According to Matthew Hougan, the Chief Investment Officer of Bitwise, a spot Bitcoin ETF has “no path forward” with the Securities and Exchange Commission (SEC) at this time. Hougan added that they plan to launch a spot Bitcoin ETF once regulatory conditions become more amenable.
The SEC has been opposed to the approval of a spot Bitcoin ETF, despite approving multiple futures Bitcoin ETFs on the Chicago Mercantile Exchange. Grayscale, along with other companies, argue that the regulator should approve spot ETFs because it has already approved futures-based ETFs, and both are based on the price of Bitcoin. However, the SEC claims that futures market has strict oversight and manipulation or tampering can be detected quickly. This feature does not apply to the spot price, which the SEC claims cannot detect manipulation.
Furthermore, the SEC claims that companies have failed to demonstrate causation between the spot and futures Bitcoin markets.
Grayscale is currently in a legal battle over the regulator’s rejection of its spot Bitcoin ETF application.
Many in the cryptocurrency industry think the SEC is treating spot Bitcoin ETFs differently from other commodity-based ETFs. As a result, they believe the SEC is unlikely to approve any spot ETF connected to Bitcoin and have essentially given up on the prospect until things change.
SEC commissioners Hester Peirce and Mark Uyeda recently confirmed that there are no applications in process for a spot Bitcoin ETF with the regulator because companies believe the SEC will not approve a spot ETF until it has “regulatory authority over spot Bitcoin markets”. 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 US is not left behind.
In conclusion, Bitwise does not see a path forward for a spot Bitcoin ETF at this time, but it plans to launch one when regulatory conditions become more amenable. Meanwhile, the SEC continues to be opposed to approving a spot Bitcoin ETF, resulting in disappointment and frustration among companies in the cryptocurrency industry.