Latest Bitcoin ETF rejected by SEC, Crypto Mom dissents

On February 26, the SEC published information detailing the rejection of the proposal of Wilshire Phoenix and NYSE Arca Inc. to list shares in a fund that holds Bitcoin and US treasuries.

Another Bitcoin ETF rejection

Wilshire Phoenix’s United States Bitcoin and Treasury Investment Trust would contain “physical” bitcoin and short-term US Treasury holdings, commonly referred to as T-bills, to replicate the Bitcoin Treasury Index (BTI). The CME Bitcoin Reference Rate would be used as the bitcoin price reference.

Unfortunately, for bitcoin investors who were hoping that an ETG approval could finally happen, the SEC believes that the bitcoin market is still not mature enough for a publicly-traded fund.

“NYSE Arca has not established that the bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation,” the SEC wrote.

A lack of market surveillance agreements and the potential for market manipulation remain key issues that the SEC bases its decision on not to approve a Bitcoin ETF.

Wilshire Phoenix responded to the disapproval in a press release, stating, “We are very disappointed by the Commission’s decision. We made every effort to get the SEC’s attention on this important issue, including undertaking extensive analysis that was made available to the SEC staff, submitting key data, and offering to provide additional information to facilitate the listing of a much needed regulated bitcoin related ETP in the United States.”

“Our ETP was created to provide investors with exposure to bitcoin through a regulated and transparent vehicle that also mitigates volatility. In my opinion, the Commission has done a great disservice to the public by rejecting this application. We are carefully reviewing the Order and determining the best next steps,” added William Herrmann, Managing Partner at Wilshire Phoenix.

Crypto Mom’s dissent

The team at Wilshire Phoenix was not alone in their disappointment. Crypto-friendly SEC Commissioner Hester Peirce – dubbed “crypto mum” by the bitcoin community – said in a public statement that the long list of Bitcoin ETF disapprovals leads her to believe that the financial regulator is unwilling to approve a bitcoin-related financial vehicle, period.

“This line of disapprovals leads me to conclude that no filing will meet the ever-shifting standards that this Commission insists on applying to bitcoin-related products—and only to bitcoin-related products,” she wrote.

“The Commission’s approach to these bitcoin exchange-traded products is frustrating because it evinces a stubborn stodginess in the face of innovation. The irony is that, in taking this approach, the Commission wanders into the unbounded, dangerous territory of merit regulation for which the Commission is ill-equipped,” Peirce concluded.

In light of the SEC’s most recent rejection of a Bitcoin ETF proposal and Ms. Pierce’s comments, it seems unlikely the bitcoin market will see an ETF listed anytime soon.