Bitwise channels Bitcoin to ETF wallet for the benefit of fund investors
Bitwise, a prominent player in the industry, has made a groundbreaking move by publicly revealing the wallet address for its Bitcoin ETF fund. This bold move has attracted a significant amount of unsolicited Bitcoin from supporters of the ETF.
To everyone’s surprise, individuals started sending small amounts of Bitcoin to the wallet, with contributions as low as 0.00042069 BTC. In addition to Bitcoin, the wallet also received various BRC-20 tokens, Bitcoin domain names, and a collection of Bitcoin NFTs. The total value of these unexpected assets amounted to over $5,000.
Matt Hougan, the Chief Investment Officer of Bitwise, explained that these assets would ultimately benefit the shareholders of the BITB fund. According to Bitwise’s policy, as outlined in its S-1 filing, any involuntarily received assets can be converted into cash and distributed proportionally among the shareholders.
Although previous versions of the S-1 filing hinted at the possibility of distributing assets in-kind, this option was ultimately excluded from the final approved version.
One of the concerns raised in the crypto community revolves around handling funds from addresses sanctioned by OFAC (Office of Foreign Assets Control). The U.S. Treasury has blacklisted certain Bitcoin wallet addresses, requiring any recipient wallet to block and report any transactions from these addresses to the authorities. This poses a unique challenge since Bitcoin wallets cannot reject incoming funds.
Hougan addressed this issue by stating that it is managed at the custodian level. Bitwise relies on Coinbase as its custody provider, and a spokesperson from Coinbase confirmed that the exchange actively blocks addresses sanctioned by OFAC.
Bitwise’s process involves working closely with clients to ensure that funds are blocked and reported in compliance with legal requirements. Coinbase’s approach is further elaborated in a blog post, which explains that funds from sanctioned addresses are transferred to and securely held in an internal Coinbase account.
In other news, tokens have experienced significant gains, while Bitcoin has remained unaffected by the outflows from GBTC (Grayscale Bitcoin Trust) on Thursday.
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