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- The Securities and Exchange Commission will decide on the last pending Bitcoin ETF application from Wilshire Phoenix by February 26.
- According to the majority of experts, the chances of obtaining approval are rather low.
A Bitcoin Exchange Traded Fund (ETF) is seen by many experts as a great opportunity for new capital to flow into the crypto market, resulting in a rising price for Bitcoin. So far, however, the Security and Exchange Commission (SEC) has rejected all applications. In previous denials of Bitcoin ETFs, the SEC has always emphasized the immaturity of the Bitcoin market, based on three factors.
According to the US Securities and Exchange Commission, the Bitcoin market is vulnerable to manipulation. Furthermore, the overall size of the Bitcoin market is too small. Finally, it is also necessary for the market players to enter into joint agreements to ensure the monitoring of the market. Wilshire is trying to address these SEC concerns by building its ETF out of Bitcoin and US government bonds. As the volatility of the Bitcoin price increases, the underlying algorithm favors government bonds.
Whether this will be enough to convince the SEC is questionable, however. In any case, in the case of Wilshire Phoenix, the SEC will announce by February 26, 2020 whether the proposed Bitcoin ETF application will be accepted. The SEC currently has no further applications, so all eyes of the community are on the decision on the Wilshire Phoenix application.
The chances of success for a first Bitcoin ETF are rather low
A large majority of experts is attributing poor chances to the ETF application. For example, Jake Chervinsky, a lawyer popular in the crypto-scene, explained that he does not think the application has much of a chance of success:
The SEC’s final deadline for approving or rejecting the Wilshire Phoenix Bitcoin ETF is next Wednesday 26 February.
Despite the crazy premium on GBTC, the rejection is virtually certain.
This is the only pending proposal of the Bitcoin ETF, as Bitwise & VanEck are taking a break. I would not bet on any ETF in 2020.
Nevertheless, Wilshire Phoenix founder Bill Herrmann is confident, as he and his team “have continued to have thoughtful and meaningful discussions with the Commission”. The company already submitted its application on 12 June 2019. Three months later, on September 24, 2019, the SEC announced an extension of the processing time. Shortly afterwards, Wilshire Phoenix amended the application and added another partner, the NYSE Arca.
Following the amendment of the agreement, the SEC extended the processing time until February 26, so that a decision will be made by tomorrow at the latest. However, it is also conceivable that the SEC will again grant itself a further period of consideration.
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