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Crypto Call to Action: SEC Delays Decision on Wilshire Bitcoin ETF Proposal, Asks Public for More Comments

September 24, 2019

In a filing published today, the U.S. Securities and Exchange Commission is requesting more time to make a decision on a pending Bitcoin exchange-traded fund (ETF) proposal first filed in May. The proposed rule change would allow NYSE Arca to list and trade shares of Wilshire Phoenix’s Bitcoin and Treasury Investment Trust.

According to the document,

“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’ and ‘to protect investors and the public interest.’”

The SEC further notes,

“Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved.”

The Commission says its seeking more public comments on several questions that are primarily focused on market manipulation.

Requests for comments on the following issues

  • The exchange’s assertion that the “proper‘ market’ that one should evaluate to determine whether the ‘market’ is inherently resistant to manipulation is the segment of the market formed by the Constituent Platforms”

  • The Exchange’s assertion that the CME CF BRR (Bitcoin reference rate) is not susceptible to manipulation

  • Whether the platforms are regulated markets of significant size related to Bitcoin

  • The Exchange’s assertion that the trading volume in CME Bitcoin futures makes the CME a regulated market of significant size related to Bitcoin

  • The requirement that shareholders may redeem all or a portion of its shares only on the last business day of each calendar month – would this restriction on redemptions affect the ability of arbitrage to keep the price of the shares aligned with the value of the portfolio continuously during the trading day over each monthly period?

Unlike prior Bitcoin ETF proposals, the Wilshire Bitcoin ETF is billed as “less volatile” and would hold Bitcoin, short-term US Treasury bills and US dollars.

Public comments initially opened in May. A total of six are currently on record with the most recent comment logged on July 17.

The SEC is now legally obligated to make a final decision in 35 days and is currently seeking more comments on the proposal via snail mail in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; via email to [email protected] with File Number SR-NYSEArca2019-39 on the subject line and via its online form.

You can check out the filing here.

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