Date: July 25, 2022
Time: 10:00 a.m. - 11:00 a.m. PT
Reason for Meeting: Standard Monthly Meeting
In Attendance: Matt Hougan (Chair), Hunter Horsley (Member), Hong Kim (Observer), Katherine Dowling (Observer), Satyajeet Pal (Observer), Ryan Rasmussen (Observer), Anais Rachel (Observer), Phillip Ward (Observer), Gayatri Choudhury (Observer), Kristen Corkill (Observer)
Item 1: Review and Verify All Data Sources for Uptime, Accuracy, and Robustness
Description: The Committee will discuss if there are any issues with the uptime, accuracy, or robustness of our data sources.
Discussion: The primary data source for historical trading volume data used to evaluate crypto assets in regard to rule III.A.i.g of the Bitwise Crypto Index Methodology encountered delivery issues in early July. Data was restored prior to the July reconstitution period, however, so there was no impact on that process.
We believe that the technological issue preventing data delivery has been resolved. We will monitor the provision of data on an ongoing basis and investigate backup data sources if and when required.
Item 2: Review and Approve All Methodological Decisions That Require Judgment
Description: The Committee will discuss and review any recent methodological implementation decisions that required judgment, as well as any known upcoming decisions.
Discussion: There were no recent methodological implementation decisions that required judgment, nor were there any upcoming decisions to note.
Item 3: Developments Impacting the Market and/or Individual Bitwise Crypto Index Constituents
Description: The Committee will discuss significant new and/or pending developments surrounding either the crypto market in general or any Bitwise Crypto Index constituent specifically, and consider whether they raise any concerns or issues for the index.
Discussion: The Committee discussed the following market developments to ensure a robust review of the index constituent selection of Bitwise indices.
- Audius experienced a security vulnerability on Saturday, July 23, 2022 when a hacker manipulated the Audius governance contract, resulting in an exploit of $6M USD in Ethereum tokens. The Bitwise Crypto Index Series monitored by this committee does not hold Audius, and the Committee determined that the hack was not relevant to existing constituents.
- The Uniswap protocol has the ability to turn on a “fee switch,” which may result in a portion of the fee revenue being sent to token holders. A Uniswap Governance proposal to test the fee switch on a limited number of isolated staking pools was recently created to take the temperature of token holders on this issue. The proposal received positive sentiment from the community. At this time, we view the prospects of the proposal’s passage as uncertain; we will actively monitor developments.
- On July 21, 2022, the U.S. Securities and Exchange Commission (SEC) launched an insider trading lawsuit against three individuals, one of whom was a former Coinbase employee. The employee is accused of using insider knowledge of the planned listing of cryptocurrencies on Coinbase’s platform to tip off a relative and close friend, who would trade the assets ahead of the listing. As part of its lawsuit, the SEC identified nine assets listed on Coinbase that it said met the definition of a “security,” and detailed a number of factors from various public sources to explain this viewpoint. The Commodity Futures Trading Commission (CFTC) also issued a public statement on the case. Bitwise is actively evaluating these developments and incorporating facts from public comments into our ongoing security analysis framework in relation to Rule III.B.i.g of the Bitwise Crypto Index Methodology. None of the tokens named in the lawsuit are held in the Bitwise Crypto Index series monitored by this committee.
Item 4: Adjournment
The Chair adjourned the meeting.
Based in San Francisco, Bitwise is one of the largest and fastest-growing crypto asset managers. As of year-end 2021, Bitwise managed $1.3 billion across an expanding suite of investment solutions. The firm is known for managing the world’s largest crypto index fund (OTCQX: BITW) and pioneering products spanning Bitcoin, Ethereum, DeFi, and crypto-focused equity indexes. Bitwise focuses on partnering with financial advisors and investment professionals to provide quality education and research. The team at Bitwise combines expertise in technology with decades of experience in traditional asset management and indexing, coming from firms including BlackRock, Blackstone, Meta, and Google, as well as the U.S. Attorney’s Office. Bitwise is backed by leading institutional investors and asset management executives, and has been profiled in Institutional Investor, CNBC, Barron’s, Bloomberg, and The Wall Street Journal. For more information, visit www.bitwiseinvestments.com.