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SEC likely to turn down Wilshire Phoenix Bitcoin ETF application

TL;DR

The Wilshire Phoenix Bitcoin ETF isn’t happening anytime soon. Securities and Exchange Commission (SEC) will decide the fate of Wilshire Phoenix Bitcoin ETF or exchange-traded funds in one week and chances of approval look slim.

The crypto community is not keeping its hopes up since every past application for an ‘exchange-traded fund’ has been turned down by the commission.

SEC will have to decide on the said Bitcoin ETF application by February 26th. In the recent past, the commission has raised serious concerns regarding the immature crypto markets and the high volatility.

So far, none of the submitted applicants have addressed the agency’s concerns to secure a positive Bitcoin ETF approval.

Wilshire Phoenix Bitcoin ETF will most likely be declined

Jake Chervinksy of Compound Finance, a famous crypto analyst, says that Wilshire Phoenix Bitcoin ETF will most likely be turned down by the agency. The past applications were denied citing BTC market manipulation, ultra-volatile price movements, and security concerns surrounding cryptocurrencies.

Even though Commissioner Hester Pierce holds a view contrary to the agency’s, his dissent alone isn’t enough to make the agency move in a positive direction.

The agency has a detailed list of concerns that it cites to deny such applications. Firstly, the agency wants a fair price valuation that is derived from multiple exchanges. One exchange cannot be sole price provider since arbitrage opportunities can lead to dilution.

Secondly, the Bitcoin market is still not liquid enough to handle an ETF. Lastly, crypto custody issues make it a risky endeavor. Crypto exchanges are not mature enough to offer a good arbitrage to the traders. All these reasons are enough to deny the Wilshire Phoenix Bitcoin ETF application.

A Bitcoin ETF will be inherently bullish

Crypto experts like Chervinsky believe that a Bitcoin ETF will be highly bullish. Institutional investors are already lining up to deal with Grayscale Bitcoin Trust. Moreover, a BTC ETF will be the sole safe route to invest in crypto from a traditional investor’s viewpoint.

Large investors and institutions will treat it as a gateway to enter the volatile crypto market without the inherent risks. However, considering the past track record of the SEC, it is merely wishful thinking.

Featured Image by Pixabay

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Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

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