Regulation and Compliance Federal Regulation SEC

SEC Reviews Bitwise Bitcoin ETF

News February 20, 2019 at 10:30 AM
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The Securities and Exchange Commission has launched its review of the Bitwise Bitcoin ETF.

In a Feb. 11 notice, the securities regulator stated that it was commencing review of a rule change that would facilitate the listing and trading of shares of the Bitwise Bitcoin ETF Trust under New York Stock Exchange Arca Rule 8.201-E.

The SEC's planned review was filed in the Federal Register on Friday.

On Feb. 6, Ric Edelman, chairman of financial education and client experience at Edelman Financial Engines, told ThinkAdvisor that he was no longer going to be an advisor to or investor in Bitwise because of the planned Bitcoin ETF approval.

Bitwise "is planning to launch a Bitcoin ETF, and if we provide that to our clients, we don't want that to be a conflict of interest," Edelman told ThinkAdvisor during an interview at the TD Ameritrade LINC conference.

Edelman told ThinkAdvisor in a Tuesday email message that the SEC review "is excellent news and illustrates the progress being made in efforts to bring a bitcoin ETF to the market."

In his comments at the LINC conference, Edelman stated, however, that "there's no assurance that the SEC will approve it; the SEC has rejected every application [for a Bitcoin ETF] so far. I'm convinced the SEC's objections will eventually be overcome and that the agency will ultimately approve a Bitcoin ETF."

As Edelman explained, the SEC has expressed two primary concerns with Bitcoin ETFs: custody and price manipulation. "I believe both of those concerns will be resolved to their satisfaction, and probably sooner rather than later."

SEC Commissioner Hester Peirce reiterated her concerns on Feb. 12 about the agency's unwillingness to approve a Bitcoin ETF.

Her concern, she said, is that the SEC's approach "looks like a merit-based approach, judging the underlying Bitcoin markets and saying we don't think they're regulated enough. There are lots of markets that aren't regulated; nevertheless, we build products on top of them, so I think we have to be very careful about that reasoning."

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