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Bitwise has publicly revealed 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 publicly disclose its fund's wallet address. Shortly after this disclosure, the wallet began receiving a series of unsolicited contributions.
Unexpectedly, individuals began btc/870428a00094df3e4164bc15c5a9071ca7dfd47e436f2c7b95a251db0491a2ec” data-type=”link” data-id=”https://www.blockchain.com/explorer/transactions/btc/870428a00094df3e4164bc15c5a9071ca7dfd47e436f2c7b95a251db0491a2ec” target=”_blank” rel=”noopener”>sending small quantities of bitcoin to the wallet, with amounts such as 0.00042069 btc. Additionally, the wallet received several 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 shareholders of the BITB fund. Bitwise's policy, as detailed in its S-1 filing, indicates that assets received involuntarily can be converted into cash and distributed proportionately to shareholders.
Previous iterations of the S-1 filing suggested the possibility of in-kind distributions, but this option was omitted from the final approved version.
A critical concern raised in the crypto community relates to the handling of funds from OFAC-sanctioned addresses. The US Treasury has blacklisted certain bitcoin wallet addresses, requiring any receiving wallet to block and report any transactions from these addresses to the Office of Foreign Assets Control. This presents a unique challenge, since bitcoin wallets cannot reject incoming funds.
Hougan addressed this issue and stated that it is managed at the custodian level. Bitwise uses Coinbase as its escrow provider, and a Coinbase spokesperson stated that the exchange actively blocks OFAC-sanctioned addresses.
Bitwise's process indicates collaboration with clients to ensure funds are blocked and reported in accordance with legal requirements. Coinbase's approach is further detailed in a blog postclarifying that funds from sanctioned addresses are transferred and held securely in an internal Coinbase account.