Bitwise Asset Management has announced a partnership with Superstate, a financial technology firm that brings securities onchain, to develop the capability for shares of certain Bitwise funds to be held in tokenized form. The Bitwise Solana Staking ETF (NYSE: BSOL) is expected to be the first fund for which the tokenized share option becomes available, with other ETFs potentially following.
The partnership represents a significant step in the convergence of traditional exchange-traded funds and blockchain technology. Under the framework being developed, tokenization would change only the form in which share ownership is recorded, not the underlying investment. Investors would continue to purchase the same shares of the applicable fund, with the same rights, through the same channels as today.
How It Would Work
Shareholders could elect to hold their shares either in traditional book-entry form through The Depository Trust Company, the standard settlement infrastructure for U.S. securities, or in tokenized form recorded on a blockchain and maintained through Superstate's transfer agency infrastructure.
Shares held in tokenized form would carry the same rights and obligations as traditional shares. The key difference is that tokenized shares would be recorded on a blockchain, enabling faster settlement, 24/7 transferability, and potential integration with decentralized finance protocols. This dual approach allows Bitwise to offer the benefits of tokenization without disrupting the traditional fund infrastructure.
Why Start With Solana
The choice of the Solana Staking ETF as the first fund for tokenization is strategic. Solana has positioned itself as a high-performance blockchain suitable for financial applications, and tokenizing a Solana-based ETF on a blockchain creates a natural fit. The Bitwise Solana Staking ETF trades on the New York Stock Exchange under the ticker BSOL, with a management fee of 0.20%.
The fund stakes 100% of its SOL holdings through the Bitwise Onchain Solutions validator, which is powered by Helius. This means the fund already has a direct connection to the Solana blockchain, making the tokenization of its shares a natural extension of its existing operations.
The Superstate Partnership
Superstate is a financial technology firm that partners with issuers and asset managers to bring securities onchain. The company provides the infrastructure for recording and transferring tokenized securities, including the transfer agency system that maintains the ownership records.
Bitwise and Superstate have an existing relationship. Bitwise recently became the investment manager of Superstate's $267 million AUM tokenized crypto carry fund, USCC, and the two firms debuted the Bitwise Crypto Carry Fund in June. The new tokenization partnership extends this relationship to Bitwise's ETF products.
What This Means for ETF Tokenization
The partnership is a significant development for the ETF tokenization market. While several firms have launched tokenized funds, the tokenization of an existing, NYSE-listed ETF represents a different proposition. It brings blockchain infrastructure to a product that already has regulatory approval, institutional adoption, and a track record of performance.
This approach sidesteps many of the regulatory challenges that have slowed ETF tokenization. Rather than creating a new tokenized product from scratch, Bitwise is adding a tokenized option to an existing regulated fund. The SEC has already approved the fund, and the tokenization simply changes the form of ownership recording.
The Broader Tokenization Trend
The Bitwise-Superstate partnership is part of a broader trend of traditional financial institutions adopting blockchain infrastructure. Figure Technology has doubled its revenue through blockchain-based lending, and MUFG is testing blockchain settlement for Japanese government bonds. The Bitwise partnership adds ETF tokenization to this growing list of institutional blockchain applications.
The partnership also comes as the SEC delays its innovation exemption for tokenization, which was meant to make it easier to trade tokenized securities. While regulators move slowly, companies like Bitwise and Superstate are building the infrastructure that will be needed when the regulatory framework eventually arrives.
What Comes Next
BSOL is expected to be the first fund for which tokenized shares become available, but Bitwise has indicated that other ETFs may follow. If the tokenized share option proves popular with investors, it could be extended to Bitwise's Bitcoin ETF, Ethereum ETF, and other funds in its product lineup.
The partnership also raises the possibility that other ETF issuers will follow suit. If Bitwise successfully demonstrates that ETF tokenization can be done within the existing regulatory framework, it could open the door for the broader ETF industry to adopt blockchain-based ownership recording. This would be a significant step in the integration of traditional finance and blockchain technology.
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