Bitwise Adds Proof of Reserves for Bitcoin, Ether ETFs

Crypto asset manager Bitwise said it is improving transparency for its spot bitcoin (BTC) and ether (ETH) exchange-traded funds, rolling out third-party proof-of-reserves verifications through U.S. accounting company The Network Firm.

The process, which is already live, replaces Bitwise’s prior practice of publicly listing nearly 90 wallet addresses on its websites.

Instead, The Network Firm will confirm on-chain holdings daily for the Bitwise Bitcoin ETF (BITB) and Bitwise Ethereum ETF (ETHW), reconciling balances with the number of fund shares outstanding, Bitwise said in a post on X.

In the coming weeks, the firm said, it plans to add a second layer of transparency. That layer will bring in daily CPA-attested reports verifying not just asset balances but also fund liabilities.

“Together, these features deliver a more comprehensive and easily readable approach to transparency,” the company wrote.

The added layer is meant to assure investors that fund holdings match obligations. Proof-of-reserve audits have been a growing trend in the cryptocurrency industry, taking off after the collapse of FTX in November 2022.

That collapse occurred after a leaked balance sheet triggered a bank run on the exchange, revealing it did not have customers’ assets on hand to meet its obligations. Since then, platforms’ reserves have been a major concern for investors.

Bitwise’s bitcoin exchange-traded fund currently has $4.9 billion in net assets, far below the market leader, BlackRock’s iShares Bitcoin Trust (IBIT), which holds $85.9 billion, according to SoSoValue data. Similarly, its ether ETF holds $358 million in net assets, below the sector’s leader’s $6.28 billion.