Marry Bitcoin and ecology: Brazil tries the ultimate stock market bet with its ETF

By: Bharggavi Ssayee

Marry Bitcoin and ecology: Brazil tries the ultimate stock market bet with its ETF

August 13, 2021 5:47 PM

A Bitcoin ETF (BTC) that aims to be ecological is born in Brazil. However, players are embarking on a controversial path, that of carbon offsetting, in an attempt to bring the king of cryptos into line with current environmental issues.


A green Bitcoin ETF: greenwashing or real ecological will?

The investment company Hashdex Asset Management has just launched the first Bitcoin exchange-traded fund (ETF) with ecological virtues in Brazil. It offers 100% exposure to Bitcoin, while committing to carbon neutrality.


This is the second authorized Bitcoin ETF in the country, following the QR CME CF Bitcoin Reference Rate (QBTC11). The German company Crypto Carbon Ratings Institute will be responsible for publishing the annual reports in terms of energy consumption and carbon emissions, linked to the creation of Bitcoin acquired through this green Bitcoin ETF.


This data will allow Hashdex to invest in carbon credits and green technology. A carbon credit is a unit equivalent to 1 tonne of CO2 avoided or sequestered. The investment rate will be estimated at 0.15% of its liquid assets each year.


The fund was launched on the Brazilian B3 Stock Exchange during the first week of August, under the ticker "BITH11".


Hashdex is not the only company to have committed to this carbon offsetting process. Indeed, on August 3, global investment firm SkyBridge Capital partnered with carbon credit provider MOSS Earth. Concretely, SkyBridge Capital bought the equivalent of 38,436 tonnes of carbon offsets.


Crypto ETF: gap to be bridged between the United States and Brazil

Brazil now has 4 ETFs linked to cryptocurrencies, a market dominated by Hashdex and QR Asset Management.


Hashdex had issued its first regulated crypto ETF, the Hashdex Nasdaq Crypto Index (HASH11), in April 2011. This ETF replicates the performance of the Nasdaq Crypto Index (NCI) and tracks a theoretical basket of several major cryptocurrencies, such as Bitcoin, Ethereum (ETH ), Chainlink (LINK), Bitcoin Cash (BCH) and Stellar Lumens (XLM). Hashdex also offers a weighted fund, the Nasdaq Crypto Index following Bitcoin and the Bitcoin Risk Parity Gold Fund.


In addition, the Brazilian Securities Commission (CVM) approved, in July 2021, a 100% Ethereum ETF in Latin America, launched by QR Asset Management.


In the United States, Victory Capital Holdings is the latest to be tempted by the adventure of a crypto ETF, by filing an application with the US SEC. Commission Chairman Gary Gensler recently reiterated in an interview the hope of an upcoming Bitcoin ETF in the United States, including the Chicago Mercantile Exchange's exchange-traded funds focused exclusively on Bitcoin futures. (CME).


Bitcoin is subject to unequal treatment in different countries. Canada had started the Bitcoin ETFs and Brazil is following the trend, while the SEC is playing the watch in the United States, unlike its neighbor further north. Gensler has recently raised some hopes for a breakthrough in this area, but nothing concrete at this point. For France, we are waiting to see what the ETF Melanion will give.