While Mr. Hougan doesn't claim to speak for the market, a footnote contained in a March 10 statement issued by SEC Commissioners Hester M. Peirce and Mark T. Uyeda expressing their dissent after the commission disapproved a proposal for a spot bitcoin exchange-traded product called the VanEck Bitcoin Trust, suggests he's not alone in his opinion.
"Based on a review of exchange filings on the commission's website, there appear to be no active spot bitcoin ETP filings currently before the commission," the footnote said, adding that their absence perhaps reflects "the market's reasonable conclusion that this commission will not approve a spot bitcoin ETP, at least not until the SEC has regulatory authority over spot bitcoin markets."
Despite the bitcoin market's "significant evolution," the SEC has continued to disapprove every application by an exchange to list and trade shares of a spot bitcoin exchange-traded product that has come before it, the statement said.
"In our view, the commission is using a different set of goalposts from those it used — and still uses — for other types of commodity-based ETPs to keep these spot bitcoin ETPs off the exchanges we regulate," the two commissioners said.
The commissioners' statement said it's worth reflecting on the SEC's approach to spot bitcoin ETPs "and what this bodes for the future of innovation, and by extension, for investor protection and capital formation, in our markets."
On June 29, the SEC issued separate orders disapproving applications for proposed rule changes filed with it by NYSE Arca to list and trade shares of the Bitwise Bitcoin ETP Trust and the Grayscale Bitcoin Trust.
Grayscale Investments, sponsor of the Grayscale Bitcoin Trust, is suing the SEC for denying the application to convert the trust into a spot bitcoin ETF. In its opening brief, Grayscale argued that the SEC had arbitrarily treated a proposed spot bitcoin ETP differently from the way it treats bitcoin futures ETPs.
Grayscale, as is common, uses the generic term ETF to describe its proposed product when, strictly speaking, it would be an ETP. As defined in the SEC's order regarding the Grayscale Bitcoin Trust, the term ETPs refers to exchange-traded products that register the offer and sale of their shares under the Securities Act of 1933 but are not regulated under the Investment Company Act of 1940.
On March 7, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments in the Grayscale case.
"The court asked thoughtful, pointed questions about the inextricable link between bitcoin spot markets and bitcoin futures markets — the exact points that are the bedrock of the case to convert GBTC to an ETF," a spokeswoman for Grayscale said in comments following oral arguments, referring to the trust by its ticker symbol. "We look forward to the court's final decision."
Grayscale has said it expects a decision in the case this fall.
Bitwise meanwhile is continuing to monitor the situation, according to Mr. Hougan, who said that just because there doesn't appear to be a path forward for a spot bitcoin ETF at the SEC currently doesn't mean that there will never be one.
"Spot bitcoin ETFs operate successfully in many markets around the globe, and we think we will eventually see them here in the U.S.," he said.
The SEC did not provide a response to a request for comment sent by email Wednesday.