Bitcoin ETF Heads Toward the SEC Starting Gate

February 16, 2019 12:43 AM

A proposal for a bitcoin exchange-traded fund (ETF) is now back on track after a fitful start with the US Securities Exchange Commission (SEC).

On January 10, Bitwise Asset Management officially proposed the concept and an operating framework to the US Securities and Exchange Commission (SEC). The firm explained in its SEC Form S-1 registration statement that Bitwise Bitcoin ETF Trust would track the Bitcoin Total Return Index, seeking to capture the full value of an investment in bitcoin, “inclusive of meaningful hard forks.” The mentioned index is produced by Bitwise Index Services, LLC. At that time, Bitwise also explained that if regulatory approval came through, the fund would be listed on NYSE Arca, which is touted as the first all-electronic exchange in the US.

The January partial shutdown of the federal government was one impediment in the way of the Bitwise Bitcoin ETF, but this week saw movement. The SEC announced that a rule change (needed for the Bitwise Bitcoin ETF) had been posted in the Federal Register. The SEC has up to 240 days to make a final determination on whether the Bitwise Bitcoin ETF, in this iteration, will get a green light to proceed. Interested parties can weigh in with comments over the next three weeks.

Bitwise believes the newly proposed bitcoin ETF will address some of the SEC’s major concerns about such a fund. The fund’s value, for example, will not be based on contracts settled in cash, as with previously proposed crypto ETFs, according to a press release. This new ETF will instead be valued based on spot prices from various cryptocurrency exchanges “representing the majority of currently verifiable bitcoin trading.” Another point of argument: The Bitwise Bitcoin ETF will differ from previous proposals because it will employ the services of “third party custodians to hold its physical bitcoin” instead of holding funds on an exchange or in a personal bank account.

Another contender involving VanEck, described in the official VanEck/SolidX proposal, was also temporarily stymied by the government shutdown. It submitted a fresh proposal at the end of January, shortly after pulling a similar request. There’s no word as of now on that candidate’s latest progress at the SEC.

Mary Driscoll covers finance and business trends as a staff writer for ETHNews. She formerly served as an editor for management and finance at the Economist Intelligence Unit and a research principal at APQC. In addition, she has written for The Wall Street Journal CFO Report, HBR-online, and strategy + business. Her book on corporate treasury management was published by John Wiley & Sons, Inc. Mary enjoys hiking and skiing in the Sierras with family. Her goal in life is to win big on Jeopardy.

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