- Bitwise submits a detailed review to SEC about the bitcoin futures market in its latest filing.
- SEC previously delayed decisions on Bitwise’s spot bitcoin ETF application to October 16.
- Bitwise counters SEC’s claim on ‘mixed’ academic literature, emphasizing the futures market’s lead over the spot market.
Bitwise takes on the SEC’s stance on academic literature in its recent Bitcoin ETF filing, offering a comprehensive review and challenging previously held regulatory beliefs.
Bitwise Seeks Approval for Spot Bitcoin ETF
Crypto asset manager Bitwise has approached the SEC with a revised argument in favor of its spot bitcoin ETF application. While the SEC had approved ETFs based on bitcoin futures, it had not done so for a spot fund, something Bitwise has been chasing for several years. The regulator, in August, chose to delay decisions on seven applications, including Bitwise’s, which now has an October 16 deadline.
Challenging the SEC’s Perspective on Academic Literature
In the amended filing presented by NYSE Arca, they highlighted that the SEC has consistently referred to the ‘mixed’ or ‘inconclusive’ academic record about the relationship between spot and futures markets. This stance had been a significant reason for past disapproval orders. NYSE Arca, representing Bitwise, has reviewed all past disapproval orders and consolidated the primary issues raised by the SEC in relation to the so-called ‘mixed’ academic viewpoints.
Spot versus Futures: Bitwise’s Stand
Disagreeing with the perspective that the academic literature is inconclusive, Bitwise emphasizes a dominant consensus among well-structured studies, suggesting the CME futures market actually precedes the spot market. The filing reveals that Bitwise held multiple meetings with the SEC staff from January 2020 to August 2021, even presenting a 107-page white paper to reinforce its findings. Additionally, a separate 24-page white paper was provided, arguing that a new bitcoin fund would not predominantly influence CME bitcoin futures market prices.
The Underlying Argument of the Filing
The crux of Bitwise’s argument lies in its belief that the CME bitcoin futures market leads the spot market, satisfying the first criterion of the significant market test. Before concluding its filing, Bitwise addressed each of the eight disagreements the Commission had previously voiced regarding their analyses. Their main contention is that any trading in a new spot bitcoin ETF wouldn’t unduly influence prices in the CME futures market without also having a similar influence on spot market prices, considering the close correlation between futures and spot prices.
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Conclusion
The Bitwise filing illuminates the ongoing tug-of-war between crypto asset managers and regulators, particularly concerning the nuances of spot and futures market dynamics. As the deadline approaches, the crypto community awaits to see if Bitwise’s comprehensive research and argumentative stance will sway the SEC’s decision in favor of a spot Bitcoin ETF. Regardless of the outcome, this debate underscores the evolving understanding and acceptance of cryptocurrency in mainstream finance.
