Bitwise filed an amendment to its Bitcoin spot ETF application Monday to include fresh arguments it says invalidate regulatory explanations for depriving American investors of the product.
The firm asserted that the CME Bitcoin futures market, for example, leads the spot market in Bitcoin's price discovery, and can therefore serve as a regulated market of significant size for market surveillance purposes.
On Twitter, Matthew Hougan, Bitwise's CIO, said: significant.
Bitwise is among nearly a dozen firms aiming to launch a Bitcoin spot ETF in the United States, although all of them have been consistently denied by the nation's Securities and Exchange Commission's ability to do so.
The government's main argument is that the CME Bitcoin Futures market isn't large nor related enough to Bitcoin's spot market to counteract a would-be manipulator trading on the exchange.
Bitcoin's price is driven more by the futures market than the SEC believes, Bitwise claims. A previous Bitwise study cited by Hougan suggests that trading volume within Bitcoin's spot market may be mostly fake, indicating that the relative size of its futures market is much larger.
In 2021, another Bitwise study found that CME futures have accounted for 52.97% to 68.03% of Bitcoin's price discovery, proofing its significance enough for a surveillance-sharing agreement. Although the SEC argued that this doesn't explain why the CME is necessary to address manipulation, Bitwise says the answer is self-evident.
Bitwise said that the answer can only be that 50% is the uniform academic standard across every price discovery paper the sponsor has reviewed, as well as all academic papers the commission has referenced.
'' leads '', then the Commission should state that.
In August, the SEC lost its lawsuit against Grayscale, accusing the agency of arbitrarily rejecting its Bitcoin spot ETF application while approving futures ETFs. While boosting investor confidence, Hougan said that solid arguments related to the CME futures' relationship with spot prices are necessary if the SEC appeals the court's ruling.