While it is curiously expected whether the US Securities Exchange and Commission will approve a Bitcoin ETF application in a short time, requests from companies are increasing day by day. Finally, crypto-focused investment company Bitwise has applied for another ETF directly indexed to the Bitcoin price, following its application for a futures contract-based ETF. ARK Invest and 21Shares companies also filed for approval of an ETF for Bitcoin futures contracts yesterday.
Another Bitcoin ETF application has been filed with the US Securities and Exchange Commission. Cryptocurrency investment firm Bitwise has applied for a joint Bitcoin exchange-traded fund (ETF) with NYSE Arca.
In the information given by Matt Hougan, the company’s director of investments, it was stated that the ETF is a fund directly indexed to the Bitcoin price, not futures contracts.
Hougan, in a statement on Twitter, announced that NYSE Arca has applied to the SEC for the Bitwise Bitcoin ETF, shared his comments on this subject with a series of tweets and used the following statements:
‘Real Bitcoin ETF is better’
“Today, NYSE Arca applied for the Bitwise Bitcoin ETF. This is an ETF that will hold BTC directly, not based on futures contracts. Bitwise already has a separate futures contract ETF application, but the actual BTC ETF is much better.
And we think it’s finally possible. We also shared a 100-page analysis article on this subject.
First, let’s talk about why an ETF based directly on the Bitcoin price is better.
‘An ETF based on bitcoin futures is riskier and more expensive’
A) Costs: Operating futures can cost more than 5-10% per year. There is 1-2% extra cost in fees.
B) Infrequent Bitcoin holding: ETFs cannot hold 100% Bitcoin futures due to the rules. The highest rate is 85%. The remaining 15% becomes other assets. These may even include bonds.
C) Risk: Do you remember USO in 2020? Position limits and liquidity… Events may progress in the negative direction.
Bottom line: An ETF based on futures contracts costs between 6% and 12%, with around 15% Bitcoin sparsity and other risks. It may be useful for some investors, but it is not ideal.
A direct Bitcoin ETF eliminates all these problems.
“We worked on ETF-related issues that the SEC rejected”
So why hasn’t the SEC approved a single ETF yet? Because in 2019, when the SEC rejected its latest filing, it published a 100-page report outlining its concerns about the market.
Our team has spent the last 2 years working on this issue. The real concern here is price manipulation. As with other commodity ETFs, a regulated market with sufficient volume is needed. The SEC wanted it too.
The gold market is unregulated, but a regulated futures market allows for price discovery.
‘We pulled out the data and saw the good news’
For Bitcoin, we already have a regulated market. CME…
But does it have the required volume? Is that enough for price discovery? We as a team reviewed the data and used multiple statistical methods.
These data gave us the good news.
‘The market has matured’
CME is now a leading source of price discovery in the Bitcoin market!
This compares to Coinbase, Kraken, Binance, Huobi, BitMEX and even FTX. Prices are statistically formed in the first CME.
The market has matured.
‘SEC wants investor protection, so do we’
This is good news for all of us. The SEC wants investment protection, and so do we! A BTC ETF is better for investors.
Therefore, after 2 years, we are applying again today.
Thank you, crypto community, for making this market mature properly.
We also thank the SEC staff who asked us the right questions.
And of course, thank you to my colleagues at Bitwise for doing the work that needs to be done.”