Bitwise Enhances ETF Transparency with Daily Proof-of-Reserves

Bitwise, a prominent crypto asset manager, has announced a significant enhancement in the transparency of its spot bitcoin and ether exchange-traded funds (ETFs). The company has introduced third-party proof-of-reserves verifications through The Network Firm, a U.S. accounting company. This new process involves daily on-chain holdings verification, ensuring that the balances are reconciled with the number of fund shares outstanding. This move replaces Bitwise’s previous practice of publicly listing nearly 90 wallet addresses on its website.

The Network Firm will now confirm the on-chain holdings daily for the Bitwise Bitcoin ETF (BITB) and Bitwise Ethereum ETF (ETHW). This daily verification process is designed to provide a more comprehensive and easily readable approach to transparency, assuring investors that fund holdings match obligations. In the coming weeks, Bitwise plans to add a second layer of transparency with daily CPA-attested reports. These reports will verify not just asset balances but also fund liabilities, further enhancing the trust and confidence of investors.

The implementation of proof-of-reserve audits has become a growing trend in the cryptocurrency industry, particularly after the collapse of FTX in November 2022. The collapse of FTX highlighted the importance of transparency and reserve verification, as the exchange was unable to meet its obligations due to a lack of customer assets. Since then, platforms’ reserves have been a major concern for investors, and Bitwise’s new measures are a response to this growing demand for transparency.

Bitwise’s bitcoin ETF currently has $4.9 billion in net assets, while its ether ETF holds $358 million in net assets. These figures are significantly lower than the market leaders in their respective sectors. However, the enhanced transparency measures are expected to boost investor confidence and potentially attract more assets to Bitwise’s ETFs. The company’s commitment to transparency and accountability is a positive step towards building trust in the cryptocurrency industry.