Bitwise CIO sees ‘no way forward’ for spot Bitcoin ETF
Bitwise believes there is currently “no way forward” for a spot Bitcoin ETF with the SEC. Thus, the company does not have an application with the regulator at this time, said the company’s CIO Matthew Hougan to Pensions & Investments.
However, Hougan added that the company plans to launch a spot Bitcoin ETF once regulatory conditions become more amicable. He said:
“Spot bitcoin ETFs are operating successfully in many markets around the world and we believe we will eventually see them here in the US”
The SEC strongly opposed it
The SEC has been adamant about not approving a spot Bitcoin ETF despite the green light for several futures Bitcoin ETFs on the Chicago Mercantile Exchange.
Companies like Grayscale that want to launch spot ETFs for Bitcoin argue that the regulator should approve spot ETFs because they have approved futures-based ETFs in the past, and both are based on the price of Bitcoin.
The SEC maintains that the futures market has strict supervision and any manipulation or tampering in the market can be determined and dealt with quickly. However, the supervisory authority claims that this does not apply to the spot price as it cannot detect manipulation.
In addition, the regulator claims that the companies that have applied for a spot ETF have failed to demonstrate a causal link between the spot and futures Bitcoin markets.
Grayscale is currently embroiled in a legal battle with the SEC over the regulator’s rejection of its spot Bitcoin ETF application. The first hearing took place on March 7, and the judges questioned the logic behind the SEC’s stance and asked the regulator’s counsel to clarify how companies could satisfy the requirements.
Grayscale expects the matter to be concluded by the third quarter.
Shifting goalposts
Many in the crypto industry believe that the SEC treats spot Bitcoin ETFs differently than other commodity-based ETFs. As a result, they believe that the current version of the commission is unlikely to approve any spot ETFs linked to Bitcoin and have essentially given up on the prospect until things change.
The sentiment was recently echoed by SEC Commissioners Hester Peirce and Mark Uyeda.
The commissioners stated on March 10 that they confirmed there were no pending applications for a spot Bitcoin ETF with the regulator, as companies believe the SEC will not approve a spot ETF until it has “regulatory authority over spot Bitcoin markets.”
According to the statement:
“The Commission uses a different set of goalposts than those it used – and continues to use – for other types of commodity-based ETPs to keep these spot bitcoin ETPs off the exchanges we regulate.”
They stated that the SEC’s current stance could negatively impact growth and innovation in the sector and called for a revised approach to ensure that the US is not left behind.
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