One company thinks it knows how to get the bitcoin exchange-traded fund (ETF) approved by US regulators.
Wilshire Phoenix, a relatively young financial company in New York, the United States proposes to launch Bitcoin & Treasury Investment Trust ETF in May with the NYSE Arca. At that time, a dozen bitcoin ETF proposal already patted down by the U.S. Securities and Exchange Commission (SEC) – including nine in one day. But unlike other ETF application, Phoenix Wilshire ETF will invest in both bitcoin and US Treasury securities, commonly referred to as T-bills.
The SEC is currently reviewing the application.
“We propose bitcoin-related ETFs are very different from those that have previously been submitted to the Commission for approval,” Wilshire said Phoenix co-founder and managing partner William Herrmann in a telephone interview. “For only a few differences, the composition of the Trust is very different. Our belief is a multi-asset trust (bitcoin and T-Bills), compared with only bitcoin. ”
The SEC has long hesitated to approve ETF with exposure to digital assets, citing the relatively young age of the market and possible risk for investors. The agency has rejected a number of proposals, while other applicants have proactively withdrawn their filings.
Herrmann said Wilshire ETFs have some mechanism to deal with this problem.
Trust itself automatically will balance itself monthly to address possible concerns about bitcoin’s price volatility, Herrmann explained. Basically, if the bitcoin price volatility increases, the index will reduce the exposure of cryptocurrency instead of increasing the exposure to Treasury bills. As bitcoin volatility falls, the opposite occurs.
the weight will be transparent, with the index displayed on Bloomberg and Thomson Reuters portal, he said.
This CME Reference Rate Bitcoin will provide data for the price of bitcoin in Trust, rather than using the price at home “or one of each of the parties involved,” he added.
Wilshire Phoenix also hopes to address issues of market manipulation SEC using surveillance sharing agreements, one of the components is required when the regulator stressed bitcoin ETF reject applications recently. Herrmann said:
“The CME has surveillance sharing agreements with both the CME futures market as well as the relevant portion of the spot market that forms the basis for the Trust’s bitcoin values. This addresses the SEC concerns about the lack of surveillance sharing agreements with the relevant spot market, which is something previous applicants have not been able to address. “
More recently, the SEC denied Bitwise Asset Management funds. In a 112-page order issued October 9th defeat regulator said-sharing agreements necessary supervision and market manipulation remain a real concern.
As recently as September, SEC Chairman Jay Clayton said that while progress had been made in space, the unresolved question of market manipulation.
For Phoenix Wilshire proposal, the SEC began accepting comments on the proposal in June, although the final decision is still months away. The agency is currently accepting comments on the proposals by 12 November 2019.
Herrmann is optimistic about the possibility of the ETF proposal, saying “we develop the ETF is consistent with the protection of investors and fair, orderly and efficient markets.”
SEC image via Shutterstock