The U.S. Securities and Exchange Commission (SEC) has published a memorandum Nov. 28 of the latest meeting regarding a Bitcoin (BTC) exchange-traded-fund (ETF) proposal. The application was originally brought to the commission by U.S. investment firm VanEck and blockchain software and financial services company SolidX.

According to the memorandum, representatives from VanEck and SolidX, as well as from the Chicago Board Options Exchange (CBOE) met with members of the SEC’s Division of Corporation Finance, Division of Trading and Markets, Division of Economic and Risk Analysis and Office of General Counsel Nov. 26.

As previously reported, in June 2018, VanEck joined SolidX to apply for a physically-backed Bitcoin ETF to be listed on CBOE’s BZX Equities Exchange: its approval or disapproval is still pending since the SEC postponed its decision this August.  

At the center of the presentation’s argument was a comparison of Bitcoin as a commodity with more traditional assets — crude oil, silver and gold — all of which already have ETFs at market.

In an analysis of price formation across traditional commodities alongside Bitcoin, the team argued that “[s]imilar to gold and silver, Bitcoin derives its value as a “money substitute” (unlike crude oil, which is a “pure industrial commodity”).

The presentation emphasized that in all three traditional commodity futures markets, “empirical evidence” shows that “spot and futures prices are cointegrated,” indicating they “are tightly linked.” The same, as per the presentation, pertains to Bitcoin spot and futures, and this pattern — for all commodities at hand — is “evidence of a well-functioning capital market.”

In another central argument, the VanEck-SolidX team argued that Bitcoin was in fact more resistant to market manipulation than its traditional counterparts with approved ETFs.

In the case of physical commodities, the team said that “inside information,” such as “the discovery of new sources of supply” or “significant disruptions” at production sites, can be exploited. For Bitcoin, these situations are “inapplicable,” according to the claimants.

Among further examples of Bitcoin’s “resilience” to manipulation, the presentation included the lack of a “strong concentration of funds on any particular Bitcoin exchange or OTC platform,” given that “[a]rbitrageurs must have funds distributed across multiple trading platforms in order to take advantage of temporary price dislocations.”  

Moreover, the “arbitrage process also has advantages in Bitcoin as compared to other commodities, such as oil, because the homogeneity of Bitcoin makes for a uniform worldwide market rather than regional semi-independent markets that result in non-fungibility and market fragmentation.”

As reported earlier this week, VanEck has just announced a partnership with the world’s second largest stock exchange Nasdaq to jointly launch a set of “transparent, regulated and surveilled” digital assets products, starting with a Bitcoin futures contract, slated for as early as Q1 2019.