The decision on a bitcoin and U.S. Treasury bond exchange-traded fund (ETF) proposal filed by Wilshire Phoenix has been postponed by the Securities and Exchange Commission (SEC).
The SEC will continue evaluating the proposal, which was first filed earlier this summer, setting Feb. 26, 2020 as its next decision date to approve or reject the ETF proposal, according to a document published Friday.
By rejecting more than a dozen in the last two years, the securities regulator has been loathe to approve any bitcoin ETF. The agency has pointed to concerns about market manipulation and surveillance sharing as two areas it would like to see bolstered before it would approve an ETF.
Wilshire Phoenix assumes that it has identified a way to address these issues. During an interview in November, the founder and managing partner of Wilshire Phoenix, William Herrmann said the fact that his company’s proposal, filed with NYSE Arca, is a multi-asset trust protects it against bitcoin’s price volatility.
Should volatility increase, the faith will automatically restore balance itself to decrease its bitcoin exposure and increase its exposure to the Treasury bills. As volatility falls, so too does the Treasury bill exposure.
In an attempt to further assuage these concerns, the company filed a comment letter on Dec. 18. Herrmann said that the letter “addresses how the [exchange-traded product] is structurally and fundamentally different from prior bitcoin-related ETP applications.”
He said 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.
The five exchanges include Gemini, itBit, Bitstamp, Coinbase and Kraken, and they symbolize the majority of the bitcoin-U.S. dollar market. The exchanges also have surveillance-sharing agreements with the CME and CF Benchmarks, the reference rate’s administrator.
It remains a subject of great concern whether the SEC will give their consent to any bitcoin ETF in the near-term. The latest rejection happened, when the SEC denied Bitwise Asset Management’s latest bid, reiterated the agency’s concern.
The rejection is being reviewed by the SEC Commissioners however there is no clarity on when the decision will come.