Bitwise CIO Matt Hougan Discusses Amended Spot Bitcoin ETF Application

Key Takeaways

1. Matt Hougan, CIO of Bitwise, provides detailed insights via Twitter on the company's amended spot Bitcoin ETF application.
2. Hougan focuses on the need to establish that the CME bitcoin futures market is the leader in price discovery.
3. The amended application is designed to address each of the SEC's major objections to spot Bitcoin ETFs.

Matt Hougan's In-Depth Twitter Commentary

Matt Hougan, the Chief Investment Officer at Bitwise, took to Twitter on September 25, 2023, to offer a comprehensive breakdown of the firm's amended application for a spot Bitcoin ETF. In a detailed thread, Hougan stated that the amendment aims to "address, point by point, each of the major objections the SEC has raised in prior disapprovals for spot bitcoin ETFs."

The Imperative of Proof

One of the critical points Hougan emphasized was the necessity of demonstrating that the CME bitcoin futures market is the leading force in price discovery over the spot market. He articulated, "We're back to needing to prove that the CME bitcoin futures market leads price discovery over the spot market such that it can serve as a 'regulated market of significant size' for the purpose of surveillance."

Academic Literature and Price Discovery

Hougan further delved into the academic aspect, stating that the amended application aims to "clear up the significant confusion around the growing body of academic literature on price discovery in the bitcoin market." He was unequivocal in asserting that "every well-designed academic study supports the finding that the CME is 'significant.'"

Regulatory Challenges and Surveillance

Hougan also touched upon the regulatory hurdles that Bitwise and other applicants face. While acknowledging that "surveillance sharing agreements with spot exchanges are positive," he cautioned that these might "not satisfy the technical regulatory requirements" as stipulated by the SEC.

Bitwise's Commitment to Research

Hougan used the Twitter thread to highlight Bitwise's longstanding commitment to original research in their Bitcoin ETF filings. He cited the company's 2019 research that aimed to uncover fake volume in the spot market and their 2021 white papers that sought to prove the CME futures market's leading role in price discovery.

The Long Road to Approval

Hougan concluded his thread by reiterating Bitwise's commitment to making a spot Bitcoin ETF a reality. He mentioned that the company has been working towards this goal for over five years and expressed gratitude towards others who have contributed to the cause.

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