SEC holds off on Bitwise crypto ETF, wants public input

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It shouldn’t come as too much of a surprise to anyone, but the U.S. Securities and Exchange Commission (SEC) has dropped the hammer on another cryptocurrency exchange-traded fund (ETF). It has said that it isn’t quite ready to move forward with a rule change proposal submitted by Bitwise Asset Management after already delaying its decision once. This, in spite of the fact that the SEC has now had a year to discuss the subject across several ETF submissions.

The Bitwise ETF proposal, which was submitted in conjunction with the NYSE Arca exchange, was submitted last February 15. By rule, the SEC had 45 days to decide on the proposal but could, at its discretion, announce a delay as it continued to review the proposal. It did and a second 45-day window has now lapsed, leading to another delay and the commission requesting public input before moving forward.

In a filing (in pdf) by the SEC from Tuesday, the commission states, The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act to determine whether the proposed rule change should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide comments on the proposed rule change.”

The SEC includes a list of 14 questions that it would like to be answered by the public. Some of the questions—such as “What are commenters’ views on the assertion by the Exchange and the Sponsor that a significant, regulated and surveilled market for bitcoin futures exists and that it is closely connected with the spot market for bitcoin?”—require a deep understanding of crypto and investments, which could be negatively influenced by responses submitted from individuals without the corresponding knowledge.

The SEC is opening the comment period for three weeks after the latest amendments to the ETF application are added to the official Federal Register. Following this, there will be a two-week period for responses.

The SEC began hearing crypto ETF rule change proposals early last year. For the most part, with over 11 now having been submitted, the commission should have had enough time to make a determination. The lack of movement has already caused some dissent within the ranks, as well as the assertion by several federal lawmakers that, among other reasons, the U.S. is losing its innovative edge to countries who are more proactive to crypto and blockchains.