SEC Restarts Clock on Proposed 'Bitcoin and T-Bills' ETF

The U.S. Securities and Exchange Commission (SEC) is again soliciting comments on a proposed exchange-traded fund (ETF) based around bitcoin and Treasury bonds.

According to a public filing published Tuesday, investment management firm Wilshire Phoenix and NYSE Arca filed an amendment to their ETF proposal earlier this month to address issuance and redemption for the securities and the listing/trading of the fund's shares.

Coinbase Custody will act as the custodian for the bitcoin held by the trust, according to the filing. Tuesday's notice says Coinbase will provide attestations confirming the amount of bitcoin it holds within five business days of the trust's monthly rebalancing, adding a detail not present in the original filing.

The amended rule change proposal also notes that CME and Intercontinental Exchange (ICE) provide bitcoin futures products in the U.S., rather than CME and Cboe. The latter company wound down its futures product earlier this year.

Later on, the filing seemingly addresses the SEC's concerns with potential market manipulation in the cryptocurrency space.

"The Sponsor notes that, in connection with the Commission’s analysis of whether a market is inherently resistant to manipulation, the Commission has in certain circumstances focused not on the market as a whole but instead on the significant subset of the market that has a meaningful impact on the particular ETP [exchange-traded product]," the filing says, adding:

"For instance, orders approving listing applications of ETPs that invest in gold bullion focused on the spot and futures market, even though gold is traded on a number of different market segments. Focusing on the spot market is appropriate because the spot market is the market to which the particular ETP would look to determine its [net asset value]."

The amendment filed on Oct. 4 "replaces ... and supersedes" the original filing "in its entirety," Tuesday's notice said.

The SEC first kicked off the comment period for Wilshire Phoenix's proposal in June, before announcing in late September that it was evaluating the proposal.

According to the filing, members of the public must submit comments within 21 days of the notice's publication in the Federal Register. The SEC has 45 days after the filing's publication in the Register to make an initial decision, but can extend that timeframe if it chooses to do so.

Tuesday's filing follows the SEC's decision to reject a bitcoin ETF proposal filed by Bitwise Asset Management, also working with NYSE Arca. The regulator cited concerns about market manipulation and a lack of surveillance-sharing agreements as an issue in its rejection.

SEC logo image via CoinDesk archives