Bitwise Files for 11 ETFs Tracking Tokens Like AAVE, ZEC, and TAO: What’s Next?

Bitwise Asset Management has filed with the SEC to launch 11 new ETFs that track a mix of direct token holdings and indirect exposures to digital assets including AAVE, Zcash (ZEC), and TAO. These filings represent a significant step toward broadening institutional access to decentralized finance (DeFi) and privacy tokens through regulated investment vehicles, amid evolving regulatory and market dynamics.

What happened

Bitwise Asset Management submitted filings to the U.S. Securities and Exchange Commission (SEC) proposing 11 new exchange-traded funds (ETFs) designed to provide exposure to a diversified set of crypto tokens. The proposed ETFs would combine direct holdings of digital tokens with indirect exposure through derivatives such as futures, swaps, or other instruments. Among the tokens targeted are DeFi-focused assets like AAVE, privacy-centric coins such as Zcash (ZEC), and TAO, a lesser-known digital asset.

According to the filings and accompanying statements, the hybrid investment approach aims to navigate regulatory and liquidity challenges by blending direct and indirect token exposure. This structure is intended to facilitate institutional investors’ access to tokens that have historically been difficult to include in traditional financial products due to their decentralized nature or privacy features.

Industry observers interpret Bitwise’s filings as one of the broadest and most diverse sets of crypto ETFs proposed by a single issuer, signaling growing institutional interest beyond mainstream assets like Bitcoin and Ethereum. Commentary from market analysts suggests that Bitwise’s approach reflects an innovative effort to balance regulatory compliance with investor demand for diversified exposure to DeFi and privacy tokens.

Some experts see this filing as indicative of a maturing regulatory environment, where the SEC might be increasingly open to considering ETFs with complex exposure profiles involving both direct token holdings and derivatives. However, alternative interpretations note that the reliance on derivatives could also represent a cautious strategy by Bitwise amid ongoing regulatory uncertainties surrounding direct token custody and compliance, particularly for privacy-focused assets.

Why this matters

The Bitwise filings mark a potential inflection point for institutional crypto investment products by proposing a hybrid ETF model that bridges direct token ownership with indirect derivative exposure. This structure could lower barriers for institutional investors seeking regulated access to a wider array of digital assets beyond the dominant Bitcoin and Ethereum markets.

By targeting DeFi tokens and privacy coins, Bitwise is addressing segments of the crypto ecosystem that have previously lacked accessible, regulated investment vehicles. This could encourage more diversified institutional participation in the crypto sector, potentially fostering deeper liquidity and market development for these tokens.

Moreover, the filings highlight evolving regulatory dynamics around crypto asset adoption. The SEC’s consideration of ETFs that incorporate both direct and indirect exposures may reflect an adaptive approach to complex digital assets, balancing investor protection concerns with innovation in financial products. Bitwise’s hybrid model could serve as a blueprint for future crypto ETFs navigating regulatory constraints while meeting investor demand.

What remains unclear

Despite the detailed filings, several critical questions remain unanswered. The SEC’s reaction to the proposed ETFs is not yet public, leaving regulatory approval and potential conditions uncertain. In particular, it is unclear how the SEC will assess the direct holding of tokens with privacy features like ZEC and DeFi protocols such as AAVE, which may raise compliance and anti-money laundering (AML) concerns.

The exact breakdown between direct token holdings and indirect derivative exposure within each ETF has not been fully disclosed, limiting insight into the funds’ risk profiles and compliance mechanisms. Additionally, Bitwise has not provided specifics on custody arrangements for the direct token components, an important operational detail given the security and regulatory complexities of holding privacy coins within a regulated fund.

Market reception and demand forecasts for these ETFs also remain unknown, as Bitwise has not released marketing or distribution plans. Without this information, it is difficult to assess the potential uptake by institutional investors or the broader impact on liquidity and pricing in the underlying token markets.

What to watch next

SEC feedback or decisions on the approval of Bitwise’s 11 proposed ETFs, particularly regarding direct token holdings of DeFi and privacy assets.
Disclosure by Bitwise of the specific composition, weighting, and operational logistics of the hybrid exposure model within each ETF.
Details on custody solutions and security protocols for direct holdings of privacy-focused tokens in a regulated fund structure.
Market response and institutional investor interest once further information or marketing plans are made public.
Regulatory developments or guidance from the SEC or other agencies that clarify compliance requirements for DeFi and privacy tokens in investment products.

Bitwise’s filings represent a notable advance in the institutionalization of crypto assets, particularly for DeFi and privacy tokens, but significant uncertainties remain. The outcome of regulatory review and further disclosures will be critical to understanding whether this hybrid ETF model can effectively balance compliance with investor demand and operational feasibility in a rapidly evolving crypto market landscape.

Source: https://www.coindesk.com/markets/2025/12/31/bitwise-files-for-11-strategy-etfs-tracking-tokens-including-aave-zec-tao. This article is based on verified research material available at the time of writing. Where information is limited or unavailable, this is stated explicitly.