In October, it was revealed that the SEC had rejected the much-awaited Bitwise ETF. However, it seems that the SEC has reconsidered its decision and it is taking a second look at the application. While many in the cryptocurrency industry have praised this move, it is not clear why the SEC has made this decision.
SEC May Reconsider its Decision
On October 9, the SEC published a 112-page document laying out the reasons why it had rejected the ETF application by Bitwise. The SEC later published a document on November 18 claiming that its five commissioners would review the Bitwise application. This review does not mean that the SEC will approve the SEC. However, it states that the SEC will allow the public to comment on the rejection of the ETF until December 18.
Matt Hougan, the global head of research at Bitwise, recently revealed that the firm did not make an application to have the rejection reviewed. This process seems to have been initiated independently by the SEC. The review comes shortly after various experts commented that the rejection of the ETF application had major flaws. For instance, one of the reasons given by the SEC for rejecting the ETF was that it was not convinced in regards to the Bitcoin market that underpins the ETF.
Bitcoin Enthusiast Does Not Believe a Bitcoin ETF Will Succeed
While the SEC is having doubts about its previous decision, one Bitcoin enthusiast is not convinced that the Bitcoin market is ready for an ETF. Thomas Lee, the co-founder of Fundstrat Global Advisors, recently expressed his sentiment during the Blockshow event that took place in Singapore.
While he is still optimistic about the future of crypto, he said that for the SEC to approve a Bitcoin ETF, the Bitcoin market cap would need to be about 16 times larger than it is today. According to a Bloomberg report, Lee believes that Bitcoin would need to be worth about $150,000 for an ETF to make sense. In short, Lee does believe that the current Bitcoin spot market has enough liquidity to meet the liquidity demands of an ETF.
Lee compared a Bitcoin ETF to the chicken and egg riddle. If an ETF were launched, it would lead to a BTC rally, which would push the price of BTC above $100,000, helping to boost liquidity. However, the current market is not large enough for an ETF to make sense.
However, Lee is not the only one who is not optimistic about a Bitcoin ETF. Another expert in the finance market, Todd Rosenbluth, who is Director of Mutual & Exchange Traded Fund Research, at CFRA, a markets research company, also holds the same sentiments. During a recent CNBC interview, he claimed that the SEC was worried about the underlying asset and not about the ETF itself.
Other experts in the crypto space do not even believe there is a need for a BTC ETF. One such expert is Sasha Fleyshman, who is a trader at Arca, a crypto investment management firm. He tweeted that there were already platforms in place for mainstream investors who wanted to invest in the crypto space.
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