Bitwise CIO sees ‘no path forward’ for spot Bitcoin ETF

Bitwise believes there is currently”no path forward” for a spot Bitcoin ETF with the SEC. Thus the company does not have an application with the regulator at this time, the company’s CIO Matthew Hougan told 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 operate successfully in many markets around the globe, and we think we will eventually see them here in the U.S.”

SEC adamantly opposed

The SEC has been adamant about not approving a spot Bitcoin ETF despite greenlighting multiple futures Bitcoin ETFs on the Chicago Mercantile Exchange.

Companies like Grayscale that want to launch spot Bitcoin ETFs argue that the regulator should approve spot ETFs because it has approved futures-based ETFs in the past, and both are based on the price of Bitcoin.

The SEC claims that the futures market has strict oversight, and any manipulation or tampering within the market can be ascertained and dealt with quickly. However, the regulator argues that this does not apply to the spot price as it cannot detect manipulation.

Additionally, the regulator claims that the companies that have applied for a spot ETF have failed to demonstrate causation 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 occurred on March 7, and judges questioned the logic behind the SEC’s stance and asked the regulator’s lawyer to clarify how companies could satisfy its requirements.

Grayscale expects the case to conclude by the third quarter.

Shifting goalposts

Many in the crypto industry think the SEC treats spot Bitcoin ETFs differently from other commodity-based ETFs. As a result, they believe the current version of the commission is unlikely to approve any spot ETF connected to Bitcoin and have essentially given up on the prospect until things change.

The sentiment was echoed recently by SEC commissioners Hester Peirce and Mark Uyeda.

The commissioners stated on March 10 that confirmed there were no applications in process 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 is using a different set of goalposts from those it used — and still uses — 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 adversely affect growth and innovation in the sector and called for a revised approach to ensure the U.S. is not left behind.