• Novel fund would offer exposure weighted by market value

• Pro-crypto Trump administration has galvanized issuers

The US Securities and Exchange Commission on Thursday approved part of an application for a novel exchange-traded fund that would track the two largest cryptocurrencies.

The Bitwise Bitcoin and Ethereum ETF from Bitwise Asset Management would seek to provide investors with a balanced exposure to the two digital assets, weighted by their market capitalization. The structure of the fund will be similar to existing ETFs that hold either Bitcoin or Ether directly.

The US regulator in a filing approved the so-called form 19b-4, one step in the overall process that would allow the product to start trading. The Bitwise fund still needs an approval for its pending registration application known as an S-1 — both steps are required to start trading.

Bitwise submitted paperwork for the joint fund to regulators last November after the US presidential election, which ushered in the crypto-friendly administration of President Donald Trump. The Republican has pledged to implement supportive regulations for the digital-asset sector as part of a plan to make the US the crypto capital of the world.

Investment firms are now peppering the SEC with proposals to start more crypto portfolios. Issuers are “probing the SEC’s boundaries, with unique filings including memecoin ETFs,” Bloomberg Intelligence Senior Government Analyst Nathan Dean wrote in a note.

For instance, Bitwise has proposed an ETF that would track Dogecoin. This cryptoasset is an archetypal memecoin — a type of token with no inherent worth whose price waxes and wanes under the capricious spotlight of social media.

The SEC has also received applications for ETFs tracking the likes of XRP, Solana and Litecoin, tokens that claim to be grounded in some kind of utility.

US ETFs investing directly in Bitcoin rolled out at the start of 2024 and proved to be a major success, given the largest cryptocurrency’s role — albeit disputed — as a modern-day store of value. The group of one dozen products, including from Bitwise, has amassed total assets of more than $121 billion. Ether funds followed and have more than $11 billion of funds under management.