Dec. 2, 2023
Dear Members of the Securities and Exchange Commission, I write to express my unequivocal support for the Franklin Bitcoin ETF proposal by Cboe BZX Exchange, emphasizing the transformative potential of Bitcoin in addressing the inefficiencies of our current financial system and its integral role in combating climate change. Response to SEC's Queries: Vulnerability to Manipulation: The proposed Bitcoin ETF stands as a beacon of resilience against market manipulations. The nature of Bitcoin's market – geographically diverse, continuously traded, and fragmented across multiple platforms – inherently reduces the risk of price manipulation. The slow transaction speed and significant capital required to maintain a presence on each trading platform further bolster this resistance. Bitcoin's decentralized nature and robust blockchain technology provide an additional layer of security against manipulation. Market Size and Maturity: The Bitcoin market has reached a significant size and maturity, reflecting a robust and well-established financial ecosystem. This growth is indicative of a stable and reliable market, ready for further institutional investment through vehicles like the proposed ETF. Resistance to Price Manipulation: Commentators have rightly pointed out Bitcoin's resilience against price manipulation due to its geographical diversity, continuous trading nature, fragmentation, slow transaction speed, and the capital required to influence the market significantly. These factors collectively contribute to a more stable and less manipulable market environment. Effectiveness of the Proposed Surveillance Agreement: The proposed surveillance agreement with Coinbase, Inc. is a commendable initiative that will significantly enhance the exchange's market monitoring capabilities. This collaboration is expected to be highly effective in detecting, investigating, and preventing fraud and market manipulations, thereby ensuring the integrity and reliability of the Bitcoin ETF. Correlation Between Bitcoin Spot and Futures Markets: The correlation between the Bitcoin spot market and the CME Bitcoin futures market is a critical indicator of the latter's significance. This correlation provides compelling evidence that the CME Bitcoin futures market is a major player in the Bitcoin ecosystem. It reflects the growing acceptance and integration of Bitcoin in traditional financial markets, further supporting the case for the Bitcoin ETF. My further view on bitcoin: Advantages of Bitcoin over Traditional Assets: Bitcoin's blockchain technology enables unparalleled transparency in asset management. Unlike gold, where it's impossible to ascertain who holds what amount at any given time, Bitcoin's ledger allows for real-time tracking of holdings. This transparency is vital for ETF managers and custodians like Coinbase, ensuring accurate representation of Bitcoin quantities and preventing dilution. Such visibility is essential in maintaining the integrity of Bitcoin as an asset class and should be a mandatory practice for Bitcoin ETFs. Bitcoin ETFs Enabling Risk-Free Corporate Investment: The introduction of a Bitcoin ETF would allow companies to invest in Bitcoin without the associated risks of direct cryptocurrency involvement. In the unlikely event that a Bitcoin ETF is not approved, I urge the SEC to consider legislation that facilitates and simplifies corporate Bitcoin investment, reflecting the growing need for innovative financial solutions. Bitcoin and Climate Change Mitigation: Many climate change projects struggle with profitability due to excess electricity generation. Utilizing this surplus energy for Bitcoin mining can transform these projects into financially viable ventures. This approach not only supports the sustainability of such initiatives but also turns Bitcoin into a powerful tool in the most crucial battle of our times - combating climate change. By fostering renewable energy integration in Bitcoin mining, we can create a synergistic relationship between environmental sustainability and financial innovation. In conclusion, the approval of the Franklin Bitcoin ETF represents a crucial step towards embracing the multifaceted benefits of Bitcoin. This ETF is not just an investment vehicle; it's a gateway to a more transparent, equitable, and sustainable financial future, aligning with the urgent need for innovative solutions in our economy and environment. Thank you for considering my perspective on this important matter. Best regards, Julian Schettler