Bitwise updates spot Bitcoin ETF application with 40 pages of new material

Bitwise has added new material to its application for a spot Bitcoin exchange-traded fund (ETF), the company’s CIO Matt Hougan said on Sept. 25.

Hougan suggested that if the U.S. Securities and Exchange Commission (SEC) ultimately does not approve a spot Bitcoin ETF following recent developments, applicants will need to prove their filings are satisfactory in certain regards.

He said that if the SEC does not approve an ETF:

“In short, we return to the status quo…We’re back to needing to prove that the CME bitcoin futures market leads price discovery over the spot market such that it can serve as a ‘regulated market of significant size’ for the purpose of surveillance.”

Hougan argued that existing spot Bitcoin ETF filings do not include substantively new arguments or research. Though several applications were recently updated to include a surveillance-sharing agreement with Coinbase, Hougan said that these additions might not meet regulatory requirements even if they are a positive step forward.

Hougan also said that Bitwise’s updated filing addresses past issues by providing more than 40 pages of new research and arguments. Though complex, Bitwise’s updated filing addresses disagreements and disapproval orders from the SEC, including matters related to price discovery and market manipulation.

Bitwise comments on Grayscale’s situation

In his announcement, Hougan acknowledged Grayscale’s attempts to convert its GBTC fund to an ETF. Hougan said that Grayscale’s recent legal victory has led other asset management firms to hope that the SEC will approve spot Bitcoin ETFs more broadly, but he admitted that the SEC could file an objection to Grayscale’s victory.

Furthermore, Bitwise’s ETF filing directly refers to Grayscale in one section that concerns how GBTC inflows are related to spot and futures Bitcoin prices. Bitwise maintained that differences between spot and futures prices do not render correlation analysis immaterial; it also cited comments from Grayscale’s court case in its argument.

Bitwise is one of several firms aiming to offer a spot Bitcoin ETF. Many of those firms filed applications after BlackRock submitted its own filing in June 2023.

Grayscale’s situation is somewhat different: its application originated in 2022 and concerns the conversion of an existing fund to an ETF rather than a new product.

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