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Bitwise CIO: Market Volatility Doesn’t Help Spot Bitcoin ETF Applications


blockworks.co 22 June 2022 22:12, UTC
Reading time: ~2 m

As the SEC gets set to rule on two spot bitcoin ETF applications within the next two weeks, the chief investment officer at Bitwise Asset Management said ongoing volatility in crypto markets could impact the regulator’s decision on such products.

Crypto index fund issuer Bitwise, which managed $1.2 billion in assets as of March 31, expects an SEC decision for its proposed spot bitcoin ETF by July 1. 

The regulator has until July 6 to rule on Grayscale Investments’ application to convert its bitcoin trust (GBTC) to an ETF. GBTC, which has $13.3 billion assets under management, has traded at a discount of about 30% in recent weeks.   

No spot bitcoin ETF has ever been approved in the US, and a number of industry watchers do not expect one to launch until 2023 at the earliest.

Bitwise CIO Matt Hougan told Blockworks that the SEC has historically considered the state of the crypto space more broadly when considering spot bitcoin products. 

“While that’s not the technical deciding point on spot bitcoin ETF applications, it’s of course the case that regulators would consider the entire environment when evaluating an application like this,” he said. “Things like the collapse of LUNA is not a great news item for the crypto industry and will probably at least enter into the minds of regulators as they review that.”

But Hougan noted that ProShares’ launch of an ETF betting against bitcoin on Tuesday is a positive signal that the SEC is on a path to eventually approve a spot ETF. The ProShares Short Bitcoin Strategy ETF (BITI) seeks daily investment results that correspond to the inverse of the daily performance of the S&P CME Bitcoin Futures Index.

“That is a sign of the SEC becoming more comfortable with the space and sort of following a crawl-walk-run strategy,” Hougan said. “The question in everyone’s mind is when will they get to the run part.”

A Grayscale spokesperson told Blockworks that the firm is also encouraged by the SEC’s continued acceptance of bitcoin exchange-traded products (ETPs), such as BITI, calling a spot bitcoin ETF “a natural next step.”    

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