In a prominent development for the crypto ecosystem, the US Securities and Exchange Commission (SEC) has acknowledged Bitwise’s application for a spot Bitcoin Exchange Traded Fund (ETF) product.
The U.S. Securities and Exchange Commission has formally acknowledged the spot bitcoin ETF application from San Francisco’s Bitwise Asset Management, underscoring the escalating institutional engagement in cryptocurrency investments.
The U.S. SEC has given official recognition to Bitwise Asset Management’s spot bitcoin ETF proposal. The tech-forward asset management firm from San Francisco initially lodged its bitcoin ETF application back in October 2021 but has since revised and resubmitted the proposal on June 28 of this year.
According to the SEC document, the proposed change pertains to the “listing and trading of shares for the Bitwise Bitcoin ETP Trust” as per New York Stock Exchange ARCA Rule 8.201-E, which covers commodity-based trust shares.
Bitwise’s recent filing adds to the growing number of institutional applications for spot bitcoin ETFs, a trend invigorated by BlackRock’s application submitted on June 15.
Bitwise’s chief investment officer, Matthew Hougan, highlighted the significance of BlackRock’s market presence in a conversation with CoinDesk on July 10.
“BlackRock, being the largest ETF issuer globally, operates with considerable influence and attention to detail,” said Hougan. “There’s no denying that their move towards a bitcoin ETF sends a potent message,” he admitted.
Hougan remained reserved about specific surveillance-sharing arrangements linked to Bitwise’s ETF proposal. He emphasized, however, that the success of any spot bitcoin ETF application hinges on a variety of analytical factors.
“This includes in-depth analysis of the CME market, and though surveillance-sharing agreements may be a compelling consideration, Bitwise is likely to adopt a comprehensive approach,” Hougan explained.
Significance of SEC’s Acknowledgement
The SEC’s acknowledgment of the Bitwise spot Bitcoin ETF application is crucial for the cryptocurrency industry because it moves the potential of a regulated Bitcoin ETF closer to reality.
Over the past few years, several Bitcoin ETF proposals have been submitted to the markets regulator, but they have faced repeated rejections due to concerns about market manipulation and custody of the underlying assets. The current recognition implies that the regulator considers the Bitwise spot Bitcoin ETF application to be sufficiently complete and worthy of further consideration. However, it is important to note that the SEC has not yet approved the ETF.
The regulator will now initiate a formal review process, which includes a thorough examination of the proposal and an opportunity for public comment. If the Bitwise spot Bitcoin ETF is approved, it will give individual investors a more accessible and secure alternative to invest in Bitcoin.
Currently, individuals who want exposure to Bitcoin must navigate the complex world of crypto exchanges or opt for alternative investment vehicles such as Bitcoin Trusts or futures contracts.
Bitwise re-filed its application for spot Bitcoin ETF in June following a host of applications fueled by renowned asset manager BlackRock. This filing indicates Bitwise’s commitment to pursuing the ETF approval process and signifies its ongoing efforts to meet regulatory requirements.
At the time of its initial filing, Bitwise’s Chief Investment Officer, Matthew Hougan highlighted that the SEC’s rejection of previous Bitcoin ETF applications by the SEC was accompanied by detailed memos outlining the regulator’s concerns about the Bitcoin ecosystem.
These concerns have primarily revolved around issues such as market manipulation, custody of underlying assets, investor protection, and overall market integrity.
THE IMPLICATION OF SPOT BITCOIN ETF APPROVAL
If the Bitwise spot Bitcoin ETF is approved, it will allow for greater accessibility and participation from both retail and institutional investors. ETFs are highly regulated investment products, making them more appealing to investors who value transparency and oversight. This increased accessibility could potentially lead to a surge in demand for cryptocurrencies, driving future growth in the market.
Additionally, the approval would set a precedent for other cryptocurrencies to be considered as viable investment options. This could potentially result in increased regulatory clarity and framework for other digital assets, making the overall cryptocurrency ecosystem more robust and secure.
Recall that a few days ago, the former chairman of the US SEC Jay Clayton expressedhis optimism regarding the potential approval for a spot Bitcoin ETF in the US. He mentioned that if an applicant can demonstrate that a BTC ETF offers an efficient and secure means for investors to enter the cryptocurrency market, then it stands a strong chance of receiving regulatory approval.
BENEFITS OF SPOT BITCOIN ETF
The advent of Bitcoin ETF would open up new avenues for both retail and institutional investors who are seeking exposure to cryptocurrencies. Additionally, it would allow investors to tap into the potential benefits of digital assets without the need for direct ownership or involvement in the complexities of crypto exchanges.
Likewise, a Bitcoin ETF would provide a regulated framework that ensures compliance with existing securities law. This oversight further protects investors by subjecting the ETF to rigorous scrutiny and ongoing monitoring, reducing the likelihood of fraudulent activities or market manipulation. Meanwhile, despite numerous applications from market participants, the U.S. securities regulator is yet to approve any spot ETF linked to crypto investments. The SEC has expressed concerns over issues such as price manipulation, lack of transparency, and custody solutions.
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