Bitwise: Bitcoin sent to ETF wallet to benefit fund investors

Bitwise has publicly disclosed its Bitcoin ETF fund wallet, attracting unsolicited Bitcoin from ETF supporters.

Bitwise, a prominent player in the field, became the first issuer of a spot Bitcoin ETF to reveal the wallet address for its fund publicly. Shortly after this disclosure, the wallet began to receive an array of unsolicited contributions.

Unexpectedly, individuals began sending small quantities of Bitcoin to the wallet, with amounts such as 0.00042069 BTC. Additionally, the wallet received various BRC-20 tokens, Bitcoin domain names, and a collection of Bitcoin NFTs. The total value of these unsolicited assets exceeded $5,000.

Bitwise Chief Investment Officer Matt Hougan explained that these assets would ultimately benefit the shareholders of the BITB fund. Bitwise’s policy, as detailed in its S-1 filing, indicates that involuntarily received assets may be converted into cash and distributed proportionally among shareholders.

Previous iterations of the S-1 filing suggested the possibility of in-kind distributions, but this option was omitted in the final approved version.

You might also like: Spot Bitcoin ETFs see $80m net outflows on Thursday

A critical concern raised in the crypto community relates to handling funds from OFAC-sanctioned addresses. 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 Office of Foreign Assets Control. This presents a unique challenge, given that Bitcoin wallets cannot refuse incoming funds.

Hougan addressed this issue, stating that it is managed at the custodian level. Bitwise utilizes Coinbase as its custody provider, and a spokesperson from Coinbase affirmed that the exchange actively blocks OFAC-sanctioned addresses.

Bitwise’s process indicates collaboration with clients to ensure that funds are blocked and reported in compliance with legal requirements. Coinbase’s approach is further detailed in a blog post, clarifying that funds from sanctioned addresses are transferred to and securely held in a Coinbase internal account.

Read more: Tokens surge double digits as Bitcoin shrugs GBTC stream
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