Bitwise writes to SEC again, emphasizes "obligation" to create Bitcoin ETF

This letter was submitted by the cryptocurrency asset company Bitwise recently, and was released by the U.S. Securities and Exchange Commission (SEC) last Friday as the company's response to SEC's rejection of its Bitcoin ETF proposal in October this year.

The letter was co-written by Bitwise CEO Hunter Horsley, CTO Hong Kim, and COO Teddy Fusaro, aiming to address the "market manipulation and regulatory concerns" raised by the SEC in order to approve a Bitcoin ETF.

Market Manipulation Concerns

Regarding market manipulation, Bitwise stated that the Bitcoin market "has unique resistance" as the price of Bitcoin is determined by a free market, unlike traditional markets that rely on coordinated pricing. The document emphasizes:

The inherent fungibility of Bitcoin and the decentralized nature of the market allow for effective arbitrage between different exchanges, which helps to prevent the potential for market manipulation in Bitcoin.

Regarding the requirement for monitoring sharing, Bitwise pointed out that the New York Stock Exchange Arca has reached a monitoring sharing agreement with the Intermarket Surveillance Group (ISG) and the Chicago Mercantile Exchange CME.

Furthermore, to alleviate concerns about market manipulation and difficulties in monitoring, Bitwise also mentioned that the settlement price of CME's Bitcoin futures contracts is based on a comprehensive set of rules managed by CME's Regulatory Oversight Committee and extracts prices from five spot Bitcoin exchanges (Bitstamp, Coinbase, Gemini, itBit, and Kraken).

According to reports, William Herrmann, founder of New York asset management firm Wilshire Phoenix, also made the same arguments and submitted a Bitcoin ETF proposal to the SEC. However, the SEC has delayed its decision on the ETF until February next year.

Bitwise emphasized that there is a significant number of U.S. investors currently investing in Bitcoin, highlighting the importance of having "safe and efficient market tools" and citing a recent report from U.S. financial group Charles Schwab.

The study shows that millennials are more interested in investing in Grayscale's Bitcoin Trust Fund (GBTC) than in well-known companies like Netflix, Microsoft, and Alibaba.

Bitwise is not deterred by the SEC's rejection, stating that it is "obligated" to provide regulated, familiar fund formats, and access to Bitcoin for all investors. It concludes:

We believe that such an ETF would provide substantial protection for the millions of investors currently accessing the Bitcoin market through other means, as well as for future entrants to the market.

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