Asset management firm Bitwise received significant BTC donations and praise from members of the crypto community following the release of its on-chain address Bitcoin ETF Trust (BITB).
In a Jan. 24 post on the social media platform X (formerly Twitter), Bitwise became the first U.S. Bitcoin ETF to publish the addresses of its holdings. According to the company, this initiative will facilitate easy verification of BITB holdings and is in line with the core ethical principles of transparency within the BTC ecosystem.
“Publishing on-chain addresses is a first step towards increasing public transparency. As the infrastructure continues to develop, we hope to do more, such as working with companies like Hoseki to provide cryptographic proof in real time,” Bitwise added.
Bitwise's BITB is one of the best performing ETFs among the “Newborn Nine”. According to official information on its website, the ETF holds 12,338 BTC in trust, worth around $490 million.
BTC donations
After the public disclosure, the Bitwise address began receiving BTC donations and entries from members of the crypto community.
Alexander Leishman, CEO and CTO of BTC investment firm River, noted that an unnamed individual sent 6969 sats to the Bitwise ETF.
Pseudonymous mempool developer Mononaut also said that the Bitwise address was “donated with an inscription by what I can only assume is Elizabeth Warren.”
Meanwhile, the donations have raised concerns about what this could mean for the ETF. Market analyst Dylan LeClair warned that donations should not come from a non-OFAC compliant address.
Eric Balchunas, senior ETF analyst at Bloomberg, noted that this is the first time an underlying asset has been donated to an ETF. According to him, this was a groundbreaking moment because “the [only] The way assets get into an ETF is only through the ` giving money to the issuer.”
He added:
“This gets around all of that, but it doesn’t create any new shares. I think it could be treated like securities lending income and rolled back into net asset value like a discount to the expense ratio.”
Address concerns
Meanwhile, some community members expressed alarm over Bitwise's choice of address. Some questioned why an “old single-sig address” was used for asset custody, while others raised concerns about the lack of “test transactions” before asset transfers to the address.
In response to these questions, Bitwise co-founder and chief technology officer Hong Kim clarified that the company's custody service provider, Coinbase Custody, has a policy of not reusing addresses after issuance. Consequently, the address is rotated after an output transaction.
“Coinbase maintains multiple shards of the same key in its cold storage custody setup and rotates addresses after the issuance transaction, but agrees that on-chain multisig would be demonstrably clearer,” Kim explained.
Additionally, Kim assured the community that Bitwise is actively working on an address update for Taproot in collaboration with its custodian.
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