Many investment firms have launched funds traded on crypto-currency exchanges, but so far, none have found favor with the U.S. Securities and Exchange Commission. However, companies continue to try, and last week, two have made applications for products similar to cryptomoney ETFs, if pure Bitcoin ETFs have not emerged.
WisdomTree, an asset manager and ETF specialist, filed a Form N-1A registration statement with the agency on June 16 for an ETF that would invest up to 5% of its portfolio in Bitcoin cash-settled futures contracts offered by the Chicago Mercantile Exchange.
WisdomTree came close to petitioning the SEC in January for a stable regulated currency, something seen at the time as a possible stalking horse for a crypto-currency ETF offering. Now it has actually gone down that road, but with a BTC component so small that the SEC can barely notice it, or care. Derek Acree, co-founder and legal counsel of DeFi Money Market, a decentralized financial ecosystem, told Cointelegraph: „This is not a new tactic, but a calculated plan to explore exactly what the regulators‘ thresholds are.
„I was not surprised by the presentation of WisdomTree yesterday,“ Eric Ervin, president and CEO of Blockforce Capital, told Cointelegraph. „We requested a similar concept last year. That request was for Reality Shares ETF Trust, a publicly traded fund that proposes to invest in a portfolio that includes both sovereign debt instruments and Bitcoin futures (up to 25% of total assets). Reality Shares subsequently withdrew its application on the advice of the SEC. Ervin told Cointelegraph
„Bitcoin deserves a place in a diversified portfolio, and if the SEC continues to block this, they are essentially encouraging investors to seek that exposure through other potentially less regulated means.“
WisdomTree calls for a 5% ETF on Bitcoin futures
Wilshire Phoenix goes the route of trust
Meanwhile, on June 12, the investment firm Wilshire Phoenix applied to the SEC – not an ETF – for a grantor trust, which has a different application process. However, like a crypto-currency ETF, it allows a Bitcoin exchange-traded fund covered by the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC has already approved such a trust for Grayscale Investments.
James Angel, a professor at Georgetown University’s McDonough School of Business, told Cointelegraph that obtaining an SEC-approved trust is easier than getting an ETF approval „as long as you disclose all, all the risk factors. Wilshire Phoenix’s SEC Form S-1 filing has „an entirely different set of approvals“ with a different set of judging bureaucrats. He added, „I don’t see that the SEC has any legitimate means to deny it.
Wilshire Phoenix had also previously applied for an ETF – again, a mixture of Bitcoin and short-term treasuries that used the bills to buffer the volatility of cryptosystems. Their application was officially rejected by the SEC because, in the agency’s view, the Bitcoin market was still heavily manipulated in February 2020.