SEC Postpones Decision on Wilshire Phoenix’s Bitcoin ETF Proposal

The Securities and Exchange Commission (SEC) has deferred its decision on a bitcoin and U.S. Treasury bond exchange-traded fund (ETF) proposal filed by Wilshire Phoenix. 

As indicated by a document published on December 20, the SEC will keep assessing the proposal, which was initially filed earlier this summer, giving February 26, 2020, as its decision date to reject or approve the ETF proposal.

The securities regulator has been disinclined to favor any bitcoin ETF, rejecting over a dozen twelve in the last two years. The office has highlighted worries about market manipulation and surveillance sharing as two zones it might want to see reinforced before it would favor an ETF.

Wilshire Phoenix trusts it has figured out how to address these worries. In November, Wilshire founder and managing partner William Herrmann stated the fact that his organization’s proposal, filed with NYSE Arca, is a multi-asset trust that ensures it against bitcoin’s value instability.

Should volatility rise, the trust will consequently rebalance itself to diminish its bitcoin exposure and increase its exposure to the Treasury bills. As volatility increases, so does the Treasury bill exposure.

The firm filed a comment letter on December 18 in a bid to additionally assuage these worries. Herrmann said on December 20 that the letter “addresses how the [exchange-traded product] is structurally and fundamentally different from prior bitcoin-related ETP applications.”

“The comment goes on to show how the two markets that are relevant to the Trust – referred to by the Commission as the ‘regulated markets of significant size’ – are the CME bitcoin futures market and the spot market composed of the five constituent exchanges from which pricing for the CME CF BRR is determined,” he stated.

The five exchanges include Kraken, itBit, Coinbase, Bitstamp, and Gemini, and they represent the majority of the bitcoin-U.S. dollar market, he stated. The exchanges additionally have surveillance-sharing agreements with the CME and CF Benchmarks, the reference rate’s administrator.

It is still not clear whether the SEC will endorse any bitcoin ETF soon. The latest rejection, when the SEC denied Bitwise Asset Management’s most recent proposal, reiterated the agency’s worries.

The SEC Commissioners are assessing that rejection, although it is unclear when they may arrive at a decision.