousands of investment professionals and financial institutions looking to understand and gain exposure to bitcoin and other crypto assets.

Risks and Important Information

This material must be preceded or accompanied by a prospectus. Please read the prospectus carefully before investing. To obtain a current prospectus visit: for BITB, bitbetf.com/prospectus; for ETHW, ethwetf.com/prospectus.

Shares of ETPs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The NAV may not always correspond to the market price of bitcoin or ether and, as a result, Creation Units may be created or redeemed at a value that is different from the market price of the Shares. Authorized Participants’ buying and selling activity associated with the creation and redemption of Creation Units may adversely affect an investment in the Shares.

Fund returns are calculated net of expenses. NAV and Index performance are calculated based on the official closing values as of 4:00 p.m. ET. Market Price performance reflects the midpoint of the bid-ask spread as of 4:00 p.m. ET, and does not represent the returns an investor would receive if shares were traded at other times.

ETHW will not participate in the proof-of-stake validation mechanism to earn additional ether or seek other means of generating income from its ether holdings.

The amount of bitcoin or ether represented by a Share will continue to be reduced during the life of the Fund due to the transfer of the Fund’s bitcoin or ether to pay for the Sponsor’s management fee, and to pay for litigation expenses or other extraordinary expenses. This dynamic will occur irrespective of whether the trading price of the Shares rises or falls in response to changes in the price of bitcoin or ether.

There is no guarantee or assurance that the Funds’ methodology will result in the Funds achieving positive investment returns or outperforming other investment products.

Investors may choose to use the Funds as a means of investing indirectly in bitcoin or ether. An investment in either Fund is not a direct investment in bitcoin or ether. Because the value of the Shares is correlated with the value of the bitcoin or ether held by the Fund, it is important to understand the investment attributes of, and the market for, bitcoin and ether.

Bitcoin Risk. There are significant risks and hazards inherent in the bitcoin market that may cause the price of bitcoin to fluctuate widely. The Fund’s bitcoin may be subject to loss, damage, theft or restriction on access. Investors considering a purchase of Shares should carefully consider how much of their total assets should be exposed to the bitcoin market, and should fully understand, be willing to assume, and have the financial resources necessary to withstand the risks involved in the Fund’s investment strategy.

Ether Risk. There are significant risks and hazards inherent in the ether market that may cause the price of ether to fluctuate widely. The Fund’s ether may be subject to loss, damage, theft or restriction on access. Investors considering a purchase of Shares should carefully consider how much of their total assets should be exposed to the ether market, and should fully understand, be willing to assume, and have the financial resources necessary to withstand the risks involved in the Fund’s investment strategy.

Liquidity Risk. The market for bitcoin and ether is still developing and may be subject to periods of illiquidity. During such times it may be difficult or impossible to buy or sell a position at the desired price. Possible illiquid markets may exacerbate losses or increase the variability between the Funds’ NAV and their market price. The lack of active trading markets for the Shares may result in losses on investors’ investments at the time of disposition of Shares.

Regulatory Risk. Future and current regulations by a U.S. or foreign government or quasigovernmental agency could have an adverse effect on an investment in the Funds.

Blockchain Technology Risk. Certain of the Funds’ investments may be subject to the risks associated with investing in blockchain technology. The risks associated with blockchain technology may not fully emerge until the technology is widely used. Blockchain systems could be vulnerable to fraud, particularly if a significant minority of participants colluded to defraud the rest. Because blockchain technology systems may operate across many national boundaries and regulatory jurisdictions, it is possible that blockchain technology may be subject to widespread and inconsistent regulation.

Nondiversification Risk. The Funds are nondiversified and may hold a smaller number of portfolio securities than many other products. To the extent the Funds invest in a relatively small number of issuers, a decline in the market value of a particular security held by the Funds may affect their value more than if they invested in a larger number of issuers.

Recency Risk. The Funds are recently organized, giving prospective investors a limited track record on which to base their investment decision. If the Funds are not profitable, the Funds may terminate and liquidate at a time that is disadvantageous to Shareholders.

Bitwise Investment Advisers, LLC serves as the sponsor of the Funds. Foreside Fund Services, LLC serves as the Marketing Agent, and is not affiliated with Bitwise Investment Advisers, LLC, Bitwise, or any of its affiliates.

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