Author: Derek Andersen, Cointelegraph; Translation: Song Xue, LianGuai
Bitwise Asset Management has submitted a revised application for a physically-backed Bitcoin exchange-traded fund (ETF), bolstered with 40 pages of new text, in response to the U.S. Securities and Exchange Commission’s opposition to the product. However, a company executive warned that this may still not be enough to meet regulatory requirements.
Bitwise is one of six financial firms offering Bitcoin spot products.
In a post on X (formerly Twitter), Bitwise Chief Investment Officer Matt Hougan explained that if the SEC appeals the decision on Grayscale, “we will be back to square one.” In this case, he wrote:
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“We still need to prove that the CME Bitcoin futures market leads the spot market in price discovery, so it can be monitored as a ‘scaled, regulated market.'”
Chicago-based CME Group operates derivatives exchanges, including Bitcoin futures and options markets.
In its revised application, Bitwise discusses the “mixed” or “uncertain academic record” of the leading-lagging relationship between Bitcoin futures and spot markets that the SEC has referred to. After reviewing academic works cited in reports on 11 previously disapproved Bitcoin spot exchange-traded products by the SEC, Bitwise states, “The data clearly shows that the Chicago Mercantile Exchange (CME) is the primary source of price discovery.”
Furthermore, Hougan concludes that the revised application demonstrates “each carefully designed academic study supports the ‘significant markets’ finding of the CME,” countering several arguments raised by the SEC in previous denial decisions.
The conclusions drawn in the revised Bitwise application are significant in meeting the SEC’s requirements. The agency has determined that listing exchanges must have supervisory sharing agreements with “scaled” regulated markets such as the CME BTC futures market. This requirement goes into effect if the exchange “cannot demonstrate that other means are sufficient to prevent fraudulent and manipulative acts and practices.” The SEC found that previous applicants fell into this category.
Hougan warned that “supervisory sharing agreements with spot exchanges are positive, but may not meet the technical regulatory requirements.”
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