Currently the United States Securities and Exchange Commission (SEC) is reviewing its decision to reject the Bitcoin (BTC) exchange-traded fund (ETF) filing from Bitwise Asset Management and NYSE Arca.
Taking another Look
On 18th November, the commission gave an announcement saying that the ETF filing from Bitwise Asset management and NYSE Arca will return to review, and this is following the rejection earlier for not being able to meet the necessary requirements.
The U.S. regulators in October also said that the applicants did not meet the necessary requirements regarding possible market manipulation and illicit activities. At the time, the SEC wrote:
“The Commission is disapproving this proposed rule change because, as discussed below, NYSE Arca has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b) (5), and, in particular, the requirement that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.”
Market Manipulation Concerns
One of the major concerns of the regulators when evaluating new commodity-based ETFs is to establish whether the underlying market is resistant to manipulation. In the order of SEC which rejected the application of Bitwise, the commissioners wrote that the evidence insufficiently support the claim that the “real” spot market for Bitcoin, when “fake and/or non-economic data is removed,” is insufficiently resistant to manipulation.
But, today the regulator announced that it is reviewing the proposal which means any part or person may be able to file a statement in support of, or in position to, the action made pursuant to delegated authority – and this should be no later than 18th December 2019.
The SEC also further points out that the order to disapprove the proposed listing of the ETF filing from Bitwise Asset Management and NYSE Arca will remain in effect pending the review of the Commission.
First Crypto ETF Approval Timeline?
Recently, the CEO of the confidential ledger protocol Findora, Charles Lu said of a realistic timeline for the first crypto ETF approval, that he is doubtful about the speed of the process:
“For a bitcoin ETF proposal to gain SEC approval, the sponsor will need to prove that real price discovery is happening as opposed to market manipulation.” Lu did not believe this will happen in the near future, adding: “The SEC will require surveillance-sharing agreements with significant cryptocurrency exchanges — a requirement that few foreign-domiciled exchanges will agree to.”
Also, professionals in the industry seem to display a certain level of reserved optimism, which they do believe at some point, the crypto industry will get its coveted prize, although not just yet.