Bitwise, a leading cryptocurrency firm, has bolstered its application for a spot Bitcoin exchange-traded fund (ETF). The company’s Chief Investment Officer, Matt Hougan, made this announcement on September 25.
Hougan emphasized that if the U.S. Securities and Exchange Commission (SEC) does not ultimately approve a spot Bitcoin ETF, applicants will need to demonstrate the adequacy of their submissions in specific aspects.
He explained that if the SEC does not greenlight an ETF:
“In short, we return to the status quo… We’re back to needing to prove that the CME bitcoin futures market plays a significant role in price discovery over the spot market, making it a ‘regulated market of significant size’ for surveillance purposes.”
Hougan argued that current spot Bitcoin ETF applications lack substantially new arguments or research. While some applications have recently been updated to include a surveillance-sharing agreement with Coinbase, Hougan pointed out that these additions might not satisfy regulatory requirements, even if they represent a positive step.
Bitwise’s updated filing addresses previous concerns by presenting over 40 pages of fresh research and arguments. Despite its complexity, Bitwise’s revised filing tackles disagreements and disapproval orders from the SEC, including issues related to price discovery and market manipulation.
Bitwise Comments on Grayscale’s Situation
In his announcement, Hougan acknowledged Grayscale’s efforts to convert its GBTC fund into an ETF. Hougan mentioned that Grayscale’s recent legal victory has encouraged other asset management firms to anticipate broader approval of spot Bitcoin ETFs by the SEC. However, he acknowledged the possibility of the SEC raising objections to Grayscale’s success.
Furthermore, Bitwise’s ETF filing directly references Grayscale in a section discussing the relationship between GBTC fund inflows and spot and futures Bitcoin prices. Bitwise maintains that differences between spot and futures prices are relevant, citing comments from Grayscale’s court case in support of its argument.
Bitwise is one of several companies striving to offer a spot Bitcoin ETF. Many of these firms submitted applications after BlackRock filed its own application in June 2023.
It’s worth noting that Grayscale’s situation differs somewhat, as its application originated in 2022 and involves converting an existing fund into an ETF, rather than introducing a new product.
