Cryptocurrency firm Bitwise has withdrawn its bitcoin futures ETF application, according to Bitwise CIO Matt Hougan, who announced on Twitter. However, the spot filing remains in play and competes with several other applications for the United States Securities and Exchange Commission’s (SEC) attention. Hougan explained the withdrawal, which on the whole comes down to spot ETFs being better for long-term investors and the costs associated with futures ETFs.
1/ Today, @BitwiseInvest withdrew its application to list a bitcoin *futures* ETF. (Our spot filing remains.)
Thought I’d share our thinking.
— Matt Hougan (@Matt_Hougan) November 10, 2021
“Bitwise will continue towards its goal of a spot bitcoin ETF.”
Hougan referred to the contango when the futures price of an asset is higher than its spot price. He says that Bitwise’s analysis shows that contango would cost investors 5–10% every year before compounding. Currently, contango is over 6%, and that the benefits of a futures-based bitcoin ETF don’t make it worthwhile. The end result of all of this is “costs on top of costs, plus added complexity.” Hougan concludes the Twitter thread by saying that Bitwise will continue towards its goal of a spot bitcoin ETF.
SEC willing is to allow futures-based bitcoin ETFs.
The SEC has signaled its willingness to allow futures-based bitcoin ETFs, and SEC Chair Gary Gensler has made comments relating to the same. Investor protection remains a priority for the SEC, but Gensler sees established investment pacts and federal securities laws providing adequate protection for these investment vehicles. The number of ETF applications has been steadily rolling in over the past 12 months, with more approvals on the horizon. Earlier, the ProShares bitcoin futures ETF has performed very well, which, in October 2021, already neared its limit on futures contracts. VanEck has also received approval for its much talked about bitcoin futures ETF.