Bitwise Bitcoin ETF not dead yet

Bitcoin has lost 14% this year

Bitcoin exchange-traded funds filed with the Securities and Exchange Commission have mostly been dead in the water, but there may be hope for one.

Rather than rejecting outright the Bitwise Bitcoin ETP Trust, the SEC has designed a longer review time, announced last week, asking for more specifics on how manipulation could be prevented. 

The investment firm, in a statement to FOX Business, said it will keep pushing to win approval. 

"Bitwise remains committed to continuing to engage with the SEC on the pathway to launching a Bitcoin ETF. We appreciate the directed questions articulated by the SEC as we continue the dialogue on this important topic. We will also continue to work to provide the SEC with data-driven answers to their questions in order to help remove the obstacles to getting the American public access to this important product," said Bitwise general counsel and chief compliance officer Katherine Dowling.  

This week Bitcoin's price has stabilized to around the $43,000 level, bouncing back. 

LIVE: CRYPTOCURRENCY PRICE DATA

FOX Business pulled a sampling of questions the SEC is asking from the rule filing, including: 

– What are commenters’ views on whether the proposed Trust and Shares would be susceptible to manipulation?

– The Exchange asserts that "the Sponsor’s analysis shows that trading in the Trust is unlikely to become the predominant influence on prices in the CME [bitcoin futures] Market, even when assuming aggressive estimates of first-year flows of $4.7 billion and average daily trading volume of $143 million." Do commenters agree or disagree?

– Do commenters agree with the Exchange that "it is unlikely that a bitcoin ETP will experience the highest first-year flows in history," and that the 2020 inflows to the Grayscale Bitcoin Trust (GBTC) of $4.7 billion is an "aggressive" working estimate for first-year flows into a new bitcoin ETP?

FOX Business' inquiries to the SEC were not returned. 

The commission has not been kind to Bitcoin ETF hopefuls, rejecting the majority of applications thus far, citing fears investors won’t be protected enough. 

SEC RULES ON FIDELITY'S BITCOIN ETF

Earlier this year, the commission said mutual fund giant Fidelity’s application did not satisfy regulators because it failed to show it can protect investors from fraud, as detailed in the SEC ruling

"While we are disappointed by the outcome of the SEC’s deliberations resulting in today’s disapproval order, we reaffirm our belief in market readiness for a physical bitcoin exchange traded product and look forward to continued constructive dialogue with the SEC," the firm said. "Fidelity’s comprehensive research on bitcoin trading in global spot and futures markets shows the maturation of these markets and the price discovery leadership of the regulated CME Bitcoin futures market, which satisfies the SEC’s standards for listing approval as applied to many existing spot-backed exchange products currently available for trading, including gold, silver, platinum, palladium and copper."

In November, the commission rejected VanEck’s Bitcoin ETF for similar reasons.

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Ticker Security Last Change Change %
BITO PROSHARES TRUST BITCOIN STRATEGY ETF 18.33 -0.02 -0.11%
GCC WISDOMTREE TRUST ENHANCED COMMODITY STRATEGY 25.82 +0.25 +0.98%
BITQ EXCHANGE TRADED CONCEPTS TRUST BITWISE CRYPTO INNOVATORS E 8.10 +0.32 +4.11%

The SEC has given the green light to ETFs that offer exposure to Bitcoin but are not pure plays, including ProShares Bitcoin Strategy ETF, WisdomTree’s Enhanced Commodity Strategy Fund and the Bitwise Crypto Industry Innovators ETF.