Bitwise Makes New Update to its Bitcoin ETF Application

Bitwise Asset Management, a leading crypto asset management firm, has recently made a significant update to its application for a Bitcoin Exchange-Traded Fund (ETF). 

Highlights of the Bitcoin ETF Update

In a recent tweet, Bloomberg ETF Analyst James Seyffart provided the crypto community with a crucial update on Bitwise’s ongoing pursuit of a Bitcoin ETF. Seyffart’s tweet shed light on Bitwise’s latest amendment to its ETF application, which introduces a compelling new dimension to its broader pursuit of the rare product.

Update: @BitwiseInvest just filed an amendment to their spot Bitcoin ETF application. Looks like the main change is that they added a section where they argue point by point against the SEC's denial of their prior application and research. pic.twitter.com/uxqZGJd1Ef

— James Seyffart (@JSeyff) September 25, 2023

The heart of the firm’s latest amendment revolves around a dedicated section that meticulously addresses and rebuts 8 “Disagreements”, each of the US Securities and Exchange Commission’s (SEC) reasons for denying its previous ETF applications.

The first disagreement centers on Bitwise’s use of “classic” price discovery metrics like IS (Information Share) and CS (Contributor Share). The SEC raised concerns about Bitwise’s acknowledgment of academic concerns regarding these metrics, citing a study by Buccheri et al. 

However, Bitwise counters this by arguing that the bias introduced by sparsity in the data actually strengthens its argument that the CME bitcoin futures market led to price discovery. The second disagreement revolves around the frequency of Bitwise’s analysis. The SEC questioned why daily results were chosen instead of different frequencies like intraday. 

Bitwise defends its choice by highlighting that price discovery metrics require statistical analysis over a reasonable period of time and that using a daily basis is consistent with academic studies and provides a better understanding of potential time-dependent changes in trends.

Bitwise Spot Bitcoin ETF Journey

Bitwise re-filed its application for a spot Bitcoin ETF in June, a move that followed a flurry of ETF applications, including those from prominent asset manager BlackRock. However, in a surprising turn of events, Bitwise filed for the withdrawal of its “Bitcoin and Ethereum Market Cap Strategy ETF” application with the SEC on August 3rd. 

The withdrawal came as a shock, considering the company’s earlier commitment to pursuing ETF approval. Bitwise has been actively engaged in refining its proposal, addressing the SEC’s concerns, and making the case for a regulated, secure, and transparent Bitcoin ETF. 

The recent update to its application demonstrates the company’s ongoing commitment to bringing a Bitcoin ETF to market.