The US Securities Commission (SEC) is once again preparing to approve or reject Wilshire Phoenix Bitcoin ETF. Wilshire Phoenix’s Bitcoin and Treasury Investment Trust filing deadline set for Wednesday.
25 February, 2020 | AtoZ Markets – Wilshire Phoenix is the latest in a long line of companies hoping to obtain SEC approval to list the shares of a bitcoin ETF. It is only one to have made an active application to the securities regulator. Such an instrument would allow investors to gain exposure to the bitcoin market without what some see as an additional difficulty in owning bitcoins. It could boost the market participation of people who are wary of bitcoin’s position as an unregulated investment.
Will Wilshire Phoenix ETF application See the Light?
The SEC’s approval of the Wilshire Phoenix ETF application does not raise much hope. Especially since the regulatory has already refused all other ETF requests that have been submitted.
The company submitted ETF’s request in mid-2019, the regulatory body repeatedly postponed any decision, which led to the final deadline of 26 February. The main concerns of the SEC are:
- The SEC wants ETFs to follow several exchanges to maintain fair pricing. The arbitration possibilities prevent the valuation from being played on a single exchange.
- Bitcoin’s daily trading volumes are in the billions. But, the SEC remains concerned about the liquidity of the Bitcoin markets.
- Fortunately, Bitcoin and crypto custodial solutions came a long way in the past two years, when the SEC released its statement. This aspect may become less of an obstacle to future decisions.
- There are many crypto exchanges, but most of the volumes are made on a dozen regulated / reputable exchanges. Closing an exchange should not prevent arbitrage or affect the price.
- The SEC believes that Bitcoin poses the same risk as other asset classes for market manipulation.
Wilshire is trying to address these concerns by composing its ETF with a basket. It automatically rebalances between US Treasury bonds and bitcoin in response to the volatility of the cryptocurrency. When volatility increases, the basket favours bonds and vice versa.
Wilshire managing partner William Herrmann said he was optimistic about the filing. Herrmann previously stated that in his opinion, this automatic rebalancing reduces the risk for investors.
The SEC Certainly Paying Attention to the Filing
The SEC certainly seems to be paying attention to the filing. According to public documents, Commissioners Hester Peirce and Allison Herren Lee both met with representatives from Wilshire Phoenix, NYSE Arca and their law firms.
The Division of Trading and Markets also met with company officials in January, as well as twice last year, to discuss the proposal. However, the SEC’s thinking on the proposal remains opaque.
Another SEC commissioner, Robert J. Jackson Jr, also expressed positive feelings towards a Bitcoin ETF, with one caveat, that the ETF meets the standards set by the agency.
Mr. Herrmann of Wilshire said that the product would allow a wider group of investors to access what is essentially a new asset. However, the bitcoin ETF Wilshire is part of a larger family of such products. The company has also filed a request to issue gold and Treasury-backed ETF.
Herrmann believes creating multiple investment strategies for consumers is part of its overall strategy. “We are confident, and we will soon have the bitcoin ETF, and the gold ETF will not be far behind. We intend to launch many more products as well,” said Herrmann.
If Wilshire Phoenix’s proposal meets the guidelines established by the SEC, it can be approved as the first Bitcoin ETF. It would be extremely positive for Bitcoin and the entire crypto market.
However, judging by the SEC’s recent refusals against other ETF applicants, this is probably only wishful thinking at the moment.
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