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Following Bitwise Flop Wiltshire Phoenix Adjusts its ETF Application

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Even though the latest drive for a Bitcoin ETF looks dead in the water again – following the withdrawal of VanEck and the failure of Bitwise – Wiltshire Phoenix is still tweaking their application before a decision will be made by the SEC on their attempt.

The SEC has opened up the application for public comment, but they have also made public that investment management firm Wilshire Phoenix and exchange NYSE Arca have filed an amendment to their Bitcoin ETF application to reflect new circumstances.

It may be that this amendment comes about following NYSE Arca being pinned as the problem for Bitwise’s ETF application. In general, it is similar concerns that keep seeing these Bitcoin ETFs denied. However, in Bitwise’s case, the SEC added:

“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.'”

To that end, the application has amended how Coinbase Custody will act as a custodian of the trust’s Bitcoins. The updated version now states that Coinbase will be confirming the availability of assets used to secure the trust within five business days from the moment of its monthly rebalancing.

In addition, the applicant wants to point out that when ETFs were approved for gold, the regulator focused on spot and futures markets which have “a meaningful impact on the particular ETP,” although gold is also traded in different market segments, adding

“Focusing on the spot market is appropriate because the spot market is the market to which the particular ETP would look to determine its NAV.”

Generally, the sentiment about the success of this application is once again low. This follows previous applications that have come across the SEC’s desk this year. Even though there has been a marked improvement in the Bitcoin market to the taste of regulators, it has not been deemed enough. 

Even with Wiltshire Phoenix making such amendments to their application, it is unlikely to be enough to sway the SEC to suddenly unlock this massive tool of institutional investors towards the cryptocurrency space. 

Darryn Pollock
Darryn has been interested in the blockchain and cryptocurrency space since he heard about Bitcoin in 2015. He then decided to use his journalism degree to report on this fascinating fintech space in 2016, and has not looked back since.

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