While a bitcoin exchange traded fund remains elusive in the U.S., another firm revealed plans to bring such a fund to market. In a recent filing with the Securities and Exchange Commission (SEC), New York-based Wilshire Phoenix, an asset management firm, unveiled plans to launch the United States Bitcoin and Treasury Investment Trust.
To date, U.S. regulators have consistently rejected efforts by ETF issuers to bring bitcoin-related ETFs to market.
Last year, the SEC rejected the applications, preventing the digital currency from gaining more acceptance from investors who are wary of the unregulated exchanges of cryptocurrencies. The SEC’s Division of Trading and Markets rejected applications from investment firms ProShares, Direxion and GraniteShares.
In previously turning back the bitcoin ETF applications, the SEC stated, “Among other things, the Exchange has offered no record evidence to demonstrate that bitcoin futures markets are ‘markets of significant size.’ That failure is critical because, as explained below, the Exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, and therefore surveillance-sharing with a regulated market of significant size related to bitcoin is necessary.”
Inside Wilshire Phoenix’s Effort
Wilshire Phoenix’s United States Bitcoin and Treasury Investment Trust will hold U.S. dollars and short-dated Treasuries in addition to bitcoin in an effort stem some of the volatility associated with cryptocurrencies. That means the fund, if approved, would not exactly replicate a direct investment in bitcoin, the largest digital currency.
“While the Shares are not intended to, nor is their purpose to, replicate a direct investment in bitcoin, they seek to provide investors with exposure to bitcoin with substantially lower volatility than a direct investment in bitcoin and without the uncertain and often complex requirements relating to acquiring and/or holding bitcoin,” according to the filing.
A major problem with bitcoin ETFs, as far as the SEC is concerned, is the potential for bitcoin thefts. Over the digital currency’s history, exchanges and individual users have been victimized by nefarious hackers that steal investors’ assets, something that does not happen with traditional securities, including ETFs.
Last week, Bitwise Asset Management, a leading provider of cryptoasset index and beta funds, revealed plans for a bitcoin ETF that would track the firm’s Bitwise Bitcoin Total Return Index.
Bitwise has spent over a year addressing and researching the SEC’s concerns surrounding bitcoin ETFs and is poised to address those concerns with regulators.
For more information on the cryptocurrency market, visit the Bitcoin category.