Breaking news from Bitwise, which recently introduced a revision of its Bitcoin-related ETF proposal, elaborating in detail on the reasons that contrast with previous rejection decisions by the SEC.
See below for all the details.
Summary
News from Bitwise: a point-by-point challenge against the SEC for Bitcoin ETF
As anticipated, Bitwise, an asset management company specializing in cryptocurrencies, has taken a bold step in pursuing its goal of launching an exchange-traded fund (ETF) linked to Bitcoin.Â
Recently, the company submitted an update to its Bitcoin ETF application, outlining detailed arguments against objections previously voiced by the U.S. Securities and Exchange Commission (SEC).
In its new submission, Bitwise highlights the growing maturity of the cryptocurrency market, emphasizing the fact that Bitcoin has reached a state of wider adoption and greater stability than in previous years.Â
The firm also argues that now is the right time for a Bitcoin-related ETF and that this tool could help make investing in cryptocurrencies more accessible and secure for traditional investors.
Bitwise has addressed point by point the concerns raised by the SEC in previous rejections. Indeed, the company is committed to addressing issues such as market manipulation, custody of digital assets, and the liquidity of the underlying markets.
This detailed approach aims to demonstrate to the SEC that the concerns have been meaningfully addressed and that the proposed Bitcoin ETF is safe for investors.
Industry experts believe that approval of a Bitcoin ETF in the United States could have a significant impact on the cryptocurrency markets, opening the door to an influx of institutional capital and increasing the legitimacy of cryptocurrencies in the mainstream financial landscape.
Hence, it will be interesting to see how the SEC will respond to this new proposal from Bitwise and whether the Bitcoin ETF will be successful on its path to final approval.
Bitwise’s new amendment: all the details
Regarding Bitwise’s objections against the SEC for the Bitcoin ETF, we see that one of the main points of contention concerns Bitwise’s use of traditional price discovery methods such as Information Share (IS) and Contributor Share (CS).
In this regard, the SEC had raised doubts about Bitwise’s understanding of these metrics, referring to academic research such as that of Buccheri et al.
However, Bitwise defends its position by arguing that the lack of data creates a bias in favor of its claim about the Bitcoin CME futures market playing a key role in price discovery.
Another area of controversy concerns the frequency of analysis performed by Bitwise. The SEC had expressed concern about Bitwise’s decision to use daily data instead of intraday data, stressing the need for a more convincing explanation.
Bitwise justifies its choice by saying that daily analysis is aligned with academic research and offers a clearer perspective of time trends. It also points out that pricing measures require adequate statistical analysis over a significant period.
Hence, despite the challenges, Bitwise resubmitted its request for Bitcoin ETFs in June, following a series of similar requests from other industry players, including BlackRock.
However, on August 3, Bitwise surprisingly asked the SEC to withdraw its request for a “strategic market capitalization ETF on Bitcoin and Ethereum.” This unexpected step raised questions, considering the company’s continued efforts in seeking approval for the ETF.
Bitwise’s withdrawal of Bitcoin ETF application: why?
As anticipated, In a recent twist, asset manager Bitwise decided to withdraw its application to transform its existing Bitcoin futures ETF, known as the “Bitwise Bitcoin Strategy Optimum Roll ETF,” into a fund that would invest in both Bitcoin and Ethereum futures contracts.
This move has sparked much speculation about the reasons behind this decision and what implications it may have for the Ethereum futures ETFs scheduled to launch in October.
Bloomberg analyst James Seyffart shared this news on his X platform (formerly Twitter) and said that Bitwise chose to maintain its exposure only to Bitcoin after this change.
Seyffart suggested that Bitwise may not see a significant advantage in having an ETF covering both BTC and ETH, especially considering that their Ethereum futures ETF is scheduled for a launch a few days after the former.
In addition, Seyffart pointed out that investors in Bitwise’s Optimum Roll ETF may prefer exposure only to Bitcoin, which may have influenced the company’s decision.
Of note, this decision came shortly after Bitwise withdrew another application, the “Bit to Bit Market of Bitcoin and Ether Cap Weight Strategy ETF,” filed with the SEC on August 3.
The asset manager announced this decision via a statement sent to the SEC on August 31.
Meanwhile, Bitwise also filed a withdrawal request for its ETF “Bitwise Bitcoin and Ether Equal Weight Strategy,” dated Sept. 22, with the SEC. All this indicates a significant change in Bitwise’s strategy in relation to cryptocurrency-related ETFs.
