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- Bitwise now uses The Network Firm for daily ETF asset audits.
- Public wallet tracking is replaced by verified third-party checks.
- CPA-based reports on assets and liabilities will follow soon.
Bitwise Asset Management has introduced a new system to verify reserves for its Bitcoin and Ethereum ETFs. The move comes after growing demand for better transparency in the crypto sector. Daily third-party audits now replace the firm’s earlier practice of listing public wallet addresses.
The Network Firm, a U.S.-based independent accounting firm, now audits the holdings of the Bitwise Bitcoin ETF (BITB) and the Ethereum ETF (ETHW). These audits are conducted on a daily basis. They certify that on-chain reserves are equivalent to shares that investors possess.
It seeks to disclose that every share of the ETF is backed by actual underlying crypto-assets. Also incorporated within this new format are reporting plans based on CPAs. These will confirm fund holdings, along with liabilities. Bitwise plans to distribute these reports during the next several weeks. It asserts that this will give clear sight of the reserves.
Stronger Checks After the FTX Shock
FTX’s meltdown changed the way most businesses approach handling crypto fund transparency. Investors lost faith when they discovered holes in reserves. Bitwise, among others, has responded to that with the utilization of proof-of-reserve audits.
These frequent reviews are consistent with conventional accounting standards. It makes the information more understandable for regulators and investors. These also brings Bitwise up to date with rising demands from regulators.
It does not rely on public monitoring, which is often misleading. Instead, it focuses on professional formal reviews of accounting. It gives a better, more accurate picture of fund safety.
Competing in the ETF Market with Transparency
Bitwise holds $4.9 billion worth of Bitcoin from its ETF, and $358 million worth of the Ethereum ETF. These are small numbers compared to larger players such as BlackRock. However, Bitwise intends to differentiate itself through greater transparency.
By adding third-party proof-of-reserves and CPA verification, the company presents itself as having a safer proposition for investors. These are long-term plans for Bitwise to earn the confidence of investors. In the last month, Bitwise recently added an options income strategy ETF that is correlated with shares of MSTR.
While that fund itself doesn’t invest in MSTR, it generates income through covered calls, but that still carries the underlying risk. In these two steps, Bitwise sends a clear message that there is a direction for the crypto funds to give better protection along with better transparency.
This can be the new standard for future digital asset ETFs. In the future, more cryptocurrency businesses will incorporate professional audits every day to be more credible. This move on Bitwise can be a new standard for digital asset investment disclosure.
Related Reading: Bitcoin Drops 4%: Are Whale Moves Signalling Market Shifts?
