Bitwise amends bid for Bitcoin ETF – here’s what it entails
- Bitwise has bolstered its case with 40 pages of detailed argumentation.
- The application directly addressed the SEC’s concerns surrounding the inconclusive stance on the relationship between BTC futures and spot markets.
Bitwise Asset Management has filed an amended application for securing approval for a spot Bitcoin [BTC] exchange-traded fund (ETF). This move follows objections raised by the United States Securities and Exchange Commission (SEC) regarding the product.
Bitwise has bolstered its case with 40 pages of detailed argumentation. However, there are lingering doubts about whether this will suffice to meet stringent regulatory requirements, as cautioned by a company executive.
Six financial firms, including Bitwise, find themselves in anticipation as the SEC delays their spot Bitcoin ETF applications. This delay comes on the heels of a court overturning the SEC’s rejection of Grayscale Investments’ application.
Matt Hougan, the Chief Investment Officer at Bitwise, took to social media platform X (formerly Twitter) to shed light on the situation. He explained that if the SEC opts to appeal the Grayscale ruling, it would essentially revert to the status quo.
In such a scenario, Bitwise would be tasked with proving that the Chicago Mercantile Exchange (CME) Bitcoin futures market holds sway over price discovery in the spot market, effectively serving as a “regulated market of significant size” for surveillance purposes.
1/ NEW: Bitwise Spot Bitcoin ETF Update
NYSE today filed an amended application to list the Bitwise Bitcoin ETF Trust, complete with 40+ pages of new research from Bitwise.
The research addresses key concerns the SEC has raised around spot bitcoin ETFs.
Here’s why it matters — pic.twitter.com/RPb7OXRGat
— Matt Hougan (@Matt_Hougan) September 25, 2023
The CME Group, headquartered in Chicago, boasts a reputation for operating derivatives exchanges, including a market for BTC futures and options.
Amplifying arguments to tackle SEC resistance
Bitwise’s amended application directly addressed the SEC’s concerns surrounding the academic literature’s mixed or inconclusive stance on the lead-lag relationship between BTC futures and spot markets.
Hougan summed it up by highlighting that the amended application showcased a consensus among well-designed academic studies. These studies support the notion that the CME indeed holds significance in the cryptocurrency market.
This stance effectively countered several arguments previously put forth by the SEC in disapproval decisions.
The implications of Bitwise’s revised application are profound in the context of meeting the SEC’s requirements. The agency has stipulated that a listing exchange must establish a surveillance-sharing agreement with a regulated market, such as the CME’s BTC futures market, of significant size.
This requirement becomes imperative if the exchange cannot sufficiently demonstrate alternative measures to prevent fraudulent and manipulative activities. The SEC had, in previous cases, found this condition unmet by other applicants.
However, Hougan injected a note of caution. He mentioned that while surveillance sharing agreements with spot exchanges are a positive step, they may still fall short of satisfying the intricate technical regulatory prerequisites.
Congress members rally for swift approval of Spot Bitcoin ETFs
In related news, four U.S. Congress members have penned a letter to SEC Chair Gary Gensler, urging him to swiftly approve spot Bitcoin ETFs. They argued that the SEC’s delay in greenlighting these ETFs constituted discrimination against spot Bitcoin ETPs.
They cited a court decision favoring Grayscale Investments as a precedent. It was also asserted that there was no valid reason to deny spot crypto ETF applications after this ruling.
The lawmakers, who are members of the House Financial Services Committee, called for Gensler to approve spot Bitcoin ETF listings immediately, emphasizing the duty to safeguard investors.