Bitwise Asset Management is trying again to get approval from the Securities and Exchange Commission for a cryptocurrency ETF.
It has filed a registration statement for a Bitcoin ETF that it says responds to questions the SEC had raised about previous bitcoin ETF filings from other firms. Bitwise itself had filed in July for an ETF based on an index of multiple cryptocurrencies, not one focusing just on Bitcoin, but hasn’t pursued it further.
Its latest filing addresses some of the concerns that the SEC has spelled out in previous Bitcoin ETF filings, noting that its ETF will rely on regulated third-party custodians to hold its physical Bitcoin and its underlying Bitcoin index would draw prices from a large number of cryptocurrency exchanges, representing the majority of currently verifiable bitcoin trading.
No action is expected while the government shutdown persists since the SEC is among the agencies that are operating with a skeleton staff. To date, the SEC has not approved any cryptocurrency ETF but has rejected filings, often asking for more information.
As recently as November, SEC Chairman Jay Clayton told a cryptocurrency conference that he remains concerned about potential manipulation in the cryptocurrency market. “What investors expect is that trading in a commodity that underlies an ETF [needs to] makes sense and is free from the risk of manipulation.” He said this is “an issue that needs to be addressed” before he would want to see trading in cryptocurrency ETFs.
Over the past year the price of Bitcoin, which is just one of many cryptocurrencies, has dived about 80%, from over $15,000 to slightly over $3,600, suggesting that investors may not be too enthusiastic about a Bitcoin ETF
“Volatility in Bitcoin is notable and likely to receive less investor interest in 2019 than a year ago when prices were skyrocketing higher,” says Todd Rosenbluth, director of ETF and mutual fund research at CFRA, an independent research firm. “Whatever is filed has to overcome that high hurdle. There’s nothing else like it.”