Bitwise’s Bitcoin Exchange Traded Fund [ETF] was recently shot down by the SEC, with the agency citing that it would pave the way for manipulative acts and practices. The United States’ financial regulator had previously published a 112-page document, detailing the reasons behind the rejection, with Bitwise, surprisingly, hailing the careful consideration the SEC gave its application. Recently, Bitwise’s Global Head of Research, Matt Hougan, elaborated on the same on a podcast.
Hougan started off by addressing the fact that the SEC had published such an extensive piece. However, he suggested that it helped with respect to the firm’s upcoming research. Hougan went on to suggest that Bitwise’s application was built on the shoulders of the Winklevoss twins, who received 96-page feedback. He said,
“We learned a lot from that feedback and we use that as the basis of our analysis. They made an argument that you could have a small regulated surveillance market. The SEC said that wasn’t enough.”
Bitwise had submitted a 560-page research report to the SEC, with the research highlighting that 95% of all Bitcoin trading volume was fake, which seemed to support the SEC’s concerns of market manipulation. However, Hougan revealed that the SEC considered the research incomplete, with Bitwise obligated to do another level of research. The SEC also told Bitwise that it wasn’t convinced that these results were completely true and even if they were, the SEC wasn’t assured that the fake figures didn’t impact the market.
Hougan went on to say that this gave the SEC a reason to reject its first-round application. However, in the long-term, he believes that it was a remarkable achievement for the industry.
Additionally, he also addressed SEC Chairman Jay Clayton’s interview with CNBC where he said that “progress was being made” with Bitcoin ETFs, even though a lot of work needs to happen. Hougan said,
“That’s what we heard in our disapproval. Progress has been made, more work needs to happen. The SEC told us what needs to happen. So we’re following that pathway.”
Finally, he assured everyone that Bitwise is feverishly working and has a clear picture of what research needs to be done to satisfy the SEC.
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