After rejecting, again and again, any attempt to introduce a cryptocurrency exchange-traded fund (ETF), the Securities and Exchange Commission (SEC) in the U.S. is looking for input on yet another proposal before it, too, is rejected. The commission posted a notice (in pdf) on its website Tuesday, in which it details an ETF proposal by Wilshire Phoenix and the NYSE Arca exchange and asks for public comments before it reaches a decision on whether or not to approve or deny the trading product.
Wilshire Phoenix and NYSE Arca amended their proposal earlier this month to clarify issues surrounding the issuance and redemption of securities from the ETF, as well as to address the listing and trading of the fund’s shares. The SEC, when it rejected the Bitwise Asset Management proposal, asserted that NYSE Arca didn’t have the proper controls in place to prevent manipulation, and there’s no reason to expect the outcome of Wilshire’s proposal to be any different.
The amendment provided by Wilshire and NYSE Arca is designed to address that point, explaining, “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].” It adds, “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 original rule change proposal had been submitted in June. At that time, the SEC opened up the first comment period, and then, in September, announced that it was reviewing the comments and was preparing its final decision. However, the filed amendment, which was submitted on October 4, replaced the previous outline of the ETF, resulting in the process to start over once again.
The public can submit comments for the next 21 days and the SEC has a total of 45 days from the proposal’s publication date to reach a decision. However, as it has done with every crypto ETF to date, the commission will most likely announce an extension of the consideration period before it is willing to offer its results.
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