US regulator delays decision on world’s first Bitcoin ETF
The SEC will not decide until February 26 whether to give green light to Wilshire Phoenix Bitcoin/Treasuries ETF
Investors around the world waiting for the first Bitcoin exchange-traded fund (ETF) will have to sit tight. The New York securities regulator said last week that it would delay deciding whether or not to give the fund the green light until February 2020.
Investment manager Wilshire Phoenix initially applied to the Securities and Exchange Commission in January 2019 to list a Bitcoin ETF. When traded on a stock market, this would give investors the chance to capture price volatility in a given asset without having to buy or sell the asset itself.
The SEC said in a statement on December 20 it would now not deliver a decision until February 26.
The SEC has rejected a flurry of proposals for Bitcoin-based ETFs from a number of companies. It cited concerns about the volatility of the price of the cryptocurrency and over regulatory issues, such as the ability for operators of a crypto-backed ETF to prevent market manipulation or other fraudulent activities.
Rather than offering an ETF entirely backed by Bitcoin alone, Wilshire Phoenix opted instead to propose a fund that also included short-dated US government bonds. These are known as T-bills and US dollars in proportions that it said would seek to mimic the exposure of a custom index to Bitcoin, thereby limiting investors’ exposure to any extreme price volatility.
The company has said the fund would only buy or sell Bitcoin once a month to adjust for shareholder inflows or redemptions, to maintain the balance of the assets contained in it. This means that any impact on the broader Bitcoin market would be very limited.
The ETF will use the Chicago Mercantile Exchange (the “CME”) CF Bitcoin Reference Rate as the reference price for Bitcoin.
FURTHER READING: US watchdog rejects latest proposal for Bitcoin ETF listing