New details regarding the Bitcoin exchange-traded fund (ETF) proposed by NYSE Arca and Bitwise have surfaced.
Earlier this month, Bitwise Asset Management revealed its plan to launch the ETF. If the Bitcoin ETF is approved, it would be the first to make it to the US market.
At the time, the firm stated that NYSE Arca would soon file the 19b-4 rule change proposal. NYSE Arca filed the form on the same day. However, it was not listed on any SEC website possibly because of the current US government shutdown. Therefore, despite being posted on NYSE Arca’s website, the document went largely unnoticed.
According to Bitwise, the ETF proposal is different from previous efforts since a regulated third-party custodian would keep the Bitcoins. The firm also stated that pricing data would be drawn from several exchanges, including spot and physically settled futures markets, to compute the index determining the value of the assets.
The filed proposal details the methodology, noting, for instance, that the prices would be “weighted such that bitcoin prices from exchanges with a greater amount of the trading volume in the prior hour are weighted more heavily than bitcoin prices from exchanges with lesser amounts of volume.”
“The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest,” the proposal reads. The SEC highlighted market manipulation concerns in previous ETF rejections.
“… given the fungible nature of bitcoin, the Index Provider believes that the potential impact on Index values of individual exchanges experiencing outside attempts to manipulate either reported volume or reported prices is muted by the use of a large number of exchange price and volume inputs,” NYSE Arca’s proposal states.
Although NYSE Arca has submitted the proposal, the clock has not yet started for its rejection or approval. “The SEC’s deadline for deciding an ETF proposal is triggered by publication in the Federal Register,” Kobre & Kim’s Attorney Jake Chervinsky said.
“That almost certainly won’t happen until after the government shutdown ends,” he stated via email. “According to the SEC’s operations plan, they have discontinued all processing and review of proposed rule changes due to the lapse in appropriations.”
Past Bitcoin ETF proposals were rejected or withdrawn. Cboe has recently pulled its joint effort with SolidX and VanEck. Per VanEck CEO Jan van Eck, the government shutdown is a key reason for such, saying firms have been discussing with the SEC before the shutdown, but the conversations had stopped. Nevertheless, he stated that the companies would re-file once the government re-opens.