Earlier this month, Bitwise Asset Management applied for Bitcoin ETF which will be listed on NYSE Arca. The Bitwise Bitcoin ETF will be backed by physically held Bitcoin tokens. NYSE Arca has now completed the official paperwork for the 19b-4 rule change and is now available on the official NYSE website.
The newly filed Bitcoin ETF application by Bitwise will rely on regulated third-party custodians to hold its physical Bitcoin. Additionally, Bitwise clarified that it would draw a large amount of data from a number of crypto trading platforms, including both spot and physically settled futures contracts in order to calculate the index determining the asset value.
The filed proposal talks in detail about the methodology involved. For e.g. the index fund price will be “weighted such that bitcoin prices from exchanges with a greater amount of the trading volume in the prior hour are weighted more heavily than bitcoin prices from exchanges with lesser amounts of volume.”
The proposal further reads:
“The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices and to protect investors and the public interest.”
Market Manipulations SEC’s Major Concern
In the previous Bitcoin ETF application by NYSE Arca, the SEC cited market manipulation as the major concern. The latest proposal from NYSE Arca also highlighted the impact of market manipulation on the bitcoin market. The proposal reads:
“… given the fungible nature of bitcoin, the Index Provider believes that the potential impact on Index values of individual exchanges experiencing outside attempts to manipulate either reported volume or reported prices is muted by the use of a large number of exchange price and volume inputs.”
The SEC has yet to review the NYSE Arca application for its approval or rejection. The ongoing U.S. government shutdown has put many SEC’s works on hiatus.
Last Wednesday, January 23, CBOE also announced the withdrawal of its much-awaited VanEck Bitcoin ETF proposal. One of the major reasons for the decision to pull back was the ongoing shutdown of the U.S. government. VanEck CEO and founder said:
“We were engaged in discussions with the SEC about the bitcoin-related issues, custody, market manipulation, prices, and that had to stop. We were trying to do that but we obviously can’t have meetings when they’re shut down. Instead of trying to slip through or something, we just had the application pulled.”
However, CBOE has announced that it will be refiling the Bitcoin ETF application while working with the regulators “to build appropriate market structure frameworks for a Bitcoin ETF and digital assets in general”.