Bitwise Asset Management has submitted an amended application for a Bitcoin exchange-traded fund (ETF) in response to the objections raised by the US Securities and Exchange Commission (SEC). However, there is still uncertainty about whether the changes will meet regulatory requirements. Bitwise is one of six financial firms whose spot Bitcoin ETF applications are currently on hold following the SEC’s decision to delay its consideration. The delay came after a court overturned the SEC’s rejection of Grayscale Investments’ application to convert its over-the-counter Grayscale Bitcoin Trust into a listed BTC ETF. If the SEC appeals the ruling, Bitwise will need to prove that the CME bitcoin futures market leads price discovery over the spot market. In its amended application, Bitwise provided evidence that the CME is indeed the leading source of price discovery, countering arguments made by the SEC in previous disapproval decisions.
The conclusions reached in Bitwise’s amended application are important for meeting SEC requirements. The agency has determined that a listing exchange must have a surveillance-sharing agreement with a regulated market of significant size, such as the CME BTC futures market. This requirement comes into play if an exchange cannot establish that other means to prevent fraudulent and manipulative acts and practices are sufficient. While surveillance sharing agreements with spot exchanges are positive, they may not fully satisfy the technical regulatory requirements.
Hot Take: Can Bitwise’s Amended Application Satisfy Regulatory Requirements for a Bitcoin ETF?
Bitwise Asset Management has submitted an amended application for a Bitcoin ETF in response to objections from the SEC. However, there is still uncertainty about whether these changes will meet regulatory requirements. The company argues that the Chicago-based CME Group is the leading source of price discovery for Bitcoin, countering arguments made by the SEC in previous disapproval decisions. While this evidence is significant, it remains to be seen if it will satisfy the SEC’s requirement for a surveillance-sharing agreement with a regulated market of significant size. Bitwise’s amended application is a step forward, but it may not be enough to secure approval for a Bitcoin ETF. Only time will tell if the SEC will be convinced by their arguments.
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