This is a nonsense position, though. Crypto futures markets track spot markets. It doesn't make the slightest bit of sense to allow futures and not spot. If spot is manipulated, so are futures.

Cme btc futures can be spot settled if you can find a willing counterparty for an otc block trade.

I really don't understand the logic of this. The futures markets follow the spot market. If there's manipulation of the spot markets that is so short term that it doesn't affect the futures markets, it shouldn't affect a spot ETF either. And if there's manipulation of the spot markets that is long term, it will affect the futures markets just as much as a spot ETF. What kind of manipulation is the SEC specifically worried about that would affect a spot ETF but not the futures market?

> spot markets are highly manipulated but futures markets aren't

If the spot market is manipulated, the futures will reflect the manipulated price. Though the SEC doesn't come out and say it, it looks like this is a concern around custodianship.

Bitcoin futures are hedged at the periphery. If a trader loses their Bitcoin, they are unhedged and go broke through usual channels. Bitcoin ETFs hold that risk at the centre. If they lose their Bitcoins, we have to deal with trading halts and moms-and-pops losing their shirts and the family office that quintuple-leveraged their ETF bet and is threatening to take out a bank.

Why wouldn't they come out and say it?

> Why wouldn't they come out and say it?

Gives the applicant space to cure the concerns and the SEC room to reverse in the future.