Bitwise Asset Management, earlier this month announced its intention to launch the Bitcoin ETF which is assumed to be listed on the NYSE Arca. In addition to this, if approved it would be the first Bitcoin ETF that would make into the market in the US.
During that period, Bitwise Asset Management mentioned that the NYSE Arca might file the application for the change in the 19b-4 rule in the near future. NYSE Arca surprisingly filed the form on the same day when the company submitted the application for the Bitcoin ETF. However, the form does not appear to be listed on any SEC website possible due to US government shutdown during that period. As a result, despite being posted on NYSE Arca website, the document remained unnoticed.
Bitwise, upon initial submission of the Bitcoin ETF application, said that to hold its physical Bitcoin, it will rely on regulated third-party custodians. The company also clarified that in order to calculate the index determining the asset value a large amount of data would be extracted from a number of crypto trading platforms that will include both spot and physically settled futures contracts.
The filed application for the ETF from the company talks about the methodology that will be involved. For example, 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 mentioned, “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.” SEC highlighted the market manipulation as the major concern for previous Bitcoin ETF application rejection by NYSE Arca.
However, the latest application from NYSE Arca discussed the possibilities that might affect the bitcoin market as a result of the manipulations. The application stated –
“… 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.”
Tough, the proposal for the Bitcoin ETF has been filed by the NYSE Arca, it does not mean that the SEC has approved or rejected the application.
“The SEC’s deadline for deciding an ETF proposal is triggered by publication in the Federal Register”, told Attorney Jake Chervinsky of the law firm Kobre Kim to CoinDesk. In an email sent to the portal, Chervinsky further added that “That almost certainly won’t happen until after the government shutdown ends.” “According to the SEC’s operations plan, they have discontinued all processing and review of proposed rule changes due to the lapse in appropriations.”